Corrs High Vis: Episode 54 – COVID-19 and the construction industry: challenges and opportunities (Part 2)

Chris Horsfall: Hello and welcome to Corrs Hi Vis. My name is Chris Horsfall and I am a Partner in the Melbourne Projects practice group at Corrs. Thank you for joining us for part two of our podcast, titled COVID-19 and the construction industry: Challenges and opportunities.

In this second episode, we continue our discussion with Kiri Parr and Kevin Pascoe, with a particular focus on how the challenges brought about by COVID-19 might actually be an opportunity for the construction industry to embrace technology and improve leadership and culture.

Let’s join the conversation.

Alice Hayes: There’s a great part of your article where you quote the famous construction worker Winston Churchill who says never let a good crisis go to waste. I know we sort of have already been touching on it, but what are the opportunities that the crisis that COVID has sort of enabled and what changes can come from that?

Kiri Parr: I will throw in the first one. One of the really interesting things I’m starting to see is the technology, the AI that’s starting to emerge around the field of construction management. So, not the technology that enables the construction or engineering activities themselves, but the technology that’s going to support how you manage projects. So, the data sharing platforms are starting to change, they’re starting to be more collaborative, single source of truth databases are starting to emerge and what I find really interesting in that space is that it’s the mid-tier smaller organisations that are proving to be more flexible.

Kevin Pascoe: Yes be more amenable.

Kiri Parr: More agile, more willing to try something out and there are some great pieces out there. I have about half a dozen pieces of people I know who are developing technologies and what they’re doing is top rate.

Kevin Pascoe: Yes I mean the future what is coming is – it would be great if there was a TV show on some of these things like they do in other areas – but I envisage a future where the engineer for example is sitting there with tactile gloves and a headset, you know a virtual reality type headset, the semi-autonomous drone 1000 km away has been tasked with a pre-mission, and that engineer is then connected in at the right time in their calendar and flies and tasks the drone, adjusts it on the construction site, where it is then laser scanning and digitally updating and inspecting the works and up-revving design drawings which the engineers presence is therefore certifying, and all of that data is uploaded and all recognised across that contracting chain. I mean this is not – we are not talking about Star Trek level of technology here – all this technology already exists is just requires …

Kiri Parr: So Kevin imagines that from the engineering task, I think about it from the litigation task so lawyers, we have these giant construction disputes at the end of the job and we go back afterwards and we try and collate all this data, and we build these databases, and if it’s a really big case you might even try and build a set of data that we can recreate the real time analytics where you’ve got your programmers trying to recreate what happened on site.
I think the capacity to have that information up-front, in real time, from the very beginning, in collaborative portals can be an utter game changer for a client who went there. It’s just starting.

Kevin Pascoe: Yes.

Kiri Parr: Because what you do is, you do that analysis and assessment in real time from the beginning and it will completely change the game.

Kevin Pasoce: The other thing to really reflect on here is the level of risk appetite and I think in Australia we do have this, I don’t know for some reason culturally with been inflicted with this very low level of risk in everything that we do. I don’t think that COVID is helping this. Innovation doesn’t come about from low levels of risk, you know, you’ve got to take approaches which are inherently risky because it’s the first time you’ve ever done it. If you put two parties together and said let’s do an adversarial contract and let’s do a mission to Mars and drive around in a Rover it’s just not going to work is it?
The level of risk is just far too high. So, it really requires a much more collaborative approach to those sorts of innovations. I think that’s really got to be a change in construction. If we want innovation to come in, the nature of contracts has to go away from adversarial and entrenched, protective mechanisms.

Alice Hayes: What about large infrastructure projects that are initiated by governments?

Kiri Parr: I think the real challenge that we are seeing with the government pipeline of works is the shift to very large projects. If you look at the data set that Marion Terrill published, the Grattan Institute published, she’s done two reports over the last six months, you can really see the shift to much larger projects over much longer timeframes, and what also that data shows is that those projects have shrunk the market of parties who can supply them, they come with claims at the back end as well.
So, if we are going to be evidence based professionals, not just go with our gut, do what we do on our large projects, actually look at the data and reflect on what that means, you need to think then about well is the best solution to continue to roll out the pipeline of work through large projects? Because large projects statistically suffer from these consequences.
So if you are going to have a large project, I think we need to reflect long and hard on the adversarial contract models that are commonly built to sit with them, because what we are seeing is that those models are driving the parties into using tools like litigation to solve the problems.

So what are the solutions and strategies inside the contract itself for helping the parties resolve disputes? And, I know with it we generally have the three tier senior negotiation, mediation and then arbitration and litigation.

What that doesn’t give you is any kind of governance structure that actually allows you to solve the problems before you’ve even got to the dispute point.

Kevin Pascoe: Yes I know where you are going. It’s the DRB …

Kiri Parr: It’s the whole dispute board. If you by comparison thought about that project as a business that you were going to deliver as a joint venture you wouldn’t have a governance strategy that just says oh if there’s a problem our two CEO’s will meet.

Kevin Pascoe: Yes.

Kiri Parr: You’re going to have a joint venture board which is meeting every month, having full reporting and is tasked with safety …

Kevin Pascoe: Correct.

Kiri Pascoe: Whether our team is performing the leadership capacity, finding problems, solving them, making decisions about how you invest the resources of the joint venture to solve the problems. And if we can start bringing that kind of mindset to our projects, because we are talking about big companies, I mean they’re big endeavours these projects, we need to be bringing that single enterprise governance thinking to the table if we are going to deliver them well.

