More consolidation; more confidence, and above all, more use of technology. That’s what’s needed says Peter Hansford as he leaves the role of government chief construction advisor.
Margins are simply too low. We have to fix it. We can fix it.” So says the government’s chief construction advisor Peter Hansford as he prepares for life outside of the Department for Business, Innovation and Skills (BIS) and as the industry prepares for life without a chief construction advisor.
Hansford has had three years as the industry’s conduit to government and he is leaving with some firm messages.
Progress has been made, he says, but there is still much to do before the UK construction industry is truly fit for purpose.
Fundamentally, it is about consolidation says Hansford, reflecting on the point made so perceptively by Sir John Armitt in his recent ICE Presidential address - that, in his view, the Continental business model of contractors using in-house design teams gets better designs.
“It is a broken business model here and it needs radically fixing,” agrees Hansford.
“We almost certainly need a smaller number of players who will invest in people, processes and research.”
Much of Hansford’s time as chief advisor has been spent creating, launching in July 2013 and then advocating delivery of Construction 2025, the government’s industrial strategy for construction.
Laing O Rourke s state of the art facility Explore Industrial Park in Steetley 64647
It’s arguably the Latham, or Egan, or Wolstenholme report of the age, and Hansford believes it stands up to scrutiny.
The advisory council that Hansford set up to deliver it had all the right ingredients – digital engineering and industrial construction pioneer Ray O’Rourke was the first name signed up and that set the tone.
“Ray was tough, challenging and brilliant,” recalls Hansford. “And the report has stood the test of time.
“I haven’t heard anybody say it’s wrong. People may say it’s too challenging, or not challenging enough. But not wrong,” he says.
If we boost productivity by use of technology, that in itself makes the industry more attractive
There were key elements. One was to tackle the high cost of UK construction not by cutting margins but by looking more at construction as a process. He cites the Smart Motorway programme as an example of progress here.
“Smart motorways are delivering the same capacity improvement, but in half the time of conventional road widening. That’s how you do construction 50% quicker,” he says.
A key part of that is standardisation and offsite, industrialised construction – and that is itself entirely driven by technology.
We’re a timid industry - collectively. Why is that?
The job of continuing to advocate delivery of Construction 2025’s vision now falls to the recently restructured Construction Leadership Council. And Hansford believes it must now step up and play a big role.
“Government is now expecting industry to lead,” he states.
And here he is concerned. “We’re a timid industry - collectively. Why is that?” he asks. Is it because the government has led it for so long? Is it because the government is its biggest client? Whatever the reason, it is seen as timid compared with the aerospace and automotive industries - certainly that is the view in government circles and here at BIS.
8% of GDP
“Yet construction is much, much bigger than those two industries together. It contributes 8% of GDP, it employs 3M people - that’s 10% of the working population. We are a really big player but we don’t behave as if we are. We are almost apologetic,” he says.
And the solution? Well it again comes back to consolidation - and leadership.
“We are so fragmented. If we had some much bigger players we could make much more of an impact. Look at Bouygues in France; look at Siemens in Germany,” he says.
Bouygues in France is far, far more than a construction company, owning TV stations, telecoms companies and all things in between. It is a similar story with Siemens in Germany.
“They have their fingers in many pies and so become influential,” states Hansford.
“Fragmentation has got to be tackled at all levels,” he stresses. “At an institutional level, at a trade body level, at a supply chain level and at the life-cycle level.
“Industry structure and industry leadership are two big areas to crack,” says Hansford.
So who - if anyone - is showing that leadership?
“The big clients have an important role to play,” says Hansford. “Anglian Water, of course,” he says. “And Highways England. And Heathrow.”
Leading the collaboration charge
Anglian Water has for years now led the charge around collaborative, outcome-led working, arguably picking up the industry baton from Heathrow, post Terminal 5. And Highways England gets singled out for praise for the way it is embracing technology to achieve its outcomes in different ways.
From the contractor pool Laing O’Rourke, Costain, Skanska and Kier get a mention and Arup and Mott MacDonald are singled out in consultancy.
But Bouygues gets the biggest mention. It’s UK chief executive Madani Sow is leading the supply chain and business model workstream for the newly reformed Construction Leadership Council and Hansford thinks he will bring a “really healthy view” and encourage challenge.
And that challenge cannot come quickly enough. “I think innovation is being unblocked but I would like to see much more modular construction. A lot of our skills and productivity issues relate to insufficient use of technology.”
Self perpetuating loop
Hansford believes this could become a self-perpetuating loop, with the use of technology - in itself making the industry more productive - drawing in more recruits attracted by the new look and feel.
“If we boost productivity by use of technology, that in itself makes the industry more attractive, so we draw in more people, and solve the skills shortage twice over,” he says.
A lot of this is now resting on the leadership council now that Hansford’s role is not being refilled.
And Hansford does have worries here. “I do worry that the glue will be missing,” he considers.
“In the new structure we have got the leaders of the workstreams who will make it happen.
“And we have got a secretariat provided by BIS. But the glue that holds it together is not obviously there.”
At least there is confidence in the new structure, with it now battle-focused on the key areas that matter,
Smaller leadership council
“The original leadership council was too big. We knew it would be too big but we wanted everybody inside the tent. We didn’t want people sniping at us from the outside,” explains Hansford.
A streamlining was always inevitable, explains Hansford, and May’s General Election provided the perfect excuse.
“The new ministers said it needed to be streamlined and that worked for us. So that’s what we did. We cut it down to 12,” he says.
Movers and shakers
Council members are now not representatives, explains Hansford, they are movers and shakers - people who will make things happen.
The Council also has to find a way to work with the new National Infrastructure Commission, of which Hansford is a big fan.
He sees the appointment of Lord Adonis to lead it as “inspired”. But he warns that it should not be seen as a panacea and stresses that whatever the Commission recommends, government will have to decide.
“Ministers have to decide. That is the reality,” he says. “For any project, you need a strong engineering case, a strong business case and a strong political case. And if you are missing any one of those then the project will fail.
“The Infrastructure Commission will give a strong engineering case.”
Bonfire of the trade bodies
Peter Hansford’s desire for consolidation extends to the number of bodies that seek to represent the industry.
It was the bugbear of his predecessor Paul Morrell and after three years as chief construction advisor, Hansford has reached the same conclusion.
“There are just too many industry bodies. Paul Morrell said there were 140 of them when I came in. I think he underestimated. They are all having their subs paid, so they must be giving some value. But how can you run an industry with 140-plus bodies?” asks Hansford. “Isn’t there a better allocation of all that money?”
Hansford says he “really welcomes” the recent merger of the UK Contractors Group with the National Specialist Contractors Group to form Build UK. “That was a really good move. I would love to see much more of that.”