The construction industry faces a combination of challenges unlike anything it has survived before, according to Mark Farmer – the author of last year’s seminal ‘Modernise or Die’ report.
Mr Farmer told the Building Engineering Services Association (BESA) national conference that an ageing workforce; poor productivity; rising consumer discontent prompted by poor quality new build housing; serious financial problems among Tier One contractors; and Brexit, which would hit inward investment, were combining to threaten the industry’s ability to deliver projects and remain financially viable.
Mr Farmer said the industry was standing on a “burning platform” and urged everyone to continue to support his vision of a digital-led future where innovation dictated future skills development in order to avoid total collapse.
“This is not the same old same old,” he told the conference at London’s Park Plaza Riverbank Hotel. “Construction has risen to serious challenges in the past, but we are now facing a set of problems that we haven’t seen before.”
He outlined three key areas for change:
- The need for clear leadership and institutional reforms that better integrate clients, industry and government;
- A productivity led change agenda letting innovation dictate future skills development and which clients and supply chain can either lead or respond to;
- With the Government playing a critical role in the strategic initiation of change across both of the above.
“The industry has an ageing workforce and large parts of it rely on a migrant workforce from the EU,” said Mr Farmer. “We are failing to attract enough people in the 16-24 age group – so we have a growing capacity gap likely to be made worse by Brexit.”
Labour shortages, including the skills gap, mean the industry needs to move to higher levels of off-site/pre-fabricated content linked to digital procurement, according to Mr Farmer, who said this could also address some of the quality issues dogging the industry – upsetting its clients and hitting profits.
He pointed to a series of sub-standard new housing projects and major quality failures like the Edinburgh schools calamity that had stirred up consumer discontent. He said the Grenfell Tower disaster would also “shine a light on the systemic failings” of the whole design, procurement and construction process – and could prove to be the much-needed catalyst for change.
“We are still delivering projects that are 95% complete with some snagging…more people are now saying ‘that’s not good enough’,” said Mr Farmer.
He called for the sector to move to new digital models involving off-site manufacturing, with more standardisation and where delivery was not so labour intensive. This would reduce the number of interfaces between project teams, each of which increased the risk of mistakes and conflict.
“We work in silos, which create inefficiencies,” he said.
Mr Farmer believes that Building Information Modelling (BIM) can play an important role as part of digital transformation. However, he said that the people developing it are currently “just talking to each other…it is not hard-wired into the reality of the industry” and the same goes for collaboration, with both regarded in some quarters as “the end and not the means”.
“It will not work if we procure digitally, but continue to construct in an analogue way,” he told the BESA conference.
BESA’s legal and commercial director Rob Driscoll applauded Mr Farmer’s conclusions. He said BESA supported his call for the industry to adopt a digital engineering and smart whole-life asset model supported by digital business and payment systems along with project-based insurance to encourage buy-in from all parts of the supply chain and clients.
“We have the digital tools and now need to focus on growing the skills needed to make them work,” said Mr Driscoll who, the day before, addressed the Digital Construction Week event on the need to move to digital tendering, procurement and award and contract management systems.
“This all goes hand-in-hand with a digital payment model that offers suppliers peace of mind and the freedom to invest and innovate. That is where the government can play a critical role,” said Mr Driscoll.
“The fact that even Tier One contractors are struggling to make a profit at a time when the market has been relatively strong proves that the current model is broken. Hopefully, there are now enough negative factors in play and positive momentum to bring about profound and lasting change along the lines outlined by Mr Farmer.”