Cost, carbon and capital

Delegates at the Government Construction Summit next week are facing some big questions and even bigger decisions. The sector is going through substantial changes as new technologies emerge and ongoing economic uncertainty continues to impact on the industry.

The government is expected to address these issues with the launch of its eagerly anticipated Industrial Strategy at the summit. We know it will focus on Paul Morrell’s mantra of driving down costs, increasing supply chain integration and maintaining a commitment to sustainability, as well as cutting edge technology such as BIM.

These are the right issues and they mirror, to a large extent, the “three Cs” of construction identified in RICS’ 2013 Construction Policy: Cost, Carbon and Capital.

But identifying the issues is only half the battle. It is providing a route to solve them and to create a solid industry, not just for the next five years but the next 25 years, which is the real challenge.

Costs

In the current economic climate it is vital that construction costs are kept low. However, to achieve lower costs the construction industry must have the right tools to calculate costs and work efficiently. For this reason the Industrial Strategy should work towards standardised cost measuring tools.

We know the strategy will focus on Paul Morrell’s mantra of driving down costs, increasing supply chain integration and maintaining a commitment to sustainability

Standardised cost measuring is also crucial in helping to lower procurement costs by providing easily comparable data. We would like to see the government, and other clients, using this to not only lower procurement costs but to create a more open and transparent system that will focus on quality and open up frameworks to regional companies and SMEs.

This requires a collaborative approach where government and industry share cost data - something the government’s Industrial Strategy must take into account.

Carbon

Lowering carbon emissions must also be an essential part of the strategy. The government has already put a number of initiatives in place through its Low Carbon Construction Action Plan and we would welcome these coming together under the Industrial Strategy alongside other supportive measures, such as an agreed methodology for measuring embodied carbon.

However, the biggest driver for change will come from a market that values energy efficiency. Initiatives such as EcoPAS, which RICS is championing alongside IPD, and a number of large institutional funds including Aviva Investors, Henderson Global Investors, and Prupim, have demonstrated the appetite for energy efficient buildings.

In addition, a recent government market report showed that sustainable elements in a home can add £16,000 to the value of a property. The benefits of energy efficient buildings are now being recognised. It is now up to the Industrial Strategy to enable the industry to drive this change forward.

Capital

Last on RICS’ list, but by no means least, is capital. Access to finance is proving one of the biggest challenges facing the industry to date, with many SMEs and regional companies being left out in the cold. In many cases it is not the lack of available finance but the knowledge of where to go to find it that is the issue.

As outlined in RICS’ Construction Policy, we would urge the government to address this in its strategy through an online portal that would provide relevant information on available finance to all companies across the UK. The Industrial Strategy is an opportunity to provide a link between initiatives currently in place and those being developed to help the industry. By doing this it can ensure we create an industry that is not only fit for purpose but a world-leader in both standards and technology.

Alan Muse is director of the Built Environment Professional Groups at RICS