Protecting health and wellbeing is a contractual issue

Bob Hide
21 November 2018

Twitter FacebookLinkedIn

Print

Topics 

Health and wellbeing

With workplace stress on the increase across the construction sector, the industry needs to look at contracts with a view to putting some safeguards in place, argues Bob Hide.

At a time when employers in other industries are reducing working hours or instigating temporary shutdowns to take the pressure off their operations ahead of Brexit, there is no sign of a similar let-up in the construction sector. If anything, stress levels on many mega projects are getting worse rather than better.

Much has been done to raise awareness of the importance of mental health and wellbeing in the construction industry. Most employers and programme owners have policies and procedures in place encouraging workers to look out for their colleagues and monitor signs of stress, anxiety or depression. 

Despite this focus on raising awareness however, many contractors and subcontractors are still facing considerable pressure to work long hours, often in isolation, in order to hit pre-set targets that are largely beyond their control. Working under this kind of pressure for a sustained time period not only increases the risk of accidents, potentially leading to a spike in onsite injuries and fatalities, it also has a negative impact on productivity.

The latest research confirms that mental health and wellbeing in the construction sector is not improving. As part of a study carried out by Construction News earlier this year, 57% of employees in the sector reported experiencing mental health issues in the last year, up from 55% the previous year. Clearly, this is a problem that despite the increased focus at senior management level, is not going away.

The problem seems to lie with ingrained working practices, which directly influence the contractual terms and conditions that apply to most mega projects, both pre and during construction. Among the main culprits are hard-to-achieve KPIs and a tapestry of incentives and penalties, including liquidated damages and pain/gain mechanisms, which are agreed as part of early contractor involvement.

As competition increases for a stake in these mega projects, contractors are coming under pressure to agree to terms such as pain/gain mechanisms, which could potentially erode their shrinking operating margins. Equally, if they succeed in delivering a key milestone ahead of schedule or under budget, they could secure a share of the savings. 

Whilst intended to incentivise delivery, helping to bring projects in on time and on budget, these terms are piling pressure on the supply chain. As milestones get nearer, subcontractors are working flat out to meet delivery targets or trigger gain-share terms, which could benefit those higher up the chain. They must meet these targets, or risk losing their share of the on-going programme and potentially damage their prospects of securing future work.

The effect is an almost obsessive focus on internal governance procedures to manage costs and measure performance during the delivery phase. The project is re-baselined on a weekly, or sometimes even a daily basis, in order to check that cost targets will be met and to allow time to intervene if they are falling wide of the mark. If things are not going well and operating margins are at risk, contractors may resort to micro-managing subcontractors, which could lead to costs being disallowed and greater focus on commercial management. This build-up of pressure can create an exceptional level of workplace stress, potentially leading to higher levels of absenteeism and a higher incidence of mental health issues. 

The root cause of these issues is the contracts that define this way of working. Without changing the way targets are set and delivery incentivised when contracts are agreed, we will be perpetuating a culture that creates a stressful workplace and undermines productivity. It’s time for a rethink.

Bob Hide is director at risk management consultancy, Equib.