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Sydney Lenssen Human cost cutting

The past week has seen the unveiling of the Government's three- year spending plans, and also publication of the Egan report 'Rethinking construction'. Resulting future prospects depend on a mix of wishful thinking and pious hopes.

Every day, details of extra public money have been trumpeted with political vigour and minimum regard for clarity. More road maintenance, school and hospital building, switching from private to public travel, all these measures must help construction. The big question is whether the economy stays on track and allows the Government to deliver the extra funds.

If it turns out our industry benefits, that will be merely coincidental. The reason for the extra investment is that the country has a backlog of neglect. Roads, schools and hospitals are falling apart and barely serve their purposes. Nobody is looking to create or save construction's jobs.

Deputy Prime Minister John Prescott appointed Sir John Egan and the Construction Task Force to help get better value from construction spending. If schools and hospitals can be built more efficiently, then the political compulsion and society's need for improvements will reduce sooner. Any savings won't be ploughed back into more building.

Egan's line of reasoning is different. He hopes to kick industry practice into the next century, with annual targets of 10% cost reduction, 10% time reduction, 20% more projects completed on time and budget and 20% fewer defects. In return he sees scope for construction to benefit from 20% fewer accidents, 10% productivity increases and 10% higher turnover and profits.

He does not believe that construction can sort itself out alone, and claims change needs to be client-led. His purpose in urging construction to deliver better value is to enable clients to expand and boost profits.

Egan is convinced that improved practice will gain more work for this industry. Yet the Task Force report highlights steel-making as a beacon of competitive progress. British Steel today produces more steel than 20 years ago, but employs 40,000 rather than 200,000.

The report does not attempt to forecast what might happen to the numbers employed in construction if its target cost reductions are achieved. That is curious, because wage bills dominate those costs which are controllable.

The Task Force does deserve a big cheer when it deals with the industry's commitment to people. It wants to see - and claims that clients are prepared to pay for - decent site conditions, fair wages and more care for health and safety. It calls for the training and development of committed and capable managers and supervisors.

'Much of construction does not yet recognise that its people are its greatest asset and treat them as such,' says Egan's report. 'Too much talent is simply wasted... construction cannot afford not to get the best from the people who create value for clients and profits for companies.'

One person who always made people his first priority was Maurice Milne, who sadly died last month. He was perhaps most widely known as deputy to Sir William Harris in the Ministry of Transport, both responsible for the busiest and most productive period in the building of Britain's motorways. His many professional achievements included two four-year stints as president of the Permanent International Association of Roads Congresses.

In the early eighties he came out of retirement to help the department with the privatisation of the Road Construction Units. Morale among the RCU's dedicated public sector engineers was rock bottom. They felt that they were being thrown out despite doing a good job.

Looking back now, I suspect that most of the people who transferred found that the private sector offers more varied opportunities, and few would harbour regrets.

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