Tag Archives: Innovation

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

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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.

Innovation Ignorance

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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.