Why we must transform

The housing, construction and education ministers recently issued a joint response to my review of the UK’s construction labour model entitled Modernise or Die.

The title was deliberately chosen to jolt the industry and the government into recognising the scale of the problems we face. Some people have not liked the negativity of the headline, but I make absolutely no apologies for this. It was meant to provoke a reaction, and if we are going to sort things out once and for all, it’s time to stop dancing around the real issues. It is therefore good to see that government has apparently listened, with ministers acknowledging the overall diagnosis, the seriousness of the prognosis, and supporting the overall direction that I recommend for industry to future-proof itself.

No doubt the government’s interest in acknowledging and hopefully helping to deal with these problems is driven by political reality rather than deep-seated emotional attachment to construction’s welfare. Although we have not had the political support that the automotive and aerospace industries have, we must now seize the opportunity in the upcoming “sector deal” to help resolve our issues.

The current government’s promises in terms of housing and infrastructure delivery, training and skills development, combined with the risks posed by Brexit mean the burning platform we have been sitting on for so long has effectively been doused in petrol. The sector deal is our chance to ask the government to help us build a new platform.

If the industry chooses not to reform, with or without government support, the simple upshot is that the future prosperity of the UK is at risk. We are entering a period where we will be losing more workers than we are gaining, and this rate of attrition has every chance of worsening.

If the industry chooses not to reform, with or without government support, the upshot is that the future prosperity of the UK is at risk

We simply will not be able to increase our physical output. The recent spate of poor financial results from large contractors at a time when industry output has been booming can only serve to act as a prompt that something is seriously and systemically wrong with construction.

Some will say we are a resilient industry and our current problems are chronic, recurring and nothing out of the ordinary. I disagree. I would suggest that looking at what has happened in the past gives us little indication of what the future may hold. There are unprecedented structural, societal and demographic changes under way that mean historic datasets and behavioural precedents have reducing relevance going forward.

The stakes are high. We need to be moving quickly to a more integrated delivery model that uses innovation in physical construction processes combined with different procurement approaches that focus on aligned interests and outcomes. We need to be attacking waste and inefficiency at every opportunity to fund the right levels of margins needed to be sustainable but ultimately affordable to end consumers.

The sector also needs a new breed of workers. Digitalisation must be the enabler of every process and discipline from architecture to stone masonry. This is the only way we are going to successfully engage with Generation Z, who represent our potential intake of new workers for the next decade.

We are pitched in a war for talent against industries that are much more aligned to the way the latest generation has grown up. We need to attract more people but also maximise retention through sustainable and interesting long-term career opportunities, as well as improving productivity in a way that still motivates and excites. Although the innovation imperative must ultimately lead and define skills development, without sufficient high-quality appropriately skilled resources, our industry will slowly spiral into decline.

I have repeatedly said that clients have a key role to play in reforming our industry. The government’s decision to hold off on my suggestion of a future client levy to force modernisation is, at this stage, the right one. I proposed it as a last resort and was not seeking immediate implementation.

If it has to come back on the table in the medium to long term, it will unfortunately mean that clients will have much bigger problems on their hands than avoiding a 0.5% surcharge. Let’s all hope we don’t get to that point and the carrot of better outcomes for all avoids the need for a stick.

I sense a wind of change is starting to blow though the industry but it’s still too early to tell whether we are at the start of a new era for construction. I hope, however, that the renewed focus my review has provided, perhaps aligned with extraordinary events such as Brexit and the recent tragedy at Grenfell Tower, act as the combined catalyst for us to start addressing our failings.

The government has recognised this, and needs to lead as a central client and policy maker. Progressive regional and local government bodies, private sector clients and industry organisations must now also rise to the challenge and together effect positive change.

Mark Farmer is founding director and chief executive at consultant Cast and author of the industry report Modernise or Die