Opinion

How construction must respond to government’s plans

We’ll seek better flow of information across the supply chain, the use of should-cost modelling (SCM), and to ensure the industry can make a fair margin of profit. Fergus Harradence

Fergus Harradence outlines that the construction sector needs to invest in technology, productivity and sustainability in order to meet the government’s plans. He will address the CIOB’s Adapt & Thrive conference on 24 March.

The UK construction sector has done a great job amid the pandemic, adopting new site procedures allowing the whole supply chain to continue operating to make a significant contribution to the national pandemic response. It has achieved this while largely avoiding significant outbreaks of covid-19 on construction sites.

The challenge now is to maintain these high safety standards, especially with the emergence of new and more contagious variants.

The headwinds can’t be ignored. On top of covid-19, there has also been some disruption to the supply of imported products, caused by problems in the global shipping industry due to a reduced number of vessels, and the new customs procedures introduced at the end of the Brexit transitional period.

Some parts of the industry have seen a reduction in work, especially in the hospitality and leisure sectors. Hopefully a combination of the rollout of the covid-19 vaccines and firms becoming more familiar with the new procedures will see these problems resolved.

Our view of the future

In the medium to longer term, the industry faces the need to adopt new technologies, techniques and working practices based on digital and offsite manufacturing to improve its productivity, the sustainability of its operations and the quality of its outputs.

This will require significant investments in capital equipment, training and capacity building in the workforce.

The industry also needs to prepare for longer term structural shifts in demand; for example building fewer offices or leisure facilities, but finding more work retrofitting homes and buildings to make them more energy efficient.

Finally, the industry needs to prepare for government and other clients demanding infrastructure and buildings that embody and emit much lower levels of carbon, higher standards in terms of building safety and information about buildings, and that it maximises its contribution to delivering wider social and economic value in the UK.

How should companies prepare?

The Construction Playbook, published in December, sets an ambitious vision for how government plans to reset its relationship with the construction industry.

Central government clients will provide greater transparency around project pipelines and build deeper relationships with the supply chain based on longer-term contracts and more collaborative contractual structures.

In return, we’ll seek better flow of information across the supply chain, the use of should-cost modelling (SCM) and benchmarking to underpin a more honest dialogue about project costs, and to ensure the industry can make a fair margin of profit.

The aim is also to deliver fairer contractual terms throughout the supply chain, better payment practices, and to improve the management of risk, as well as avoiding the escalation of issues into disputes, or to resolve these quickly.

It also sets out how government will challenge the industry to deliver better social value, and use new technologies to deliver this and improve its performance. The themes of the Playbook are relevant to the whole industry, and give examples of what firms should be doing to prepare for the future.

What’s holding industry back?

The main obstacles to the industry making progress are its structure, and also its adversarial culture.

The future is a more collaborative one, with closer relationships between clients and firms throughout the construction supply chain, greater transparency and information sharing, and an industry where the majority of infrastructure and new buildings are manufactured, and will form part of a digitised built environment.

The industry needs to be better at understanding the contribution it can make to society, and how it can maximise this, invest in improving its capability to innovate and deploy new technologies and techniques, increase its diversity, improve levels of skills and competency, and deliver better occupational and mental health provision for everyone working in the industry.

A path to the future

The Transforming Construction Challenge, a £420m innovation partnership between the industry and government, which is part of the Construction Sector Deal, is supporting the development of a wide range of innovations, and associated approaches and techniques.

It has supported the use of AI to improve project planning and delivery, digital platforms that support SMEs to use modern methods of construction, and new manufacturing techniques to produce homes and other buildings, including pioneering the use of product platforms (common sets of components) for built assets, an approach that has been very successful in the automotive sector.

In parallel, the Construction Innovation Hub has developed an approach to defining what constitutes value, to broaden the focus of procurement away from capital cost, and is also working on how to embed quality management approaches in the delivery of construction projects.

Many firms of all sizes are improving their performance. Covid-19 has required many to rethink their business processes and onsite operations, and to adapt these in ways that improve productivity to close the output gap created by the need to adopt safer working procedures.

In parallel, we are seeing firms large and small adopting new technologies and investing in the capabilities of their workforce, or recruiting people from other sectors, whether IT or manufacturing, to bring new ideas and skills into the business.

These trends are good, but they need to embed and accelerate if we’re to realise the full value of the industry and its output.

Fergus Harradence is deputy director of construction at the UK Department for Business, Energy and Industrial Strategy.