Challenging the construction industry
Published:  14 October, 2009

LONDON: A decade after Sir John Egan published his 'Rethinking Construction' report which challenged the UK construction industry to change the way it does business, the transformation remains incomplete and the industry now finds itself standing at a crossroads with a storm looming on the horizon.

With green shoots starting to appear in parts of the wider economy, some in the construction industry might be tempted to simply hold their breath and hope to ride out the difficult conditions. This would be both a lost opportunity and a terrible, if not fatal, mistake.

As the review team at Constructing Excellence have found, difficult times still await the industry. Private capital expenditure is being delayed, public spending is under tremendous pressure and ambitious environmental targets are being implemented.

In the review team's opinion, these challenges can and should be used as a catalyst for change to strengthen the industry. The construction industry is worth over £100bn/year and contributes 8.7% of the economy's gross value, therefore improving its efficiency and ensuring that it can deliver a built environment fit for the future, is in the best interest of everyone.

Andrew Wolstenholme, chair of the review team said: "There is no doubt that Egan had a big impact on some parts of the industry but the transformation remains incomplete. For the last decade, the construction industry has been sheltered by a strong economy. The current economic crisis is the perfect opportunity for us to restart the process and create a built environment sector this country deserves."

Egan' s Report examined the efficiency of the sector, set targets for cutting capital costs (10%), improving predictability and productivity (10%) and eradicating defects and accidents on site (20%). It also recommended that the industry adopt the 'lean' production techniques pioneered by the car industry and a partnering approach to business.

The report, entitled Never Waste A Good Crisis, has found that while the industry is moving in the right direction, it has fallen well shorts of Egan's targets. Both safety and profitability have taken reasonable steps forward, but progress on all other areas has been disappointing with an annual improvement of less than 3%.

Based on the input of over a thousand industry professionals who completed online questionnaires, in depth interviews with key industry figures and key performance indicators from over 500 demonstration projects, the review highlights the issues that continue to stifle progress in the sector. These 'blockers' are identified as business models based on short term cycles, a fragmented industry, poor integration in the supply chain, and a lack of strategic commitment at senior management and Government levels.

The review also sets out a future agenda for UK construction, including some quick fixes, and identifies one the greatest challenges for the sector as being the delivery of a built environment that supports the creation of a low carbon economy.

Sir John Egan comments on the review: "Since 1998 we could have had a revolution and what we've achieved so far is a bit of improvement. I would give the industry 4 out of 10. The opportunity remains just as large today, with the added incentives of harder economic times and major environmental pressures. So I congratulate the team on a thorough review and on pointing out the next steps on the way to radical improvement - every crisis is an opportunity."

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