The government’s industrial strategy for construction is 12 months in. But what progress has been made and what still needs to be done?
- CLC progress
- A fair Payment Charter?
- Higher efficiency, lower costs
- Embracing technology
- Pipeline certainty vs election doubt
- Image boost prompts fierce debate
- 2025 resonating on the ground?
- Next steps
The construction industry has an image problem. It’s not seen as an attractive career option to enough talented young people, despite the wealth of roles available in a huge variety of disciplines.
It has grappled with payment, has a looming skills shortage, inefficiencies in the supply chain and a workforce that is not diverse enough.
Pressure is building on all industries to become more sustainable and construction is no exception, while securing value for money, especially on public-sector projects, is increasingly vital during times of austerity.
It was with all of these factors and more in mind that the government launched its industrial strategy, Construction 2025, in July 2013 with a promise to “radically transform the industry”.
The document is a 13-year commitment to improve the industry by addressing long-standing issues such as payment and making it a more positive place for everyone to work.
“This is a 13-year charter. We’ve got a lot to do, but I think we’ve made a good start”
Mark Wakeford, Stepnell
The strategy promised to develop a charter for fair payment, to provide clear leadership from industry and government, and to improve the industry’s image to attract the next generation of workers.
It also promised to cut initial construction costs and whole-life asset costs by a third, as well as slicing built environment greenhouse gases in half.
One year on, what has changed? Is the strategy really taking hold across the industry? And will it survive past this parliament to achieve its goals?
A cornerstone of the 2025 strategy is the Construction Leadership Council: this is what makes it different from previous strategies, according to council member and Construction Alliance chairman Mark Wakeford.
The CLC is made up of some of the most prominent figures in the industry and government, and co-chaired by High Speed 2 chairman Sir David Higgins and business secretary Vince Cable.
What has this impressive line-up of leaders achieved so far? “I think the council has found its feet, but it’s still got to find its groove properly,” says National Specialist Contractors’ Council chief executive Suzannah Nichol.
“It took a couple of meetings for everyone to work out who was there and why they were there, and what their objectives were. But it’s got some big hitters and some practical people round the table. It needs to capitalise on that and get some really joined-up thinking.”
“Sometimes we get all caught up in committees - what we want is a couple of clear priorities and some action, rather than getting caught up in talking about things”
Nick Pollard, Balfour Beatty
It is vital that with a long-term strategy such as this one, the leadership team set small, gradual goals along the way.
There is a sense that, although the strategy is off to a good start, more action is needed - and soon.
Balfour Beatty Construction Services UK chief executive Nick Pollard says effective leadership is important.
“With leadership of any kind, it’s important that leaders distil the complex into the simple and clearly set an energetic tone from the top to deliver on the simple priorities - rather than get cluttered by the bandwidth of issues that inevitably are on offer in any complex environment.”
But the call for action must be seen in the context of the work the strategy is doing and the complex nature of its aims.
“I’m aware there’s pressure for the CLC to come forward with the answers, but if it was that easy we’d have done it a long time ago,” Mr Wakeford says.
“Communication is vital and we need to find every way of getting this more visible within the industry.”
It is the responsibility of the CLC and its members to promote the work that they are doing to implement the strategy’s aims.
Liz Male, chairman of TrustMark and a CLC member, agrees that this promotion must improve. “We’ve got some catching up to do, but we’re getting there.”
A fair Payment Charter?
One area the council has taken action on and been particularly vocal about in the past year is that of payment practices in the industry. This Fair Payment Charter, launched in April this year, sets out an aim to reduce standard payment terms in construction to 30 days by 2018.
Although no formal process is planned for companies to sign anything, nine firms represented on the leadership council have agreed to support the charter.
“The issue was that we had to try to pitch it where we could achieve critical mass within the industry - there was no point creating something which only nine people sign up to, as people will just ignore it,” Mr Wakeford says.
“Conversely, we didn’t want to make it so easy that everyone could sign up to it, as this would put those who already pay quickly and promptly in a worse position.”
“We can extend people’s vision for longer, giving them greater security and a sense of where they’re going”
Liz Male, TrustMark
It was clearly a difficult issue, one that required some delicate balancing of interests to get this far - but even so, why such slow take-up? The charter has, after all, been in the public domain for more than two months now.
“It’s a work in progress,” Ms Nichol explains. “Companies can’t physically sign up to it at the moment. Saying that you’ll follow its principles is effectively signing up for me.”
