Consultant adds typical £20m project now expected to cost 3% more – wiping out firms’ margins
The impact of covid-19 is causing productivity losses of around 35% on the UK’s construction sites, triggering extensive programme delays and spiralling costs, according to Turner & Townsend.
The firm added that the uncertainty of whether labour will arrive on site, the current 2m social distancing measures and material delays are compounding the productivity gap.
Using data from 70 medium-sized UK construction projects, the company’s Suiko consultancy has modelled that a £20m commercial real estate project with an 81-week programme before the pandemic would typically suffer productivity losses of 20%.
Now, a project of this scale is seeing this rise to 35% with project completion delays of up to 32 weeks and increases of around £600,000 in preliminary costs alone.
Analysis of 45 projects delivered during the pandemic reveals that labour shortages, together with the impact of social distancing, is accounting for around 7% of productivity losses.
A further 1% is being lost through the poor transfer of design information while people work remotely. In addition, late material deliveries or unavailability is leading to another 7% loss.
The sector’s reliance on the flow of global material supply chains continues to cause disruption and although some shortages have been addressed, pinch points in the domestic supply chain are also continuing to impact productivity with delays being reported in the arrival of plasterboard and aggregates.
Stephen Gallagher, principal consultant at Turner & Townsend, said poor planning and inefficiency was a major contributor to the problem.
He said: “UK construction has systemic productivity challenges. In particular, the final phases of a project are typically the most inefficient as contractors are often behind schedule and must throw extra labour at sites to try and get buildings finished on time. This usual fix will not be possible with social distancing and reduced labour.
“In the age of covid-19 the internal fit-out phase is the most challenging because numerous trades are working on site, often out of sequence, and there is a high volume of and variety of materials arriving to site.”
Turner & Townsend has recommended the industry mitigate the impact of covid-19 by embracing digital platforms, offsite construction methods and adopting approaches used by the manufacturing sector to boost performance.
Gallagher added: “Short-term, the sector needs to look at whether it can recover lost productivity on-site through smarter working practices. Lean can help increase productivity whilst dealing with lower resource levels, by removing large amounts of process waste.
“By embracing modern methods of construction, the covid-19 impact on resource levels can be mitigated by taking processes off site.”