Building the Future Commission: introducing the project delivery and digital stream

In November the Organisation for Economic Co-operation and Development predicted the UK will be the second worst performer in terms of economic performance in the G20 this year. The evidence that Britain is suffering from poor productivity keeps mounting, and the impact is felt in our struggling public services and the decline in our standard of living. And construction is not helping. According to the Office for National Statistics the industry is below the UK average and has showed negative or little growth between 1997 and 2020. Of the various sub-sectors the construction of buildings has fallen the most, with architectural and engineering services showing a similar decline.

There are multiple reasons for construction’s poor performance. Most jobs are bespoke, which means each project has to be designed and built from scratch, making the process expensive and slow.

Modern buildings are becoming increasingly complex making it harder for project teams to deliver schemes where everything works as intended on completion.The industry is also suffering from a skills shortage, exacerbated by the combination of covid and Brexit as thousands of European workers went home and never came back. The workers that are left are aging and are not being replaced as they retire.

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Contractors operate on ridiculously slim margins which means there is not the money to invest in research and development that would improve productivity and there are other cost pressures such as the need to deliver net zero buildings.

There have been multiple attempts by various experts to modernise the industry – Latham and Egan back in the 1990s and more recently the Farmer review, ‘Modernise or Die’. Despite these initiatives, large parts of the industry stubbornly refuse to make the step change necessary to radically improve productivity.

Below we look at some of the key areas the commission is set to explore.

Collaboration

Construction is by its nature fragmented with a multitude of designers, consultants, contractors and specialists coming together to deliver a project and disbanding on completion. This means the different parties involved in projects tend to work in silos.

This leads to duplication of work, adding cost and makes realising the best design and construction solutions less likely.

Contractors frequently say they are not involved early enough in projects to help develop solutions that can be built more efficiently. There has been some progress to tackle these issues, the growth of digital tools has helped teams collaborate more easily, eliminating duplication and improving co-ordination which streamlines the construction process.

The use of preconstruction service agreements allows contractors to add their expertise at earlier stages of design and be paid for their contribution – clients can retain competitive tension by putting out schemes to tender once these have been more fully developed.

But barriers to full collaboration remain because of concerns over intellectual property and, more critically, liability should something go wrong with a project. Initiatives to foster greater collaboration such as partnering contracts and integrated project insurance have never gained much traction with the industry reverting to single stage lump sum contracts when times are difficult. One of the major challenges for the industry is to find ways to promote greater collaboration while addressing the perceived downsides and demonstrating clear benefits for making the change.

Skills

In 2016, the Farmer review warned that the construction workforce could shrink by up to 25% in a decade because of people retiring and a lack of new entrants.

Brexit has made it difficult to employ workers from overseas and construction has an image problem in that people think they will be working outside in the cold and rain which is unpleasant and dangerous. The industry is also seen as male-dominated and white, which is off-putting for women and ethnic minorities and which in turn radically restricts the recruitment pool. At the same time existing industry workers need to learn new skills to leverage digital technology and deliver net zero buildings. They also need to keep up to speed with new technologies such as smart buildings and modern methods of construction. The challenge is to find ways of attracting a bigger, and more diverse, workforce to ensure the industry has the resources to deliver buildings fit for the future.

Offsite manufacturing and standardisation

Taking construction offsite is seen as the solution to many of the industries ills. It takes workers away from wet and cold sites into warm factories which improves productivity, quality and worker wellbeing. Offsite elements can be brought to site as assemblies or modules, greatly speeding up the construction process. And work can be transferred to areas where there are plenty of workers and costs are lower than areas such as London.

Offsite construction also offers plenty of opportunities for standardisation making the design and construction process much more cost effective.

But the adoption of modern methods of construction has had a chequered history despite the supposed benefits. The mechanical, electrical and plumbing (MEP) sector has embraced modern methods of construction (MMC) enthusiastically as there are clear benefits to factory production and bringing MEP elements to site as assemblies and quickly bolting these together. But adoption of less valuable and larger building elements such as walls or even complete buildings has proved more of a challenge. 

The challenge for the industry is find ways to leverage the benefits of modern methods of construction without huge upfront costs and confidence that offsite systems are safe and durable

Clients are wary of new construction techniques that could cause them expensive problems later. And they are cautious about relatively unknown suppliers which, if they go bust, could be very expensive as the whole project might need redesigning to accommodate a new system or traditional construction.

And in many instances offsite elements are more expensive than traditional construction because of the cost associated with setting up factories and the fact these often are not fully utilised.

This is not helped by housebuilders and contractors setting up their own factories rather than using bigger, experienced third party suppliers. This means housebuilders and contractors have to learn all about manufacturing from scratch, and spend a fortune on a factory with enough demand so it does not lose money when the going gets tough.

The challenge for the industry is find ways to leverage the benefits of modern methods of construction without huge upfront costs and confidence that offsite systems are safe and durable.