But does the issue of payment terms in the industry actually go much deeper? When the charter was launched, concerns were raised by some that it would reduce the cashflow of main contractors, forcing them to increase their prices and charge clients more.
Mr Pollard says he worries “that there are some fundamental misunderstandings at times in some of the pronouncements” around payment.
“I’d be the last to pretend that our industry has been [made up of] good and kind payers in the past, but our clients have not been good and kind payers either,” Mr Pollard says.”I am absolutely an advocate of paying on time - but I am also absolutely an advocate of being paid on time.”
Higher efficiency, lower costs
Payment will only be improved, of course, if companies and clients collaborate more closely to pay more fairly. This increased collaboration could also result in lower construction costs and greater efficiency.
One of Construction 2025’s stated aims is to achieve a “33 per cent reduction in the initial costs of construction and whole-life costs of assets”.
The previous Government Construction Strategy, overseen by Paul Morrell, held similar ambitions and aimed to reduce public sector construction costs by 15 to 20 per cent by 2015.
A Procurement/Lean Client Task Group was set up to support delivery of this, chaired by Mr Pollard.
“I’m not sure a dynamic industry is being presented to the man on the street”
Suzannah Nichol, NSCC
“The things we proposed around procurement and being an intelligent client have been followed through to some extent by a number of departments and agencies - such as Transport for London and the Highways Agency, for example,” he says.
“All the language around collaboration [in Construction 2025] is directly related to that work on intelligent clienting. That’s good to see, as without it, the 20 per cent savings from that report cannot be leveraged.”
Most of the issues raised by Construction 2025 can be solved with better collaboration - not just costs and payment, but also lowering carbon, increasing the use of technology and improving the industry’s image.
“As we come out of recession, those that control the powers of delivery - the trowels on site, for example - will have more power than at any other time in the economic cycle,” Mr Wakeford says.
“Certainly main contractors are seeing the need for far more overt partnerships and collaborations far earlier on in the process if we’re to secure the calibre of organisations we need to deliver on the promises we make.”
The previous strategy tabled a number of new procurement models that all encouraged early contractor involvement as much as possible. But it emphasised that “no process alone will change performance”, something Mr Pollard still believes is true.
“This needs intelligent, collaborative relationships between industry and customer,” he says. “Without that, and the correct contract forms in place, the efficiencies won’t be achieved.
“It will remain adversarial - if you don’t have the right intent or behaviours, this all falls to dust.”
The use of technology is another way to increase this efficiency and lower costs. Mr Wakeford cites BIM as something both clients and suppliers are increasingly pushing for.
“Even as a regional contractor we’re seeing far more questions around the potential of BIM, and more of our supply chain understand what value it can bring,” he says.
“The priorities should be things that produce confidence in industry - that’s deeply important, as all this is about the future”
Nick Pollard, Balfour Beatty
The Technology Strategy Board has been working to build evidence to prove BIM’s effectiveness, providing funding for its implementation on projects as well as running competitions on digitising construction.
“Demonstration projects can take advantage of the enthusiasm of early adopters to prove the benefits of new approaches,” says TSB head of sustainability Richard Miller.
“Once the change develops momentum there is a demand for new skills that can be satisfied in many ways, from new entrants to the market to CPD for existing professionals.”
Level 2 BIM was mandated for all public sector projects from 2016 onwards as part of the previous Government Construction Strategy. It’s one of the few aims of that previous strategy that has been properly followed through.
Pipeline certainty vs election doubt
The previous strategy also stated that it was important for the industry to have “sufficient visibility of the forward programme to make informed choices (at its own risk) about where to invest in products, services, technology and skills”.
This has also been built on in Construction 2025, with an infrastructure pipeline from government providing more clarity about future work.
The National Infrastructure Plan was updated in December 2013, with the value of its pipeline increasing from more than £309bn to more than £375bn of investment, most of which is in the energy and transport sectors.
“The priorities should be things that produce confidence in industry - that’s deeply important, as all this is about the future,” Mr Pollard says.
“I’m grateful for the support the government has given. But it’s down to the industry to make this happen”
Mark Wakeford, Stepnell
Clear commitments from the government to spend money on nuclear power, energy generation and transport help to increase confidence - and with a clear pipeline of work, the industry is able to plan more effectively for the long term, in turn promoting collaboration and efficiency.
