1.1 Introduction
The construction industry is concerned with the planning, regulation, design, manufacture, fabrication, erection, construction and maintenance of buildings and other structures. It encompasses the disparate activities of building, civil engineering and heavy engineering. These activities can range from minor domestic works costing a few hundred pounds or major building schemes costing tens of millions of pounds to major transportation and other infrastructure projects costing several billion pounds. Whilst there are certain similarities in the principles underlying the execution of each individual activity or project, their scale, complexity and organisation can differ enormously.
Whilst the demarcation between the aforementioned disparate activities is blurred, the majority of architects are involved solely with building projects in their various forms.
1.2 Significance of the construction industry
The construction industry is an important part of any economy. In the United Kingdom it accounts for approximately 7% of the nation's gross domestic product or Ā£110 billion per annum of expenditure. Some 40% of this expenditure is in the public sector, with central Government being the industry's biggest client. However, the construction industry's share of the nation's output has declined over the past 20 years.
There are certain characteristics that distinguish construction from other industries including:
- the physical nature of the āproductā
- the product is normally produced on the client's land (i.e. the construction site)
- most products are a prototype (i.e. a one-off design)
- the traditional arrangement which separates design from construction
- it produces an investment rather than something to be consumed
- its activities may be affected by the vagaries of the weather
- its processes include a complex mix of different materials, skills and trades
- typically it includes a small number of relatively large construction companies and a very large number of small firms.
The construction industry is a major employer of labour. It employs over 2 million people in the United Kingdom, from the unskilled through to the highly skilled professional. Therefore, due to its significance, the fortunes of the construction industry provide a good barometer of the nation's economic performance. An active construction industry generally represents a buoyant economy.
1.3 A changing industry
The construction industry is sensitive to trends in both the national and international economies, and is affected by such matters as:
- economic confidence
- level of employment
- interest rates
- inflation
- manufacturing output generally
- performance in other market sectors, e.g. retail.
In times of recession people or businesses are usually reluctant to invest. This has a direct effect on the construction industry through a reduction in expenditure on capital projects.
The construction industry continually needs to adapt. It has to respond to advances in technology, changes in government policy and initiatives, and new methods of procurement. This has certainly been the case over recent years.
The demand for improvements in performance is constant and cannot be ignored. Key reviews carried out during the 1990s highlighted the dissatisfaction amongst major clients given the unpredictability surrounding the delivery of projects on time, within budget and to the standard of quality expected. The Latham Report1 identified that this was primarily due to the fragmentation within the process (e.g. separation between design and construction) and the level of confrontation between the parties involved. The subsequent Egan report, Rethinking Construction,2 again recognised the level of dissatisfaction and put forward proposals for improving performance across the industry. It centred around five key drivers:
- committed leadership
- customer focus
- integrated processes and teams
- drive for quality
- commitment to people.
It proposed:
- integrated project processes
- decent and safe working conditions
- improved management and supervisory skills
- replacing competitive tendering with long-term relationships
- that leading public sector bodies become best practice clients.
The report set very ambitious targets which included an annual reduction of 10% in terms of construction cost and a reduction in defects of 20%.
Subsequently, in 1999, the government, recognising the need for improvement in the procurement of government construction projects, launched the āAchieving Excellence in Constructionā initiative.3 It put in place a strategy for sustained improvement in the procurement process and achieving whole-life value for money from projects.
Particular focus was given to the use of partnering and developing long-term relationships, reducing financial and decision-making approval chains and improving the development of individual's skills. The increased use of performance measurement indicators, value and risk management techniques, and whole life costing was also encouraged. Whilst being a public sector initiative, some major private sector clients sought to set similar objectives.
A parallel initiative by Constructing Excellence (see section 1.8.4) sought to achieve a step change in construction productivity through continuous improvement. It focused particularly on innovation, productivity and communicating knowledge of best practice. This was encouraged through promoting networking, collaboration, demonstration projects and the benchmarking of performance.
Many of these aims were reflected in a subsequent review by the National Audit Office Modernising Construction4 in 2001. This also highlighted the need to address more effectively, the operational efficiency over the life of a building.
In 2011, the Government published its Construction Strategy5 and made a damning assessment of the industry, similar to that in the Egan report. Listed amongst many criticisms were:
- the United Kingdom does not get full value from public sector construction
- there is broad consensus, spread across the industry and its customers, that construction under-performs
- there are poor and inconsistent procurement practices leading to waste and inefficiency
- there are low levels of standardisation.
Like the Egan report, the Government Construction Strategy stated an intention to achieve significant savings from reducing costs by up to 20%. It identifies a model for the public sector in which:
- the client issues a brief which concentrates on the required performance and outcome
- designers and constructors work together to develop an integrated solution that best meets the required outcome
- contractors engage key members of their supply chain in the design process when their contribution can create added value
- value for money and competition are maintained by effective price benchmarking and cost targeting, by knowing what a project should cost, rather than through lump sum tenders based on inadequate documentation
- supply chains are, where the programme allows, engaged on a serial order basis of sufficient scale and duration to encourage research and innovation around a standardised product
- industry is provided with sufficient visibility of the forward work programme to make informed choices (at its own risk) about where to invest in products, services, technology and skills
- there is an alignment of interest between those who design and construct a facility and those who subsequently occupy and manage it.
The efforts to improve the level of safety within the industry were reinforced by the introduction of the Construction (Design and Management) Regulations 2007 (CDMR). These regulations have undergone a governmental review that was completed in 2011 and the Construction (Design and Management) Regulations came into force on 6th April 2015.
In addition the sustainable agenda has come more to the fore in all projects both large and small. A growing need for a sustainable approach in the planning, design and construction processes exists, together with sustainable supply chains and the need to measure carbon footprints. This has led to a more extensive consideration of the whole life cost for projects in both the public and private sectors, impacting on both the design and procurement processes.
These and other initiatives clearly show there is a willingness for continued improveme...