How Our Industry Can Improve and Learn from Adversity

At Ikon, we’ve encountered the same recurring issues: low-cost projects with minimal profit margins, unfavourable contract terms, and unrealistic expectations.

These challenges not only compromise quality and delay timelines but lead to financial instability across the supply chain. It’s clear that these aren’t merely operational hurdles; they represent systemic flaws that require our collective attention.

Beyond the lowest bid

The truth is, chasing the lowest bid can lead to costly long-term repercussions. The collapses we’ve seen among major contractors in this space should serve as a wake-up call, yet many businesses are continuing down the same perilous path.

Reflecting on the recent downfall of ISG, we see it as a significant marker of the risks associated with these unsustainable practices. This event underscores how crucial it is for contractors to maintain strong financial safeguards, such as effective cash flow management, limited reliance on a few large projects, and careful vetting of contract terms.

ISG’s situation also highlights the need for the industry to adopt fairer practices, including balanced contract terms and improved payment reliability. Without these, we can be sure to see a continued cycle of instability affecting further businesses.

We’ve made it our mission to advocate for a smarter, more sustainable model. We see an opportunity to grow, moving beyond transactional approaches and adopting more thoughtful, future-focused practices. In doing so we not only protect client interests but also build stronger foundations for long-term success.

Empowering the supply chain through timely payment

Extended payment terms imposed by some clients creates significant challenges and the impact extends far beyond the main contractor. The supply chain is typically made up of smaller businesses with limited financial reserves, who end up being the ones hit hardest. The Federation of Small Businesses (FSB) reports that nearly 40% of small construction firms are affected by late payments, highlighting the urgency for change.

The illusion of short-term savings presents greater long-term risks, which are often seen as disrupted timelines and weakened partnerships. Quality suffers across the board, deadlines slip, and in some cases, suppliers or subcontractors are forced out of business.

To address this, we must prioritise timely payments as a cornerstone of project success. Implementing clear payment schedules within contracts, coupled with penalties for late payments, can adopt accountability and build trust among all parties involved.

Treating suppliers as financial partners and paying them promptly preserves the quality, speed, and integrity of any build.

Building strong partnerships through balanced contracts

Contract negotiations offer an opportunity for collaboration, but too often, we see an unbalanced allocation of risk. It’s common for clients, often advised by legal teams, to shift disproportionate project risk onto contractors through heavily amended terms and conditions. This practice not only drives up costs but also limits competition and impacts project execution.

The recent Construction Leadership Council (CLC) statement tackles this issue, acknowledging that over-modifying standard contract terms has become a prevalent issue in construction. They also emphasise the importance of minimal contract alterations to ensure transparency and equitable risk-sharing.

One solution to this problem would be implementing a risk-sharing model, where liabilities are capped for both parties. By reducing contract alterations and adopting equitable risk allocation, we can create an environment of trust and transparency, promoting standardised contracts that fairly distribute risks and benefits everyone involved.

Have we really learned from the collapse of major contractors?

Each major contractor collapse prompts a wave of discussion, but too often, meaningful changes are slow to follow. We must ask ourselves whether we have truly implemented the lessons from these events. These incidents highlight the consequences of short-sighted decision-making that prioritises low-cost bids over long-term value, and they serve as powerful motivators for transformation in how we approach projects.

To drive change, we need to translate those lessons into actionable strategies. Regularly reviewing our bidding processes and project outcomes is essential, using metrics such as project profitability and client satisfaction to inform future bids. Industry-wide communication channels where contractors and clients can openly discuss common challenges and share best practices can facilitate knowledge transfer and collective growth. By encouraging a culture of transparency, we can turn challenges into opportunities for improvement.

A consultants role in project success

While many consultants pride themselves on project success, others take the opportunity to leverage their position to maximise fees at the expense of the supply chain. Should they decide to prioritise their own financial interests, it can lead to friction among project stakeholders which can hinder teamwork and collaboration.

It’s essential to engage with partners who align with our collective goals. To ensure this alignment, we recommend evaluating consultants based on their collaboration and efficiency track records.

Establishing performance-based fee structures can further align their incentives with project outcomes. By partnering with consultants who share our collaborative attitude and prioritise transparency and teamwork, we’re able to deliver consistently high-quality results for our clients.

Building a stronger future together

At the heart of this conversation is the future of how we build. These challenges are no secret, and while our opinions may ruffle some feathers, it’s important we address them for the right reasons. Addressing these issues is about protecting our entire supply chain and ensuring the long-term sustainability of our industry.

When clients, consultants, and contractors collaborate under realistic expectations and fair terms, we create a robust ecosystem.