Reducing Third-Party Risk In The Supply Chain

Modern slavery is one of the risks construction businesses have to manage across their supply chain, and it is a real problem in the UK today. It takes many forms, from human trafficking to forced and bonded labour, and over 10,000 people were referred to the authorities in 2019. Forced labour, which is common in construction, is the most prevalent form.

When large construction organisations take on project management roles, they appoint contractors who in turn sub-contract further. That creates a supply chain that is rarely transparent, yet the project manager remains legally accountable for the status of everyone working within it.

PwC estimates that over 70% of organisations have a moderate to high dependency on third-party agencies. That dependency is exactly where visibility drops away, because a project manager can rarely be sure of the status of every worker their sub-contractors use, even though they are accountable for it.

The consequences of getting it wrong are severe. A breach of requirements such as the Modern Slavery Act 2015 can bring fines running to millions, plus reputational damage that costs work and clients and can end a business. Almost half of organisations in a recent Deloitte survey believed the financial impact of a third-party failure had doubled over five years.

The TierOne Project's risk capability maturity model lets a construction business assess its third-party landscape across four areas:

The model returns a maturity ranking and a set of prioritised recommendations, so a business can see where it stands and where to focus first. In 2021 the TierOne project launched the framework and piloted it with construction giant Multiplex. An experienced team of construction, safety consulting and labour experts trialled it against one of Multiplex's biggest sub-contractors, and advised them on their greatest areas of risk across quality, reputation, workers' status and conditions, and data protection.