Today, Doug joined a panel of internationally leading architects and urban designers, including Jan Gehl and David Mackay, to help the residents of Redcliffe in Bristol to develop their ideas and plans for the redevelopment of Redcliffe Way in one of the first initiatives under the new localism bill.
A question following a lecture I gave at the Building Centre the other morning asked why it is that Part L of the Building Regulations is still failing to deliver substantial improvements in building performance. The answer is so obvious that I thought I’d better share it more widely.
“Commercial competition drives quality standards down”.
In the case of building regulation, a previous government thought that it would be a good idea to open Building Control up to competition from the private sector in the form of Approved Inspectors. Once you remove the protected status of Building Control then the whole field of regulation actually becomes one of competition for work.
Now consider, if a Building Control Officer or an Approved Inspector needs to be concerned about where future work will come from, their priority is to ensure that their clients are happy with their service. Happy clients will return or recommend the service to others. This is a basic requisite of business, but it is entirely contrary to the need for a regulator to enforce unpopular regulations. The basic incentive of continuing employment means that the regulator is unlikely to insist on strict compliance but will work to find loopholes for the client to exploit.
Enforcing regulations will inevitably create conflict. That is why the jobs of the enforcers need to be protected against unhappy clients and developers who have fallen foul of the regulations.
There has been a plethora of debate recently about stimulating innovation in the construction industry, but it seems to me that all discussions have missed the fundamental point:
“There is no incentive for construction industry players to innovate.”
Innovation is expensive so there needs to be adequate reward for investment in innovation. In manufacturing, innovation is rewarded by lower production costs or higher product sales, which when multiplied by thousands or millions of products adds up to a considerable incentive.
In construction, a team is assembled to deliver a single product. They may never have worked together before and may never work together again. Some of them may be competitors. The main beneficiary of any innovation is certainly not going to be any of the design team; it is most likely to be the end user who may not even be known at the time of design. How then is the team incentivised to innovate?
Innovation may be in the interests of the developer if this means that buildings are more attractive to customers, but our dysfunctional property market means that the premium for location outweighs that for building performance by such a margin that innovation becomes irrelevant. Further, the developer has the counter incentive to pay the lowest design and construction cost possible to maximise his return in the market.
The reality is that the construction industry won’t innovate unless there is a strong reason for doing so, but that can’t happen with the present property market. Government could lead the way by procuring public sector construction in a way that directly rewards innovators, rather than persisting in least first cost procurement, but that would require joined up thinking which has never been their strength. However that would be a much more productive approach than continuing to lambaste an industry for something beyond its control.
Aviva, on of the UK’s largest financial investment operations has bought up 23MW of domestic PV installations from Homesun, one of the UK’s largest installers of “free” solar panels.
How does Homesun provide people with free solar panels? It allows homeowners to benefit from the electricity generated (if they are at home during the day to use it) but keeps the Feed in Tariff (FiT) payments. Obviously Homesun will have done their homework to ensure that all their installations are on optimally sited roofs (they don’t do installations in Scotland) and as a business I’d guess that they are knocking out installations for little more than £5,000 each with a return of £1,000 PA from the FiT. Of course Homesun don’t use their own money for the installations, they borrow money and now pay a hansom return on those loans, keeping a healthy profit for themselves into the bargain.
Does this sound familiar? In March 2010 I wrote in this blog that FiTs were a public subsidy for the rich and I have gone into print predicting that they would become a means of funneling tax payer’s money to the bankers.
So why would Aviva be interested in Homesun? When the financial markets are in turmoil investors run for low risk investments, typically gilts, but with concerns about sovereign debt even those are not guaranteed anymore. So imagine the attractiveness of a government guaranteed annual payment well in excess of the rate on gilts. That is what Aviva bought when it bought Homesun’s 23MW portfolio, a guaranteed annual income of around £9M. No wonder they were happy to pay some £100M for it.
As I’ve said before: everybody wins, the homeowner with free electricity, Homesun’s shareholders and Aviva’s investors. The only people who lose are those who Homesun judged to have unsuitable roofs, who will fund the FiT payments through increased electricity bills.
Since the recent cut in FiTs, Homesun no longer offers “free” PV installations.
I’ve just had the pleasure of being keynote speaker at Black Architecture’s first breakfast briefing, talking on the subject of Eco-Porn in building design. The event was a huge success and stimulated a lot of high level debate about how the property industry can take the sustainability agenda forward and also deliver substantial additional value for clients and occupiers. (Sorry -Chatham House Rules)
One of the key issues that did arise from the discussions however, was that of language. It is becoming clear to me that we designers do not speak the same language when we talk about sustainability as is spoken by property investors and those who appraise buildings. This results in the standard tick-list approach to environmental appraisal, as we see embodied in rating systems such as BREEAM and LEED, becoming the default intermediary for communicating sustainability between parties. Unfortunately, any rating system that is simple enough that it can be applied universally, by expert designers and non experts assessors alike, must contain elements of compromise. At the moment, that compromise appears to be manifesting itself in a loss of essential energy performance and operational information.
Don’t get me wrong; I am a great fan of environmental rating systems in raising the aspiration for building design. But I don’t believe that when appraising a building we can substitute a single overall rating for all the richness of information that we can convey through proper communication. Building occupiers are increasingly interested in maintenance and running costs and we need to be able to drill down within any rating system to interrogate the underlying performance data and understand how the performance is achieved.
For instance a potential tenant should be able to draw comparisons between a BREEAM Excellent building achieved through energy conservative design which will save them money and one achieved by attaching Eco-Bling post-factum which will cost them far more in the long run. This will require intelligent translation between techno-babble and econo-speak. I’ve said it before and I’ll say it again many times I am sure: if we designers want to be at the forefront of the sustainable property revolution, then we really need to learn a new language to communicate our ideas; that of finance and economics.