Samuel Woff: One of the analogies from the paper that I really liked was you talked about, we’re coming into an era – coming out of COVID – a massive government spending to kick start the economy. And you said that’s great but you shouldn’t get a sick patient to suddenly run, and what you meant by that is if the construction industry as a whole is sick and you are going to inject all of this cash in and all of these projects to try and get it going, you might try, and you know, you might shock them out of their state too quickly.

Is there a better way where we could sort of ramp up differently, or more slowly, or in a more controlled, or sustainable way so that we aren’t going suddenly from someone who’s critically ill to try and get them to compete at the Olympics?

Kiri Parr: Well maybe we should say that there’s not one patient. Every project, and every owner, and every contractor is at a different point in their leadership journey and their skills journey, but every single one of us has the capacity to say what can I do better now with what I’ve got?
And, what is the next thing that I can do that will get me towards a better outcome?

Kevin Pascoe: I’m glad you put the optimistic spin on it Kiri, because when the question was positive I had a – you know, I am a very optimistic person but I had a very pessimistic view to that question. Which is, that I think the horse has bolted, and that you know the governments have just released all of the projects, the borders are shut, the universities will not be training people as we have in the past and had those foreign skills coming in. So, I think that there will be issues.
I’m out talking to a lot of people. There are certain skill sets in the technologies area or in engineering that are just not available at the moment and every single person I meet says do you know any structural engineers, do you know any rail signalling engineers? Everyone wants to build a railway at the moment, and a Metro Tunnel, and that’s going to be a problem that will result in not meeting the contractual timelines or the quality, there’ll be issues with both of those, time and quality of the delivery and over cost obviously. So, I’m a little bit pessimistic in that regard.
But Kiri’s hit the right note by saying the optimism is, and this is what we hope, and this what the call for the paper really was about. Everyone’s got a responsibility to do what they can. I guess we’re doing that by writing the paper and still talking about it. But from the listeners to this podcast’s perspective it might be that and my advocacy is that, people really need to think about project outcomes as a best for project outcome.
I understand that people are engaged by a client to work for those client’s interests, but my point is that it is not in the client’s best interest if the project outcome is to the detriment of the other parties on the project.
The best project outcome is that it’s built on time, to quality, to cost, health and safety, no one is killed, or badly injured and mental health and all of that, and that everyone involved in the project can be proud of it and drive past it or point it out to their kids, family in the future and have a nice sensation about it. I’ve had projects where I’ve growled at the project as I drive past it years later. I’ve had projects where during the project I’ve had to not go near it because I’m just too emotionally invested in it.
Years later you like to look back and go oh yeah. I think time does temper it and you do forgot some of the bad stuff eventually. So that’s the point, I think that everyone should really try to look at here as to what is the best longer term outcome and to try and encourage everyone else to think about that.

Kiri Parr: Yes absolutely. If you look back on the projects that you’ve delivered over your past, those projects that were delivered with collegiality, with quality, with excellence, they give you joy and they’re normally projects that are often distinguished by some different models or by different leadership perspectives, and that’s where our paper was coming from so I must say thank you for giving us this opportunity to amplify this debate.
It has amplified in our industry over the last 18 months, more of us are talking about it, more of us are commentating on about it, writing papers, really there’s some wonderful case studies that are starting to emerge here in Australia of organisations that are really trying to do things differently.
It’s early days and I’m less pessimistic than Kevin, I certainly don’t want us returning to type. If this is your inflection point take it, seize it, run with it, phone me up for some ideas.

Samuel Woff: The question that I had was I’m a big fan of the idea of everyday leadership. Leadership is not just for the two or three people at the front of the press conference but we all have an obligation and a responsibility to be leaders in our own way within our own sphere of influence.
So my question is if we want to get to – and you talk about this in the paper – an idealised state in five years’ time, what would be your one thing that you would like to see the listeners of this podcast do to be everyday leaders in this field?

Kiri Parr: Invest in your leadership journey, your skills to really unpack what builds good teams. Go and learn new skills that really are about team building and what builds good teams and how to have constructive conversations.
If you feel like or you carry into your day, if you walk in and you’re carrying anger and the need to use that in some way, just know that there are some other approaches out there that might be more constructive.

Kevin Pasoce: Yes, absolutely, the diversity of – everyone talks about diversity in construction, they think about it a bit too narrowly I think. Diversity of thought is really the most important element.

One of the reasons that Kiri and I collaborate so much together is that, obviously I originally was an engineer in my training and Kiri a lawyer, but we do think about the world in different ways and whenever we do get together it’s just little sparks go off in terms of thought bubbles and trying to get those ideas, and it really motivates us and we get these great ideas that comes out of things.

Whether it is leadership or the approach we’re taking to the solutions that we’re providing to our clients or in whatever we’re doing. It’s been difficult the last year obviously with COVID, family and work and pressures and finances and all of these sorts of things. But, it’s really important that if I think you want to be successful and provide good leadership to everyone around you, you’ve got to find the time to get out of the everyday and whether that’s through walking in nature, reading different books, whatever it is, talking with different people, different groups, it’s really important and you’ll get those really diverse thoughts and that’s where that innovation comes from, cross-fertilisation of different industries and different processes.

Alice Hayes: I just wanted to thank you both Kiri and Kevin for your passionate and considered thoughts on the best practice for a flourishing construction industry in Australia. Thank you. Thank you again.

This podcast is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice about your specific circumstances.