The government’s formal response last week to Mark Farmer’s report, Modernise or Die, did not hold many surprises.
While endorsing the majority of Mr Farmer’s proposals, Whitehall has been eager to point out that action around several recommendations is already under way, including reform of the CITB and efforts to boost residential delivery through modern methods of construction, as outlined in the housing white paper.
At the same time, the government has made clear that it expects an active contribution from industry to address the challenge posed by the Farmer Review: that of raising productivity through investment in new skills and methods.
The elephant in the room remains how to fund and facilitate the necessary change.
A third way
Whitehall has passed over Farmer’s recommendation to charge 0.5 per cent of a project’s construction value from clients that cannot prove how they are delivering skills and innovation improvements, on the grounds it would risk damaging developer confidence and lead to cost inflation.
At the same time, although the Construction Leadership Council (CLC) is pushing for a £250m sector deal from Whitehall through the Industrial Strategy Challenge Fund, direct investment by the state beyond this is unlikely to be forthcoming.
There is, however, a third way, which is to leverage major programmes as a means to building capacity and capability within our industry.
“As Mr Farmer suggests, it is essential that the government, clients and the construction industry share responsibility”
In guaranteeing a pipeline of work, these projects provide the certainty the supply chain needs to invest in innovation. By thinking intelligently about how we design, commission and deliver these programmes, we can build the skills and methods the sector needs for the future.
We have already seen this with programmes like Crossrail, which has helped create world-class capability around tunnelling and underground rail infrastructure that can now be exported by UK plc. HS2, with its high-speed academies, is building on these earlier advances. Long-term frameworks such as Highways England’s Road Investment Strategy are similarly being designed to encourage innovation in skills and methods as a means to boosting productivity on the network.
Job with the most potential
Private sector programmes on this scale are fewer and further between, but in the UK the biggest opportunity lies in the expansion of Heathrow. This scheme is at the most opportune phase of its development, with the client taking a hands-on approach to designing the supply chain.
Forging close partnerships with suppliers across the UK to build the capacity and skills needed to deliver a highly efficient project is being placed at the heart of the programme. More productive working practices and innovation will be enabled through Heathrow’s hub logistic plans, which will also offer opportunities for the supply chain including SMEs and manufacturers across the whole country.
These ideas – like those from the Farmer Review – are not completely new and were central to the development of the largest major project at Heathrow, T5. Boosting productivity through offsite construction and the standardisation of design elements – more akin to the manufacturing sector’s approach – enabled productivity and innovation to be embedded in the project.
What has changed now is the urgency with which these techniques need to be developed and rolled out not simply on a single programme, but across the sector. As Mr Farmer suggests, it is essential that the government, clients and the construction industry share the responsibility for doing so.
Together, we need to identify how the skills and innovations developed for one part of the sector or one programme can be harnessed to boost productivity in others – and to then shape programmes accordingly.
As the burden is shared by all three parties, so the benefits will be – in the form of world-class capacity and capability which drives industry innovation and ultimately the productivity of UK plc.
David Whysall is head of cost and commercial management – infrastructure, at Turner & Townsend