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Sector deal: 7 key details to take on board

Following the government’s delayed release of the construction industry sector dealCN analyses the agreement’s stand-out features.

Finally, some recognition

The industry has long complained that the government does not appreciate the sector’s importance. A revolving door of construction ministers have presided over few industry-specific policies and a lack of strategic emphasis.

However, the sector deal appears to mark a major shift – not only in the commitment of funding, but in the statement of intent.

Certainly, the language used in the deal’s executive summary recognises the value of the sector to the country: “The life of every person in Britain is affected by the construction sector. It is one of our truly nationwide industries.”

The acknowledgement of the sector as a major employer as well as recognition of its geographical reach and diverse partnerships is undoubtedly welcome.

The Carillion additions

The sector deal was delayed as a result of Carillion’s collapse, so it is unsurprising to see a raft of measures relating to some of the poor practice its liquidation has exposed.

Government will support the Construction Leadership Council to develop ways to improve contractual and payment practices, as well as boost performance based on “lessons learned” from Carillion.

The government hopes these measures will combine with its established commitments on publishing late payment data to the benefit of SMEs. It is likely, however, that many smaller firms will reserve judgement until this becomes a reality.

Technology, technology, technology

Branded by the minister as a deal built on “bytes and mortar”, the government repeatedly emphasises the role technology can play in improving the sector.

Bemoaning the fact construction has lower levels of digitisation than sectors such as retail or goods manufacturing, the sector deal argues that innovations such as AI can help create a “technology-driven business model.”

And there’s money behind these ideas, such as the £250m Transforming Construction fund being aimed at increasing spending on R&D across the board.

This money could be critical, as few contractors have spare cash to invest in R&D. However, things will only change if the investment is matched with a commitment to implementing new methods.

Acknowledging the skills crisis

Speak to any industry leader and it won’t be long before the conversation turns to skills shortage.

There was recognition of this in today’s announcement with the addition of a 2020 target of 25,000 apprenticeship starts and 1,000 construction T-level placements.

It’s not clear exactly how these targets will be met and the document still asks a lot of questions about what exactly can be done to tackle the crisis, but the industry will no doubt be pleased that the government is taking one of its major challenges seriously.

Procurement promises

The sector deal definitely reflects a greater understanding of procurement’s role in industry transformation – and the power this gives government.

There are a number of pledges to use government procurement to enact industry change, many of which centre on the idea of redefining value criteria so that it “takes into account more than cost”.

Also included is a pledge to remove bureaucracy from the process, with the government to develop a standardised cross-industry prequalification process and questionnaire that can be adopted across the public and private sectors.

Retentions decision

Lurking in the background of those sections discussing payment practices and contracts is the spectre of retentions.

Mentioned several times directly in the document, there is a promise to publish a response to consultations on retentions.

Considering that a number of industry bodies have decided to disagree quite publicly about the best route to end retentions, what the government decides to publish could be a defining moment in whose voice it will listen to.

Broken business model

Getting the attention of government has also brought into focus some uncomfortable truths for the industry.

The sector deal doesn’t pull any punches, describing the current business model as unsustainable, criticising clients and contractors for being focused on the costs and risks of projects, and slamming the failure to collaborate effectively.

It’s clear the government expects construction firms to work harder and more intelligently. Though Whitehall will look to play its part, this will be on the basis that the industry modernises itself.

Construction sector deal: Target timeline

Nov 17 A presumption in favour of offsite construction for suitable capital programmes from 2019 for five departments announced in the autumn 2017 Budget
Industrial Strategy Challenge Fund (ISCF) Wave 2 announced with £170m allocated to Transforming Construction fund
Industrial Strategy white paper published – including a high-level overview of the construction sector deal
Dec 17 National Infrastructure and Construction Pipeline and Transforming Infrastructure Plan published by the Infrastructure and Projects Authority
May 18 Final report of the Independent Review of Building Regulations and Fire Safety published
Jul 18 Construction sector deal published
Summer 2018 Establish a network of centres of excellence and demonstrator projects to support the development of smart construction for housing
Dec 18 50 new apprenticeship standards developed by the construction sector working with the Institute for Apprenticeships
Improve availability and affordability of insurance products for homes built via smart construction techniques including offsite and MMC
Construction Leadership Council (CLC) strategy for international and exports published
Jul 19 CLC to conduct annual review of sector deal implementation
Dec 19 Implement in full the recommendations of the CITB Review (published in November 2017)
2020 Industry to have increased the total number of apprenticeship starts in the sector to 25,000 a year
Develop and publish a common approach to procuring for whole-life asset value, and cost and performance benchmarks for built assets
Develop standardised industry training modules in key areas such as health and safety and management and leadership
2021 Develop and demonstrate new building designs based of digital building designs, and associated manufacturing technologies, techniques, and performance and quality standards
Deliver measurable improvements in productivity, and the level of pre-manufactured value in built assets



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