Race to the Bottom

Posted on June 19, 2013 by Doug King

The built environment is of vital importance to the creation of a sustainable society and construction needs to be considered as being for the public benefit. Decarbonising the UK building stock will not be easy or cheap and it requires concerted effort and co-operation across the supply chain. The capitalist free market is no longer an appropriate mechanism for the construction industry if we are to deliver the new paradigm.

Despite numerous spectacular failings in the delivery of IT and defence projects, our political leaders persist in their faith in the free market. Thus least first cost tendering is now applied across all aspects of public procurement for construction, from initial design right through to the regulatory functions. Where the Government leads the private sector will surely follow.

Open competition certainly does drive down prices but it is equally clear that it does not deliver real value or quality.

Any student of economics can tell you that people respond to incentives and that competition creates perverse incentives. Consider the case of the exam board official caught out last year feeding prior knowledge of exam questions to teachers at a training event. When schools are judged by exam results and exam boards compete to attract schools to use their examinations, they will do whatever is necessary to capture business. The market has created an incentive for perverse behaviours by exam boards including dumbing down the questions and advising teachers which areas to focus on during revision.

Nowadays even Local Authority Building Control has been forced into competition with approved inspectors. There is no longer any protection for the regulatory function. Developers will select their inspection services based not only on fees, but also on who is likely to give them the easiest route to compliance. So, just as with the competing exam boards, there is an incentive for building inspectors to be lenient in order to encourage future business. Any inspector who rigorously applies the regulations is likely to be quickly out of work. How can we therefore expect the statutory regulation function to be rigorously and impartially executed?

So, if our system of statutory oversight is compromised, can we rely on the supply chain to deliver the quality and performance improvements we need? I don’t think we can, as I said in a previous article ‘The Root of the Performance Gap’.

When I started as a young engineer, the practice I worked for had a policy of disregarding the lowest tender when we were evaluating mechanical and electrical subcontracts. You could almost guarantee that the lowest bidder had cut his cloth too thin and that performance on site would suffer, leading to poor quality and a continuous battle over proper completion of the works.

These days however, I find that clients not only appoint the lowest tenderer for every service, but that they also try to negotiate the price even lower. Yet it is clear that lowest cost tendering incentivises suppliers to deliver the lowest level of service that they can get away with. I contend that this actually leads to increased overall cost due to the additional management and supervision required to ensure that the bare minimum requirement of the specification is fulfilled.

However, given the urgent need to decarbonise the UK building stock, simply achieving the bare minimum of the specification is not enough. Every party in the construction process needs to deliver over and above. We need an industry in which every individual actively contributes to achieving a long-term vision rather than being focussed on short term financial goals. We need an industry in which selection is on the basis of performance and lifecycle value.

I suspect however that the public sector is still wedded to competitive tendering and we won’t see the necessary leadership for some time to come. In the interim, a step change in construction performance and value could be achieved by simply changing tender rules. There are lots of clever ways to structure competitions to achieve best value rather than lowest cost. However, a simple first step would be for the public sector to commit to taking the second lowest bid in any tender. At a stroke this would remove the incentive to bid at unrealistically low levels. The construction industry would then be able to concentrate on delivering value rather than recouping its losses.

What Have the Romans (Government) Ever Done for Us?

Posted on May 17, 2013 by Doug King

The long awaited Government Industrial Strategy for Construction will be published next month. Here’s a suggestion for what it could say and what I think it probably will say:

What it could say:

The UK construction industry is capable of great feats of innovation, but it needs the support of enlightened, intelligent clients to deliver to its fullest potential. This Government will therefore address the shortcomings of public sector procurement to demonstrate that the public sector can be an intelligent client which no longer stifles innovation, focussing on least first cost rather than value and attempting to transfer all risk to the private sector.

What it probably will say:

The UK construction industry does not innovate often enough. Therefore, whilst maintaining the current public procurement structures that favour compliance and accountability over innovation, Government will introduce ever more restrictive rules that will force the Construction Industry to adopt expensive and un-necessary practices such as BIM in the hope that this will in turn force more collaborative working and somehow lead to more innovation.

Government, national and local presently persists in pursuing risk transfer over innovation and least cost instead of best value in public sector procurement. The recent spending cuts have unfortunately merely reinforced the focus on least first cost by setting short term financial targets. A better outcome for the country could be achieved by refocusing procurement on value so that savings are replicated year on year rather than pursuing least cost today at the expense of tomorrow.

Government also continues with its rhetoric about supporting SMEs and promoting innovation in construction. However it persists in policies that are aimed at transferring all possible risks to another party. Thus it creates the conditions for procurement under which only the largest and safest (ie least innovative) companies can be selected.

