Competition in the construction industry is a dysfunctional travesty of the real thing

I was astonished by Richard Threlfall’s statement that “the construction industry is one of the closest to perfect competition” (Recovery position, 4 July 2014, pages 30-32). Nothing could be further from the truth. Competition in the construction industry is a dysfunctional travesty of the real thing.

Price competition in free markets is the most important single force in the modern economy. This competition has two roles: to ensure that the customer gets the optimum balance of cost and quality in their purchases, and to ensure that suppliers strive continuously to win business by constantly improving their production methods.

Competition in construction fails on both counts: our customers hate doing business with us, and our production methods remain the most primitive in the modern economy. These facts were demonstrated by the original Key Performance Indicators studied by Constructing Excellence (CE) over the decade from 2000 to 2010. These showed that predictability, productivity, profitability and many other measures failed utterly to show any sustained improvement over the period.

The problem is that we persist in trying to create buildings - arguably the most complex products in the modern economy - using primitively poor, inherently untrustworthy information. Contractors (and increasingly consultants) compete to win projects, they do not compete on their ability to deliver them. This is a crucial, crippling feature of life in our industry. But with luck, model-based building design will change that.

If you’re looking for something useful for government to do, I’d suggest that they reinstate the KPI data gathering and analysis work that Constructing Excellence were doing until a couple of years ago. Then we could at least measure our performance - without it we’re just guessing.