But the pressing question, particularly with a general election less than a year away, is how will a change in government affect this pipeline and the government’s commitments?
“It’s right to look long term, but the biggest difficulty is: what is the sense of continuity beyond the life of this parliament for this plan and how rigorously will it be adhered to?” Mr Pollard asks.
He calls for more long-term certainty around government plans for construction and infrastructure. “It would be good to see a mechanism to lock this in,” he says.
“If the government changes, what will the level of commitment be? So it would be good to see some hard actions dealing with the short and medium term, not just long term.”
Ms Male confirms the CLC is also looking at creating a pipeline for private sector projects, not just publicly funded infrastructure schemes.
“We can extend people’s vision for longer, giving them greater security and a sense of where they’re going,” she says. This creates confidence in the industry, which builds creativity.”
Image boost prompts fierce debate
Securing a robust pipeline of work will be pointless if the industry does not address its growing skills shortage and ageing workforce by attracting more young people.
This will be achieved by improving construction’s reputation - something that the CLC has been discussing at length. Ms Male says this has been the most engaged and creative aspect of the strategy discussions so far.
“There have been lots of ideas for initiatives around young people which have yet to reach fruition, but the creativity I’ve seen is good,” she says. “I’ve seen more groups come up with ideas on this than any other part of the strategy.”
So, has the industry’s image improved in the past 12 months?
“It’s inevitably improved in some areas but it’s a constantly moving environment,” Mr Wakeford says. “I’d like to think it’s getting better in general, but I think what has improved is the awareness that we need to do something about it.”
However, Ms Nichol believes the industry still has a long way to go. “I don’t think it’s changed in the past 12 months, but there are some good discussions going on to ask, ‘What is the joined-up approach we can take to get people to join us?’” she says.
Moving from ideas to actions is proving slow, and there are still whole sections of society that the industry is not tapping into.
“We need to be making our industry a more welcoming place, whether in terms of race, gender, sexuality - these are big priorities,” Mr Pollard says.
“I welcome the UKCG’s Five Faces, Five People campaign - that’s about encouraging more people in and targeting schools and parents to change our image.”
2025 resonating on the ground?
The strategy is not only about attracting more good people into the industry, however; it’s also about nurturing, developing and retaining those great people that are already engaged to become “an industry that is known for its diverse and talented workforce”.
“The first task is to engage leaders, then in time it will engage with all the workforce”
Liz Male, TrustMark
To do this successfully, the leadership council needs to effectively communicate what it’s doing - and particularly what it’s aiming to change - to people right across the industry.
“If you talk about government wanting to see a dynamic industry working together to make itself better so that businesses both large and small can thrive, then it gets attention,” Ms Nichol says. “I’m not sure that is being presented to the man on the street.”
Ms Male agrees, but argues she “wouldn’t expect it to resonate that deeply yet”. “The first challenge is to reach every industry leader,” she says.
“Only when all of them know will they carry the message through. Then in time it will engage with all the workforce.”
The next two years are crucial for Construction 2025, with the general election looming and industry clamouring to see actions come from discussions.
The government has done well so far to bring industry leaders together and to foster honest discussions - but the industry itself will have to take the next step.
“This was a 13-year charter when it came out. We’ve got a lot to do, but I think we’ve made a good start,” Mr Wakeford says.
Most agree that some visible, short-term actions need to come from the CLC soon - whether by better communicating progress that is being made, or by targeting some easy wins first.
Long-term strategies such as this one that aim to make large changes within an industry need short-term, achievable goals to progress.
“The next stage is to move into action and that has started already,” Mr Wakeford says.
“I’m really grateful for the support government has given, using its influence to get the calibre of people to sit round that table. But I recognise that it’s down to the industry to make this happen.”
Mr Pollard echoes this - noting the a danger of getting bogged down in discussion when something needs doing quickly.
“Sometimes we get all caught up in committees - what we want is a couple of clear priorities and some action, rather than getting caught up in talking about things,” Mr Pollard says.
#loveconstruction turns one – celebrate with us!
On 3 July, #loveconstruction will be one year old. We will be celebrating at Construction News with tweets throughout the day, honouring the way that this campaign has taken hold on social media.
But we also want your contributions. Film a short video on your mobile phone of yourself or a colleague saying “I love construction because…”, then email them to us and tweet them on 3 July.
Construction 2025 aims to improve the image of construction, but many people do not realise what a positive force for change the industry can be.
This is an industry you love. Tell people why.