It is clear that BIM is going to be used as a Trojan Horse to try and force collaborative working on an industry that is poor at collaboration. However the industry does not collaborate as the present public sector procurement structures actively dis-incentivise collaboration. I am a fan of BIM as a tool, but not as a blunt legislative instrument (look at what has happened to renewables and BREEAM). Until procurement and incentives for construction are re-designed collaboration simply will not happen, with or without BIM. In the meantime the expense of deploying BIM will further prevent Government procurement from engaging with the Innovative SMEs that it purports to support.

Government now has the chance to be an intelligent client for construction and in doing so provide the leadership for the rest of the public sector, and eventually the private sector, to become intelligent clients too. Government could demonstrate the benefits of client intelligence in delivering lower cost, better performing, sustainable construction. Government needs to invest in technical expertise within its departments. Much of what Government is presently doing is evidently well intentioned, but ultimately flawed as it simply does not recognise the differences between construction and other industry sectors. Initiatives and incentives that work in manufacturing or aerospace simply do not translate into the construction sector. A restored, expert civil service would consult with the construction industry to create an intelligent system for procurement, financing and operating public sector projects to everybody’s benefit.

I want to hear that the Industrial Strategy for Construction will commit Government to investing in the reform and demonstration that is essential for the industry to move forward and be genuinely sustainable. Not only in what it constructs, but for the sake of our economy, to become sustainable as an industrial sector, able to compete against international encroachment into UK construction. If the Government cannot do this for us we may as well give up and go home.

Fashion Not Function

Posted on May 2, 2013 by Doug King

The ridiculous fashion for urban wind turbines is still showing no sign of abating with the erection of BSkyB’s new turbine at its West London studio complex. Perhaps the continuing political insistence for ineffective on-site renewable generation is to blame. It is not just successive national governments and fashion-following local planning regulations, but all too often we find that corporates are now playing to the populism of green. This collective disregard for engineering reality forces building owners and developers to pay for sub-optimal solutions and forces architects and engineers to try and justify the essentially unjustifiable in defence of what has been forced on them. AJ Footprint 25th April

If you ask a primary school class where we should build wind turbines, the answers usually range from “on top of hills” to “out at sea”, anywhere it is windy. By the time those children arrive at the final year of their architectural degrees the answer has often become “attached to my building as an icon”.

Unfortunately the very nature of buildings is to disrupt the smooth flow of wind which is essential for efficient energy generation. The increased friction due to surface roughness in urban areas reduces the potential power in the wind dramatically. At the height of BSkyB’s turbine, it is only half that of rural areas. In city centres the power available may be just 15% of the open country equivalent (full explanation here).

This location effect is generally accounted for by applying a capacity factor to the theoretical maximum generation of a turbine. The rule of thumb for UK wind power is to assume a capacity factor of 30%-35% for good onshore installations. The generation figures quoted for BSkyB indicate a capacity factor of just less than 15%. Thus the same turbine, at the same cost, could generate more than twice as much electricity if it was not shackled to a building. This doubling in output would more than offset the grid distribution losses (around 6%) to deliver the electricity back to BSkyB in West London.

Two identical Enercon E70 Turbines. The one on the left produces 3.5GWh whilst the one on the right produces 5.7GWh.

Two identical Enercon E70 Turbines. The one on the left produces 3.5GWh pa whilst the one on the right produces 5.7GWh pa. The difference is due to surface friction.

Apart from the very obvious branding potential, urban wind turbines have little going for them. It is time that politicians, national, local and corporate, stopped interfering and let engineers and architects make the best technical systems decisions for genuinely sustainable development.

Measure Progress Not Just Carbon

Posted on April 28, 2013 by Doug King

I have been thinking for a little while about the suitability or otherwise of the metrics we use to measure sustainability. Given peoples’ reactions at a few meetings recently, including the Edge Debate on the Politics of Carbon Measurement and a conversation with the UK Consul for Climate Change in Chongqing, I think that the time has come to look seriously at this issue.

Presently we attempt to measure the impacts of what we build, but we rarely measure the beneficial outcomes. Therefore we risk focussing attention on all that is bad and forgetting the good. Taken to extremes we could end up going backwards socially and economically in order to address the political imperative to deliver zero (or at least very low) carbon buildings. For example, many sub-saharan africans live in housing that would easily satisfy the Zero Carbon Hub’s definition. However if we were to adopt housing of this standard in the UK it would not be considered social progress. This rather exaggerated example highlights the need to find some form of metric that acknowledges the benefits of expending some carbon in certain circumstances in order to deliver social and economic progress.

