David Bowcott on transparency, construction and risk
February 1, 2013 by David Bowcott
The world is becoming more transparent. Facebook hit over one billion users in 2012 (that is one in seven people willing to post much of their personal information online). Twitter means any set of eyes can report via their mobile device on events or actions taking place almost anywhere in the world. Wikileaks are publishing classified documents every day. We are also seeing the rise of an open source philosophy, whereby previously hidden intellectual capital is released for all to see in hopes of fostering innovation. Whether you like it or not, the internet has had a profound impact on the world, and that impact is being felt by every person, company and institution as a wave of transparency floods the planet.
There is good and bad that come with greater transparency. One school of thought is that transparency is the future as it leads to much greater honesty in the way we conduct ourselves (the belief that those that are fighting transparency must have something to hide). Others believe the information that is available on individuals, companies and institutions can be used as a weapon, and we should all tread very carefully. Whether it’s good or bad we can’t deny it has changed the way we act—as
every word and action is potentially captured for the record.
No occupation has felt the impact of transparency more than politicians. On the one hand they are trying to capture the vote of as many people in their riding in order to get elected, but on the other hand they’re sometimes afraid to take a stand on an issue for fear of losing their majority and thus their elected position. Just look at the United States right now. The gridlock being experienced in Washington is related to the rise of transparency over the past 10 years, whereby every action of every politician is recorded for all to see. Without transparency politicians of the past were able to find a middle ground and their actions were not scrutinized as closely, because there simply was less information to analyse. Today, politicians are going into very serious negotiations, for instance, on whether to default on their country’s debt obligations, and the Twittersphere is posting each side’s game plan forcing all players to adhere more veraciously to that game plan. Thus gridlock.
Love it or hate it, transparency is here to stay. From the construction industry’s perspective, transparency has had a huge impact on the way we are doing business. More owners are investigating models that encourage greater transparency between the various parties to the development and operations of their assets. The migration away from design-bid-build to both sides of the project delivery spectrum (shared risk and broad risk transfer) is very clear. In their own unique ways both sides of the spectrum are using their specific asset delivery model to encourage greater transparency.
On the broad risk transfer side of the fence P3s are using the paranoia of all parties (the debt in particular) to force greater oversight and planning around risk. A key tenet to better oversight and planning is transparency between all parties.
On the shared risk transfer side, parties are coming together in a genuine partnering framework, using open-book planning
and execution practices to increase the certainty of successful delivery. The design-bid-build model is often seen as
a model that fragments roles and discourages collaboration and transparency. I don’t necessarily agree with this thought process, but do agree the fragmented nature of each phase of the assets development, found in the DBB model,
was exploited by some to create a more adversarial environment from which these parties gained financial benefit.
Pay attention to trends in transparency, and pay particular attention to how these trends are impacting our industry. The property and casualty insurance industries loss ratios are starting to indicate a statistically significant decrease in loss ratios where projects are executed with greater transparency. As more owners see greater certainty associated with delivery models that encourage transparency, you can expect them to embrace these models and reap the benefit of this market change.
David Bowcott is senior vice-president, national director of large/strategic accounts, AON Reed Stenhouse Inc. Send comments to firstname.lastname@example.org.
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