12 AUG 2022
The RICS 2022 ANZ Commercial Management Conference took place recently, providing key insights and engaging discussions. Designed for professionals in Australia and New Zealand's commercial management of construction space, the conference is the first of its kind from RICS.
Chaired by Steven Evans FRICS (Director, Concordia Resolution) it provided space for attendees to critically reflect on the challenges and opportunities ahead for the sector.
Within some organisations, the commercial management skillset and function are not common or consistent. This has led to projects running significantly over budget or time and to building contractors struggling.
The management of projects and risk in construction are critical to project success. In a session moderated by Wayne Elsom MRICS (Executive Director, WME Consulting) commercial management as a discipline was reflected upon - is it broken or is it simply misunderstood?
The panel shared thoughts about what the role of a commercial manager is. Simon Chatwin FRICS (LOR) shared his belief that primarily their duty is to support the operations team on projects, whether on the client or contractor side. Commercial managers are always looking to support other teams to build in the most timely, efficient and profitable way. To do this, soft skills such as clear, world-class communication, risk management and dispute avoidance are essential.
Phil Adams FRICS (Director & Principal, ICR Advisory) added to this, referring to the RICS APC QS Pathway Guide and its definition of commercial management. Here, key skills for the role include monitoring, analysing, evaluating, advising and reporting. These interrelate with the profitability of a project and mean the role holds an end-to-end position within projects.
Agreeing with this, Sue Morse FRICS (Director, Hestia Consulting) added that the role of a commercial manager is not just about reporting. She asserted it is also about innovation. Innovation flourishes when you have the right people around you, so another key aspect of the commercial manager's role is to assemble not just people, but the right kind of people. This makes a team that will drive forward productivity and business goals. She also made the salient comment that good commercial management involves developing the commercial managers of the future as well.
Over the past decade, bespoke contracts have become the norm. The balance of the client and contractor risk has shifted because of this, and there is less consistency across the board. Moderated by Stephen Bolt FRICS (National Manager, Contracts, Claims and Dispute Services, WT), the panellists debated whether it's time to rethink and encourage the use of unamended forms of building contracts.
Discussing the use of amended contracts, Stuart Bailey MRICS (Director, ProfiQS) drew attention to bespoke contracts often having special conditions within them. This presents challenges in how they are interpreted between lawyers and stakeholders. He acknowledged that some of the conditions were common, allowing for a degree of cohesion, but the use of widespread bespoke contracts does present challenges.
Following on, Stephen Evans FRICS (Director, Concordia Resolution) commented that New Zealand is way ahead of Australia in terms of standardisation between contracts, referencing the NZS3910 being a more recent effort from New Zealand to develop some consistency. In contrast, Australia is more in a state of tweaking contracts and working in bespoke clauses without considering the impact this has on the next client interacting with it. This carries risk and largely, doesn't benefit anyone.
Matthew Meakin MRICS (Head of Legal, Building, Lendlease) agreed, noting that although Australia has got standard contracts, these are often amended beyond recognition and there is a culture of passing problems on to the next person who is involved with the contract. When amendments are made to deal with project-specific issues this can be positive but problems develop when other agencies go their own way and amend without forward-planning or care for the next person.
Moderator Stephen Bolt FRICS drew attention to limitations creeping in for Quantity Surveyors in what can be commented on as more and more queries that develop are requiring the input of legal professionals. A result of this is that surveyor reports may be becoming less comprehensive than previously, and this is a concern for the industry.
The conference sessions closed with a panel discussion about the role construction professionals have in contributing to a sustainable infrastructure sector. Moderator Hayley Davis (Principal, Strategic Infrastructure Advisory, MACE) facilitated panellists Simon Chatwin FRICS (Commercial Director, LOR), Allan Barclay MRICS (GM Finance & Commercial, Facilities at Downer) and Jon Lamonte FRICS (CEO, Watercare) as they considered reform, challenges and productivity within the industry.
Referring to the Delivering Outcomes recommendations in Infrastructure Australia's report, the conversation focused on how construction professionals can best leverage them and how to use the experience of other jurisdictions to effect meaningful change in the industry. The report, which proposes a 10-year roadmap to develop a more productive and resilient future, is informed by extensive research and international best practice.
Allan Barclay MRICS commented upon the need for the industry to change and change being an ongoing process. The infrastructure sector has faced challenges that have caused it to change before. Often these are major events or unexpected impacts. Therefore, the challenges currently being faced are part of a cyclical evolution of the industry.
However, Jon Lamonte FRICS sentiment was less optimistic when asked what impact the Australia report could have. Referring to the Project 13 report by Heathrow in London and the 10-point Plan of New South Wales, he highlighted their common themes such as collaboration, partnership, risk apportionment and contractual mechanisms and the lacklustre success that followed the reports being published.
Following on from this, he raised the question of whether the sector is a bit protective of the way things have always been - is there the appetite from all stakeholders for the industry to change and the report to make a difference?
The discussion moved on to sustainability for the industry, with Simon Chatwin FRICS commenting on sub-contractors and the broader supply chain, and how to create financial stability for the industry. He noted that the infrastructure report is focused on a more productive industry with greater research, development and innovation. He asserted that the sector needs to look at the supply chain as people with this kind of skillset tend to be within that area and, to really change, it's important to give it more capacity to invest.
With thought-provoking sessions and a variety of key themes covered, the RICS 2022 ANZ Commercial Management Conference placed a spotlight on the challenges and opportunities facing the surveying industry. Change is inevitable and the sector has had to undergo reforms before. How suggested reforms come to fruition in the current climate is going to depend on how much professionals across the sector collaborate and invest in change, and on there being more standardisation in the ways of working.