I was involved a few years ago in a new headquarters building for CAFOD in Lambeth. The building followed closely on the heels of two other charity headquarters, Heelis, the National Trust HQ and the Woodland Trust HQ, and it received comparatively little attention. Perhaps this was because the CAFOD building was mechanically ventilated and cooled, whereas the others were natural ventilation exemplars. CAFOD had to be mechanically cooled as the tight urban site available required a very high occupancy density to accommodate the entire organisation, whereas the other buildings were on suburban or extra-urban sites with plenty of space for low occupancy density and natural ventilation. On the face of it this means that the CAFOD building was both more expensive and had higher carbon emissions. However these standard metrics of cost and carbon per square metre of space do not account for how the buildings can subsequently be used. I decided to look again at the buildings in terms of the occupancy. Occupancy rates are after all what office tenants will be most interested in. The results completely reversed the ranking of the three buildings as shown below.

Whilst the metric of carbon per desk or carbon per worker is certainly much more useful than carbon per square metre in linking impact to business targets, an even better metric would link carbon to a measure of business success, such as productive hours or added value. Thus at a stroke we would be able to distinguish between well designed environmental buildings that reduce carbon and promote productivity and those that pay scant attention to the design and bolt on EcoBling to achieve the carbon reduction.

Take hospitals as another example. Lots of good work has been done in the past on identifying the quality design factors that influence patient outcomes, by providing a better working environment or recovery environment. The NHS metric for energy efficiency is presently kWh/m3 per year. Using such measures as targets can create perverse incentives. A hospital could economise on carbon by reducing ventilation rates, but this would increase recovery times and cross infection rates. A better metric for the NHS would surely be kWh per bed, to account for spatial efficiency, but in order to measure the real success of hospitals we should link energy efficiency to patient outcomes. Perhaps a metric of kWh per patient discharged. The shorter the stay in hospital the better the outcome for both the patient and the NHS and the less energy expended in achieving the outcome.

Designing these new metrics will be complicated to get right. As soon as any measure is adopted as a target it creates an incentive and we must ensure that the perverse incentives in the system are as few and as little impact as possible. However any work in this area has got to be better than simply sticking with metrics that incentivise unrealistic outcomes for the businesses that have to occupy the buildings. If those of us who work in sustainability want to see positive outcomes from our efforts then we must find means to set the importance of carbon reduction within social and economic context that will deliver better business outcomes too.

China’s Conservation Culture

Posted on April 22, 2013 by Doug King

Having spent the last 2 weeks in Chongqing, China’s fastest growing industrial city, I realise on returning to the UK last week just how cosy and indolent our western economies have become. China is a powerhouse of making and doing, whilst we luxuriate in our undemanding jobs, manipulating imaginary paper wealth whilst ignorantly squandering natural resources in our disposable consumer society.

It is forecast that some 300 million Chinese will join the middle classes this decade. This is in addition to China having the fastest growing urban population in the world. The pressure on Chinese cities and their economy is phenomenal, but they are preparing for it. Our guidebook to Chongqing, published in 2011, lists only one metro line. We arrived to find that they already have four, with seven anticipated by 2015! Compare this with the 20 plus years it has taken to get London’s Crossrail underway.

But it is not just the phenomenal rate of development that I believe will set China apart, it is their culture of conservation and re-use.

Walk down a street in any Chinese city and you can find people who can repair, re-purpose or recycle just about everything you can imagine, from building materials to mobile phones. Demolition sites are immediately picked over for re-usable materials and you can find plenty of trade in recovered reinforcement and plywood shuttering from concrete. Cardboard packaging is collected from high street shops and carried off in huge bundles by little old ladies.

All the litter bins in public places, not just on the street, but out of town too, are all segregated for recyclable and non-recyclable, as you would find in Germany or other more enlightened Euro countries. On corners throughout the cities you will find the street cleaners sorting and packaging up the waste from the litter bins for re-use or recycling.

With a street food culture such as China’s you would expect to find large quantities of disposable food containers in the litter bins. However, you will also find people collecting the containers, clearly for re-use. One might question the hygiene implications of such a trade, but it is unquestionably avoiding substantial quantities of plastic going to landfill, reducing the costs of packaging for the food businesses and providing a subsistence income for the recyclers.

This culture of avoiding waste has clearly grown out of necessity. However, if this culture can be retained and nurtured, particularly in relation to Chinese manufacturing industry and the emerging middle class then there is no question that it will result in a fully developed economy that is far more resource efficient than we can boast in the West.

Whilst we in the West merely debate the principles of a circular economy, the Chinese live and breath it. The disposable consumer culture of the West is simply not for them, and long may it remain so.