New private sector playbook aims to tackle construction industry’s productivity problem

Research by Graham Robinson at Oxford Economics for Trust and Productivity has highlighted how UK construction productivity growth has fallen by an average of 0.6% each year between 1997 and 2019. This compares negatively to the average 2.8% productivity growth across the period for the whole UK economy, and the 3.9% growth seen in manufacturing specifically.  

The Construction Productivity Taskforce, which draws from construction industry expertise at organisations such as BAE Systems, British Land, Bryden Wood, Alinea,  Cast, Gardiner & Theobald,  GPE, Landsec, Lendlease, Mace, Morrisroe, Sir Robert McAlpine, Skanska, SOM, Turner & Townsend, and Be the Business, cited the research in a new private sector construction playbook (84-page / 4.8MB PDF) – a guide aimed at helping employers, contractors and consultants to embrace collaboration as a route to achieving better productivity and innovation across the lifecycle of a project. Pinsent Masons experts contributed to the contents of the playbook.  

Increasing productivity is “essential” if the construction industry is to address the issues and challenges it faces, from skills shortages to the drive to use resources more effectively and find the money to invest in highly sustainable buildings that meet net zero commitments, the Taskforce said. 

Graham Robinson of Pinsent Masons who was behind the productivity research for Trust and Productivity said: “Productivity in construction has suffered because the industry remains highly fragmented, which has added to the lack of productivity growth. As buildings and infrastructure have become more complex so the levels of fragmentation have exploded.” 

“This downward spiral in productivity and margins for construction also leads to a lack of innovation and change becomes almost impossible,” he said. 

According to the Construction Productivity Taskforce, there are 10 drivers for success in any construction project. These include effective partnerships, an outcome-based approach to project implementation and the adoption of a portfolio and long-term contracting to deliver value, drive innovation and provide for supply chain resilience. It said the economic and financial standing of suppliers should be assessed in a transparent, objective and non-discriminatory way.

Other drivers for success identified include the embedding of digital information flows across the whole life of the asset, involving suppliers early in the construction process, the benchmarking of objectives and the fair and appropriate allocation of risk.

The Taskforce said trust and collaborative partnerships also depend on fair payment, and it further endorsed the promotion of innovation and continuous improvement.

Neal Morris of Pinsent Masons said: “Underpinning the drivers for success that the Construction Productivity Taskforce has outlined are contracts that enable and reward improvements in productivity. Traditional contracting is not suited to delivering the efficiencies and innovation necessary to support productivity gains – there has to be greater, and earlier, dialogue between parties, a rethink over risk and liability, and proper shared incentives to deliver value and innovation. Collaborative contracting models are available to help achieve this, but are still too rarely used in practice.”

In its playbook, the Construction Productivity Taskforce highlighted the potential of modern methods of construction (MMC) for addressing stagnant productivity and in helping the construction industry address other challenges arising in respect of decarbonisation and building safety. It urged industry to “maximise the use of MMC” in individual projects, acknowledging that some compromises on that approach may be needed to accommodate “site-specific demands”.

“Modern methods of construction (MMC) have the potential to transform the construction industry into a highly productive, resource efficient, sustainable sector of the economy,” the Taskforce said. “Building off site can also make construction safer and as it delivers greater precision and accuracy, buildings are safer for those who reside in them. MMC can also help with diversity of people in construction and attract new talent into the industry to alleviate a long-term skills shortage.”

“To become effective on a large scale, MMC will require a greater adoption of standardisation in the design and delivery of buildings across the private and public sector. Greater collaboration and knowledge sharing between clients, designers, contractors, and the wider supply chain as well as regulators, planners, funders, and insurers will help create the scale needed to accelerate the long-term investment required to make a full success of MMC,” it said.

According to the Taskforce, there are opportunities for the construction industry to adopt specific methods that have helped to deliver productivity gains in manufacturing. It has specifically endorsed design for manufacture and assembly (DfMA), which helps drive greater standardisation, as well as a platform approach to DfMA where “shared features of assets within and across sectors, such as structural grids, beams, columns, connectors and slabs” can be identified and embodied. Construction teams are also encouraged to “rethink the logistics solutions employed on construction projects to meet the new business models”.

MMC has also been endorsed by the UK government in its ‘Construction Playbook’.