Staying Ahead of the Legal Change Wave.

Breaking Construction’s Bad Reputation for productivity in the UK

For decades, the UK construction sector has operated in a state of habitual underperformance. It is a reality we have all, to some extent, learned to tolerate. We see productivity that has flatlined for forty years while manufacturing has raced ahead. We navigate margins so razor-thin (averaging 1% to 2%) that a single delayed project can threaten the solvency of a Tier 1 contractor. We sign collaborative contracts like the NEC4, yet we often default to the adversarial behaviours of the past the moment a risk materialises.

We have treated this fragility as "just the way the industry works."

That assumption is no longer safe. A convergence of three pieces of legislation - the Procurement Act 2023 (PA23), the Economic Crime and Corporate Transparency Act 2023 (ECCTA23), and the Building Safety Act 2022 (BSA22) - has fundamentally rewritten the rules of corporate survival.

This is no longer about managing commercial risk. It is about managing existential threat.

The good news is that this crisis offers the precise leverage we need to finally solve the "Collaboration Paradox." By understanding human behaviour and applying well-designed "nudges," we can move the industry from a state of fragility to one of high-performance resilience.

The Legislative "Triple Threat"

We must first understand why the landscape has shifted so violently. In the past, a failure in compliance might lead to a contract dispute or an insurance claim. Today, the interactions between these three Acts create a domino effect where a single failure can lead to criminal liability and market exclusion.

1. The Procurement Act 2023: The Transparency Trap

Fully active as of February 2025, the PA23 is not just a rewrite of EU rules; it is a mechanism for accountability. Its most potent weapon is the Centralised Debarment List.

Previously, a contractor's poor performance in one region might stay quiet. Now, under the Act, exclusion grounds have been centralised and expanded. A minister can place a supplier on this public list for mandatory grounds (like fraud or bribery) or discretionary grounds (such as "poor performance" that led to termination or damages).

For a construction firm relying on public sector pipelines, inclusion on this list is effectively a corporate death sentence. It renders you uninvestable and uninsurable for up to five years. The Act also mandates the publication of Key Performance Indicators (KPIs), meaning your track record is now a permanent, public digital footprint.

2. The ECCTA 2023: Piercing the Corporate Veil

While the PA23 controls your access to the market, the ECCTA23 changes how your internal failures are prosecuted. Specifically, the new "Failure to Prevent Fraud" offence forces a radical rethink of supply chain management.

Under this Act, a large organisation is strictly liable if an "associated person" commits fraud intended to benefit the company. In construction, an "associated person" includes your employees, agents, and potentially your subcontractors.

If a site manager falsifies timesheets to hit a milestone, or a subcontractor fakes environmental certification to get a product approved, the main contractor can be prosecuted. The only defence is to prove you had "reasonable prevention procedures" in place. Furthermore, the Act expands the "identification doctrine," meaning the actions of "senior managers" (such as project directors) are legally considered the actions of the company itself.

3. The Building Safety Act 2022: The Long Tail of Liability

The BSA22 completes the pincer movement. It demolishes the traditional liability shields developers and contractors have used for years. Through Building Liability Orders (BLOs), the High Court can now look through the corporate structure of Special Purpose Vehicles (SPVs) and shell companies to seize the assets of parent or associated companies to pay for remediation.

The Act also introduces the "Golden Thread" of information, requiring a digital, evidentiary trail of competence and compliance throughout a building's lifecycle.

The Existential Domino Effect

Consider how these Acts interact. A subcontractor, under commercial pressure, installs a cheaper, non-compliant fire safety product and falsifies the compliance certificate (Fraud).

1. ECCTA Trigger: The main contractor is prosecuted for "Failure to Prevent Fraud" because they lacked reasonable digital assurance procedures.

2. BSA Trigger: The safety failure attracts a Remediation Order, and because the SPV is empty, a Building Liability Order targets the parent company's balance sheet.

3. PA23 Trigger: The fraud conviction or the significant safety failure becomes a ground for mandatory or discretionary exclusion. The firm is placed on the Debarment List.

In this new world, "business as usual" is a path to insolvency.

The Collaboration Paradox

Why do we find this so hard to fix? We have the contracts. We have the technology.

The problem is what experts like Dr Martin Perks of Black Pear Advisory call the "Collaboration Paradox." This is the cognitive dissonance between our contractual intent and our operational behaviour.

We sign contracts that demand "mutual trust and cooperation," but we operate in a commercial environment of low margins and high stress. When humans are stressed, we revert to what psychologists call "System 1" thinking - fast, instinctive, and defensive. We become susceptible to biases like:

• Optimism Bias: Believing we can recover a delay without reporting it, leading to hidden risks.

• Sunk Cost Fallacy: Throwing good money after bad to fix a problem rather than stopping to reassess.

• Status Quo Bias: Bypassing new due diligence checks because "we've always used this supplier."

We cannot legislate these human traits away. Instead, we must design around them.

The Solution: Behavioural Nudges

This is where we can be optimistic. By applying Nudge Theory - the science of influencing behaviour through the design of the "choice architecture" - we can align our daily actions with these new regulatory demands. We need to make the compliant behaviour the easiest behaviour.

Here are three practical nudges for the senior manager:

1. The "Pre-Mortem" (Fighting Optimism Bias)

Instead of a standard risk workshop, hold a Pre-Mortem at the start of a project.

• The Nudge: The Project Director announces: "Imagine it is 2028. We have just been placed on the Debarment List because this project failed. Write down the history of how this happened."

• Why it works: This reframing makes it safe for the team to voice their deepest concerns (e.g., "the supply chain is insolvent") without being seen as negative. It turns "dissent" into "insight," allowing you to fix the fraud or safety risk before it happens. This also serves as evidence of "reasonable prevention procedures" for the ECCTA.

2. The "Opt-Out" Due Diligence (Fighting Status Quo Bias)

To protect against the "Failure to Prevent Fraud" charge, you must verify your supply chain.

• The Nudge: Change your procurement software settings. Instead of asking managers to request a background check on a new supplier, make the check automatic. The manager must actively "Opt-Out" and sign a waiver to bypass it.

• Why it works: It harnesses inertia. When compliance is the default, people naturally comply. Bypassing the check becomes the high-effort action.

3. Salience in Tendering (Fighting Present Bias)

Procurement teams often focus on the lowest initial price (Present Bias), ignoring the long-term risk of the triple threat.

• The Nudge: Redesign the tender approval document. Place the "PA23 Exclusion Risk Rating" and the "Safety Competence Score" at the very top of the page, in large font, before the price is listed.

• Why it works: We give disproportionate weight to the first information we see. By making the existential risk salient, you force the decision-maker to view the price through the lens of safety and compliance.

Conclusion: A New Attitude for a New Era

The legislative cage has been built. The Procurement Act, ECCTA, and Building Safety Act have closed the exits on the old, adversarial, risk-dumping model of construction.

But this is not a cause for despair. It is a mandate for modernisation.

For the client senior manager and the construction professional, the path forward is not to add more bureaucracy, but to understand the human engine of your business. By acknowledging our biases and using well-designed nudges, we can break the Collaboration Paradox. We can build firms that are not just legally compliant, but psychologically safe and commercially resilient.

The threat is existential, but the opportunity is transformative. Let us choose to adapt.