It is fundamentally important, for the reasons already highlighted in this review, to involve clients in the process of industry modernisation. The recommendations for integrated industry leadership and CITB reform set out above are both predicated on clients at large helping to drive a new type of demand by physically commissioning advancements in way that we build. Industry, government and clients should seek to build an alliance aimed at fundamentally changing how we approach the entire process of built asset creation.
It is recommended that starting point for driving change should be the CLC's Business Models workstream. The mission of this working party is to drive asset owner and end user value from construction projects, which will require a shift in emphasis from the construction process to an outcome focus and better alignment of industry and client interests. To succeed there will need to be a change in the way that the construction industry works and the role of this CLC workstream is to identify, promote and lead this change.
Figure 18: Construction Leadership Council's Business Models workstream
| 1. | To understand how asset owners' behaviours influence supplier behaviours, and to identify ways where modifications to behaviours will produce better outcomes. This will involve: • Assimilation of GCB, IPA, LGA, ICG work to make Government, Public Service deliverers and Local Authorities "better clients". • Making recommendations on consistency of approach across clients (both public and private sector). • Investigating the role/influence of government to underscore changes to these behaviours. |
| 2. | To work with academic institutions and build on well-documented case-studies and research in the construction sector and establish a clear picture of what "good projects looks like" - for example: • Organisational structures. • Early contractor involvement in design. • Greater collaboration. • Simplified/standardised procurement. • Fair reward and payment for all involved. • Whole-life cost/value, not just construction. • Continuous improvement and the up-take of best practice. |
| 3. | To work with established industry groups, such as Build UK, Specialist Engineering Contractors Group, Professional Institutions etc, to consider the industry's business models, and identify ways to improve efficiency and productivity. In particular, investigate: • Conflicting vested interests in the project/programme life-cycle. • Supply chain integration and interface management. • Cash-flow throughout the project/programme life-cycle. • Risk placement throughout the project/programme life-cycle. • The role of labour only sub-contractors and SMEs. • Definition of best value beyond capital cost. |
| 4. | Make recommendations on what the business model could be, and the mutual advantages this brings to the asset owners and supply chain. |
| 5. | Create a narrative that shows what the industry can become and how this will be achieved. |
| 6. | Draw up an implementation plan to promote: • Understanding of the model by both asset owners and suppliers. • Collective best interest of implementation. |
| 7. | Use housing sector as a priority test bed for the new ideas. |
It is vital that this work is rooted in the real world and is able to empathise with and influence the large grouping of private real estate clients that exist in the industry and attempt to change their buying behaviours. It should not focus unduly on public sector, major projects or infrastructure aligned delivery models as there may be diminishing returns for effort deployed from this approach bearing in mind 75% of all output lies outside of these areas. It should also respect that real estate developers are not always the asset owner and, although they commission construction, they may not have aligned interests to the ultimate occupant or owner of an asset. There is also a large proportion of one off or occasional clients that need to be influenced as far as possible by the outputs of this workstream if wider industry change is to be achieved.
To create an initial scalable model, it is suggested that the housing sector is used as a client integration test bed. This should include not just traditional housebuilders but the likely new participants in a tenure and product diverse housing market including Central Government, Regional Government, Registered Providers, Local Authorities, Build to Rent developers and investors and specialist later living developers and investors.
| Recommendation 3: Industry, clients and government should work together, leveraging CLC's Business Models workstream activity, to improve relationships and increase levels of investment in R&D and innovation in construction by changing commissioning trends from traditional to pre-manufactured approaches. The housing sector (spanning all tenures) should be used as a scalable pilot programme for this more integrated approach. |