CONSTRUCTION JOURNAL

The first RICS Built Environment Leaders Forum: digitisation and industrialisation

RICS hosted the first Built Environment Leaders Forum in Parliament Square in July 2018 where key stakeholders debated how to effect much-needed change in the industry

Author: Steph Fairbairn

06 April 2019

The Grenfell Tower fire and the demise of Carillion are two key events that have highlighted recurring challenges in the built environment: productivity, fragmentation, delivery and process waste, and communication. Combine this with globalisation and technological advances and the demand for change in the industry is reaching a crescendo. The industry is inherently aware of this – how could it not be when £13bn is reportedly lost in construction projects in the UK due to poor communication alone? But it is proving difficult to harmonise fragmented and polarised perspectives from key stakeholders in order to begin addressing these challenges and changes.

There is hope for change with huge potential in technological developments, opportunities to learn from other industries and some of the changes proposed in the Industrial Strategy: Construction Sector Deal – but will these be enough? The objective of the Built Environment Leaders Forum was to reflect on this, encouraging wide and insightful debate and in turn gaining and sharing insight to provide thought leadership and guide the development of standards.

The proposition for debate was: 'Digitisation and industrialisation are just the latest construction industry management [attempts at] panaceas: what is really needed is structural transformation of the industry including new concepts of being a client, professionalism and contracting'.

Structural transformation

The argument in support of the proposition stated that while digital developments are important, these cannot flourish without structural transformation. It was argued that in order to achieve this, seamless communication is required, as is a change in attitude towards the concept of cost. An understanding of cost and use of the correct terms is imperative: cost is what the manufacturer pays for supplies, price is what the product sells for, and value is what it is worth to the buyer. Each figure should be higher than the previous, and each is intrinsically linked. It is wrong to ignore the contextual nature of costs, price and value.

This understanding will contribute to better models of procuring and contracting, in turn letting digitisation and industrialised building thrive – something that they cannot do in a cost-based contracting process because there are too many contractual interfaces. The fact that these interfaces are only used once an agreement is made means that anyone brought into the process through a contract has to put a price to a scope that has beendefined already. They therefore have no incentive to innovate. We need to reduce the number of interfaces rather than coming up with more techniques that merely seek to cope with them.

A move towards performance-based costing is required. Ultimately, this means procuring for value and would require redefining the commercial roles and business models in some parts of the built environment. The process should be less contractually oriented and fragmented. The providers of technology should contribute to investment in the longer-term operation of the building, meaning that they, as the supply chain, would no longer be mere box shifters but project influencers.

"The providers of technology should contribute to investment in the longer-term operation of the building, meaning that they, as the supply chain, would no longer be mere box shifters but project influencers"

This approach would mean the sector had some commonalities with the manufacturing industry. For example, in industrialised building one firm owns the entire supply chain and, therefore, has removed the contractual interfaces from the process. It understands the end users as it has direct contracts with them, and the innovation and productivity levels are remarkable.

The end users are key to the structural transformation of the industry. Clients must take a lead on the change, as Heathrow Airport has done with its off-site construction hubs around the UK, and in turn create a more holistic system. The outcomes for the client should also be our focus: integration, communication and commercial management are key. The industry is fundamentally broken and requires change – we must disrupt it ourselves.

 

Digitisation

Against the proposition, the argument was made that digitisation and industrialisation are the key to improving productivity, creating skills and acting as the enabler for the future. It was argued that to do so, a new blueprint for the built environment is needed, driven within the UK by the government's commitment to increase research and development spending to 2.4 per cent of GDP.

The key question is whether our industry can move fasterthan its clients and its environment. In reality, the architecture, engineering and construction industries are sheltered from change, partly by their own inertia and partly by their clients – the construction methods used to build the Parthenon more than 2,000 years ago are still being used today.

Change can't be institutionalised and the industry is resistant to it, but low profit margins and low barriers to entry mean it is ripe for external disruption. That is, we should be adopting the technologies that are helping other industries rather than trying to devise our own solutions to problems; tools that have proven effective elsewhere can help us effect change. The fact that the industry is slow to adopt new ways of working draws attention to wider issues.

"Change can't be institutionalised and the industry is resistant to it, but low profit margins and low barriers to entry mean it is ripe for external disruption"

Perhaps the new concepts of client, professional and contractor are backward- rather than forward-looking. We must consider whether the contractor and professional should be separated, and how we integrate our systems. Above all, the end users are the main priority – they are the owners of the value, and their role in a project is the most important.

Green construction is also an important consideration. Prefabricated buildings are an environmentally friendly solution, cutting waste and reducing room for human error. We must invest in this if we are to achieve the targets set by the Construction Sector Deal.

The world is demanding change, we are in danger of becoming an industry that is outstripped by emerging technologies. We must act to integrate digital into all of our processes, rather than evolving in a fragmented fashion. Digital tools will bring greater transparency and predictability which will drive our industry forward.

Moving forward

Despite differing views on the proposition, the forum agreed on a number of points.

  • The need for change is undeniable.
  • All elements of the proposition are interlinked.
  • The client needs to be the driver of change.
  • There is a lack of leadership and therefore responsibility in the construction industry.

Other ideas discussed included whether professional bodies should be leading the way in terms of integration by merging, whether construction is in fact an industry or a collection of industries, whether sponsorship for construction projects could be a way forward, and how we interpret all of the data we collect.

In terms of professional development, we need new minds with new thinking, professionals with better soft skills to enable better management and integration, and recognition of a longer tail of specialisms to cover the challenges presented by new technology and industrialisation.

What was clear in the first Built Environment Leaders Forum was the commitment from those in the industry to find a way to overcome the many issues that we are facing. With so much change to effect, such commitment is key, and RICS will continue to facilitate these conversations through future forums. We'd welcome your contribution.

Steph Fairbairn is editor of the RICS Construction Journal  sfairbairn@rics.org

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