Leadership Fragmentation

Distinct but related to the structural fragmentation issues highlighted above is the highly fragmented nature of leadership and decision making in the industry. This is underlined by a fundamental lack of collective responsibility for change and improvement across all stakeholders involved in built asset creation, modification and operations.

The first observation would be that the industry and its clients appear to be operating to a large degree in two distinct spheres with little sign of the inter-dependence that, on paper, should exist between the two. The real estate and built asset investment and development sector is completely reliant on having a properly functioning and effective construction industry to deliver its aspirations which are then either traded or held as financial, social or operational investments, whether it be major civil engineering led infrastructure, schools, hospitals, homes or commercial buildings.

There is no single large scale representative body that represents both industry and clients across all types. The Construction Leadership Council (CLC) does have membership spanning central government (which is also obviously a client), stakeholders from within industry itself (including main contractors, suppliers, SME sub-contractors and consultants) and indeed, the housebuilder client sector. However, it does not have a wider mandate to represent and lead on behalf of the collective industry and its clients. Indeed, looking in the other direction, the British Property Federation (BPF), representing many real estate developers and investors does not appear to have any formal mechanisms in which to interface at scale with the construction industry it so heavily relies on despite having its own construction committee.

The CLC is not a dedicated full time executive body and it has an unenviable task of trying to initiate change, by setting an agenda that has to then be socialised and sold to industry, assisted by CLC members leading by example. Its link to government in a strategic capacity is perhaps the most powerful tool it has rather than scalable direct industry and client wide influence.

The industry's own representative bodies are, generally, highly fragmented and, by implication, often serve only particular subsets of the industry due to the priority being their own members' interests. There has essentially been a lack of joined-up strategic thinking that brings together government, clients, major contractors, specialist contractors (across both building and engineering) and relevant professional bodies. At the time of writing this review, the National Housing Taskforce has just been convened in conjunction with the All-Party Parliamentary Group for Housing and Planning to look at the issues behind housing supply in the UK. This shows a welcome, more joined up approach involving the CIOB, RIBA, RICS, RTPI as well as key representatives from the finance and social housing sector. Although it still does not give 'front line' ownership to private client representatives and industry supply chain participants, which this review highlights as key, this better integration of constituent parts is most certainly the direction of travel required. It is vital that the 'Skills, Materials & New Technology' workstream within this forum thinks both strategically and practically and explores the different mechanisms that can promote construction industry modernisation. It is considered likely that in a housing context, these will sit outside of the traditional housebuilder approach and this should influence focus and effort on formulating its recommendations which it is hoped will be influenced by the findings of this review.

Turning to the government's role in leadership, it is worth highlighting that although government wants to drive an industry improvement agenda, its direct influence as a commissioning client is limited. The CLC's Construction 2025 Report11, which sets out government's and industry's joint ambitions with targets for lower-costs, increased speed, carbon reduction and more exports, look impossible to achieve based on the findings of this review. The focus to date has been on leveraging government's role as a client through adoption of best practice and attempting to influence wider improvements. However, government's role as a client is itself fragmented, with different commissioning agents at national and local level across a range of economic and social infrastructure, including transport, hospitals, schools and housing. It is important that government continues to improve its ability to commission intelligently, with the Government Construction Board providing a forum for this.

In this regard, it is crucial to note that only 25% of the industry's output relates to public sector works (excluding infrastructure). The Construction Output Bulletin from ONS published in May 2016 (Figure 8) showed the value of public sector works as being relatively stable since 1997: moving between 23-26% (other than immediately after the 2008 economic downturn when public sector works represented over 30% of output).

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11 Construction 2025 Industrial Strategy: Government and Industry in partnership, Construction Leadership Council, July 2013.