The Brexit Infrastructure Group, led by ICE President Sir John Armitt, is working to highlight the importance of research funding to construction ahead of negotiations on Britain’s European Union (EU) exit.
The construction industry is almost unique in not having seen productivity gains in recent decades, even though the quality of completed construction projects has steadily improved. We know also that the size of the UK construction market is set to grow by 35% over the coming decade. If we factor in the existing skills gap – with KPMG identifying a training deficit of 51% – it’s clear that the UK will not be able to produce the required output at the current rates of productivity.
In 2013 the UK Government and the industry published their 2025 strategy for construction, setting targets of 33% lower costs, 50% faster delivery, 50% carbon reduction and a 50% increase in exports. The benefits to the economy and to society of achieving these targets are well understood. But they cannot be achieved without innovation.
Currently, the construction industry is not sufficiently well structured to deliver innovation without government support, due to fragmentation, uneven workflow and low profit margins. Funding for collaborative research overcomes these barriers.
Recent technological advances have potentially paved the way for a leap forward in construction productivity. The support received to date from Innovate UK, R&D tax credits and EU programmes such as Horizon 2020, has already helped produce some excellent results. Improvements will come from advances in automation, digitisation, supply chain logistics, process automation and smart infrastructure. Skanska has been involved in collaborative research into flexible factories, tagging and tracking of components, condition-based maintenance, gamification of construction design, and more. Government support has played an important part in bringing this about. Continuing support for construction-related research is essential to help achieve the 2025 targets, but there is also a need to develop an innovation culture in the industry.
Evidence shows that the UK has achieved an excellent return on investment in EU research related activities, with a net gain of €3.4bn (£2.9bn) from 2007 to 2013. Construction-specific research is difficult to separate out, as there is often crossover with other industry sectors, but we also expect the transfer of knowledge into construction from other sectors to become increasingly important.
Perhaps the greatest risk of Brexit to construction research comes from threats to academia. Applications are down and given the uncertainty, EU countries and organisations are more wary of involving the UK in future projects. There are also major concerns around the free movement of people. Universities are already seeing applications from the EU dropping quite markedly. Construction research benefits from the impressive capabilities of our universities. A decline here would have significant consequences.
In addition to continued involvement in EU research, we should take the opportunity to build on the strong position of UK construction. The UK’s balance of trade in contracting and consultancy is already positive. Our leading position in digitalisation and smart infrastructure represents massive opportunities, not only to the UK construction industry and the delivery of projects, but also as a highly exportable area of expertise. This is already recognised in the Construction 2025 strategy and within the current focus of the Construction Leadership Council. But there is much to do and a serious need for the industry to truly collaborate to make it happen with scale.
The chancellor’s commitment to guarantee EU-funded project work, including research and innovation, up to 2020, regardless of whether we have departed the EU by then, is welcome. It’s a positive sign. But, as an industry, we must ensure that innovation delivers the productivity gains and return on investment that will justify government support beyond the end of the decade.
We have a tremendous opportunity to transform our industry in terms of productivity by encompassing digitalisation and innovation. But leadership is crucial. If clients and contractors, together with universities and consultants, can work effectively together to make real progress, then we can be more than optimistic for the future.
The Brexit Infrastructure Group will work with negotiators over the coming months and ensure they are informed about the risks and opportunities ahead.
- Mike Putnam is president and chief executive of Skanska UK and member of the ICE-led Brexit Infrastructure Group