Industry needs to move to more sophisticated ways of working, says former Balfour Beatty boss Dave Smith
Once this pandemic is over, it will be very easy to return to the old ways – and some will. But, hopefully, most of the industry will see the bigger picture and adjust their business for the right sectors, scale, attitudes and work together for a better outcome.
A more successful recovery will occur if there is the sort of collaboration and proactive togetherness that we saw emanate after the Second World War and the innovation and entrepreneurial spirit that took off.
There are several things we can do: increase direct procurement, which would remove the waste and delays in complex competitive tendering; we should also improve contract negotiations to encourage more pain/gain activity and collective outcomes for all.
But it is a growth in offsite manufacturing, firstly to assist in reducing social distancing risks, but eventually to increase value for money and improve productivity, that could be the real disrupter and the biggest single change in our industry.
We have talked about this for 30 years with some success but it is still only around 3% of the total sector.
It makes no sense that this figure is so low. The industry has been broken for 50 years or more. It fails to deliver to original time or budget commitments, whether it is a major programme like Crossrail or regular one-off projects.
The only significant improvements we have seen have been the step-change in safety and a small, improved commitment to social value.
Procurement practices have got better – but there is still an adversarial undertone too often, while the sector has no market leader and is too fragmented. Margins generally do not reflect the risk of what we do. When the industry is at its best, it has a lot very innovative and progressive thinking. But it is not valued.
Is this the moment, then, when we can challenge ourselves to fundamentally change the industry?
We need to create improved margins for everyone, build to faster programmes, improve quality, productivity and end-user satisfaction and reduce waste and energy.
Offsite manufacturing can force design to be integrated and digitised from a very early point. It can create design needs to be relatively fixed and signed off similarly. It will reduce energy consumption on site dramatically, remove 90% of site waste and cut programme times by at least 25%. It can also reduce the number of operatives needed – and therefore travelling times – and create a much more thermally efficient building that saves energy for the life of the building.
So how do we increase the current 3% to 50% of the market?
The government and industry need to mandate certain principles. We need to create a cross-industry board that sets the direction and rules for scale, standardisation and continuity to force growth.
If we can regulate metrication and specification and compete on service delivery, scale and quality, we can change the market and increase margins and grow our GDP share.
What will we see because of this change? The significant take-up in 3D printing to improve efficiency, the use of technology to push the boundaries of design, manufacturing, acoustic and fire treatments along with thermal efficiency. It will also mean the true integration of whole life design and costings as maintenance and capital budgets are re-engineered together to force efficiency and value.
All this would have another benefit as well: recruitment. By reinventing itself like this, the industry would be seen as an attractive place to work for the young and diverse as they realise its complex, engineering challenges make it a market that is seen as an exciting and progressive sector.
Dave Smith is non-executive chairman of Claritas and was managing director of Balfour Beatty’s construction business in the south of England