A look back at the inquiry which called for a “radical overhaul” of the construction sector

Back in March, the House of Lords launched an inquiry to find answers into why the construction sector continues to lag behind others and, after hearing from scores of invested parties, the committee ruled a radical overhaul of construction was needed to solve poor productivity levels. 

A report published by the House of Lords science and technology committee concluded that if the government was to achieve its aim of building 300,000 houses a year by 2020, then traditional construction methods would need to be shelved and re-evaluated. 

Central to achieving ambitious construction targets would be off-site manufacturing (OSM), according to peers. OSM has been highlighted as key to increasing productivity while reducing labour demands, improving the quality and efficiency of buildings, and reducing the environmental impacts associated with traditional construction.

Chairman of the committee, Lord Patel, concluded that there was “clear and tangible benefits from off-site manufacture” for construction. Patel said evidence received by the committee showed OSM could “increase productivity in the sector by up to 70%”. However, a lack of collaboration across the industry and the sector’s business models no longer being appropriate were not supporting the UK’s urgent need for new homes and infrastructure. 

“OSM requires collaboration between clients, designers and contractors from an early stage but much of the evidence the committee received painted a picture of a construction sector that is fragmented and lacking in trust,” the report added. “These barriers must be addressed by the sector itself and strong leadership is needed from the Construction Leadership Council.” 

One of the committee members Lord Robert Mair, who is also president of the Institution of Civil Engineers (ICE), says the inquiry was called due to a much-anticipated construction sector deal and because housing had become a very big issue and something that everyone was aware that needed addressing. 

Tangible benefits of off-site manufacture for construction concluded by the committee:

• Better quality buildings and infrastructure 
• Enhanced client experience 
• Fewer labourers and increased productivity 
• Creating more regional jobs away from large conurbations 
• Improved health and safety for workers 
• Reduced disruption to the local community during construction

Once it was established what the committee was looking to achieve, a call for evidence was sent out in April. Lord Mair says the committee was delighted to receive a “very big response” with about 80 different written submissions coming from a very wide field made up of clients, consultants, contractors, the insurance industry and the supply chain. 

Oral evidence in the chambers then followed. Chief executives like Tony Meggs (Infrastructure and Projects Authority), Suzannah Nichol (Build UK), and Diana Montgomery (Construction Products Association) were just a handful who have supplied their views in recent months on which peers started to make conclusions on what could improve the sector’s poor productivity. 

The ICE president says both written and oral evidence taken on board helped develop a picture of frustration within the industry and that all parties wanted to avoid outdated models of procurement and practices which were systemic in the sector. Mair added: “None of the evidence surprised us but there was a definite consistency in what we were hearing, in that there was quite a lot that was not satisfactory about the construction industry. We were painted a picture of a very fragmented construction industry with conventional business models of delivering infrastructure not all that satisfactorily. This was a consistent element across all the submissions we received.” 

Mair says that one of the strong recommendations to come out of the report was the fact there was lots of things to be gained by exploring what Project 13 is recommending in a means of improving collaboration and removing barriers. The Project 13 model is an attempt to reassess and rethink the delivery model and prioritise better outcomes for the public and customers of infrastructure and by ensuring the right invested parties are involved together from the outset to lead to much better outcomes. 

"In the inquiry we had to understand what the barriers were and what was holding back the construction sector."
ICE president Lord Robert Mair.

“In the inquiry we had to understand what the barriers were and what was holding back the construction sector, the House of Lords peer said. “It was clear to us there was a compelling case for a much more widespread use of OSM but we heard from lots of witnesses saying that the current culture and structure is not conducive to extensive use of OSM. That was blamed on a lack of collaboration and the system most commonly used making it difficult for all the clients, consultants, contractors to be involved from the very start of a project which is what you really need to maximise the potential.” 

One of the stakeholders to contribute to the report was offsite specialists the McAvoy Group. Managing director Eugene Lynch said: “The construction industry faces significant challenges - low productivity, poor performance in consistent delivery on time and on budget, a growing shortage of key skills and a lack of transparency relating to issues such as life cycle costing and project performance. 

We believe these issues can be addressed with the wider adoption of offsite construction technology, provided the barriers to change can be removed.” The committee’s report also backs the government’s Construction Sector Deal which was published in November 2017 as part of its much-awaited Industrial Strategy, which stated a “presumption in favour” of using OSM from 2019 across the five governmental departments of health, justice, transport, education and defence. 

Mair believes improvements within the industry can be expected sooner rather than later with the government clearly recognising the importance of the sector with construction worth nearly £100bn to the UK economy in 2016. 

He said: “Ministers clearly recognise the value of OSM so we were keen in our enquiry to find what the government meant by that and we very much welcomed its stance to positively encourage OSM and changing the way procurement is done. This is along with the government’s “presumption in favour” of off-site manufacture across five departments, this will provide an important signal to the construction sector that there importantly will be a tight line of projects and provide confidence for companies to invest in OSM facilities.” 

Another potential barrier highlighted in the report is the industry’s ever-growing skills gap. If OSM is to be embedded into the inner workings of the industry, then the government must ensure that young people entering the workplace are equipped with the digital skills needed for modern methods of construction, according to the committee. 

However, there is a change of tune starting to appear within the industry with many believing that more attention is being paid to what is needed going forward with the construction sector deal and the House of Lords report proving there are efforts to overhaul the industry. 

Simon Rawlinson, head of strategic research and insight at Arcadis, said: “It starts to create that momentum of more volume going through the system, more investment, more opportunity, so that gives me a lot of confidence. You’ve got lots of effort being put into finding ways to start pooling demand and people are thinking about developing skills. It is going to help bring offsite out of the holding pattern it’s been in for quite a few years.” 

Despite construction being plagued by lagging productivity levels over recent years, a move to ensuring OSM becomes embedded within the inner workings of the industry has begun with the role of the government and the wider public sector described as “pivotal” by the committee’s chair. 

The next stage of the process will see the government respond and a debate in the chambers likely in autumn will follow. “We have had very good feedback from the report we published,” Lord Mair added. “I anticipate the report will be well received; we are not being critical, we are simply making recommendations. The government remains the single biggest employer of infrastructure projects, so I don’t think change will be a slow-burner. We believe our report makes sure improvements happen sooner rather than later.”