The construction question: solutions for a broken supply chain

By Diana Montgomery, Chief Operating Officer and former Chief Executive of the CPA.

Last month, at my last AGM as the Construction Products Association’s CEO, I reflected on a number of the key issues we face as an industry that are cause for concern.

Unsurprisingly (yet somewhat tiresomely) Brexit is the first among these. The CPA has been working hard to help its members plan as best they can for what the uncertain future might hold. We regularly update our economics team’s popular Brexit slide presentation, which analyses the risks and opportunities ahead. The CPA’s website and weekly newsletter additionally provide members with as much information as we have from the various government departments on how the UK hopes to function post Brexit, with or without a deal. Businesses like our members need certainty about their future in order to plan; I sincerely hope this will be achieved in the coming months.

The second pressing issue facing the construction sector concerns its supply chain, the fundamental dynamics of which must be remedied. The symptoms of these structural shortcomings are all too well know – bankruptcies, skills shortages, poor quality builds and safety failures. These symptoms won’t get better if left untreated and to their credit, the government plans to revitalise and innovate the sector with a major investment called the Industrial Strategy Challenge Fund.

What government wants is certainly ambitious: more housing, increased rail capacity, cheaper energy and better public services delivered at one third less cost, 50% faster and with half the carbon emissions. So, the question is how can this be achieved? The government believes – and I agree – that the way forward is to harness the potential of the technological revolution we are experiencing and fully digitise the construction supply chain. We must bring manufacturing techniques on to the construction site or to take construction off site, and use intelligent tech to monitor and improve the performance of the asset.

This will help treat the ailing patient that is the construction industry supply chain. Like most treatments, it may be painful but it’s ultimately what is needed to grow.

Government and the Construction Leadership Council have three levers to pull in order to deliver this treatment. First, government must procure for value as opposed to cheapest price, with a favourable deal for offsite methods of construction. Second, government must properly partner with industry to enable and deliver innovation in the market. This can only be delivered with an appropriate investment in skills training – the third lever.

I’m confident that government, as the country’s largest client of construction, can deliver on these ambitions. And it’s obvious to me, having worked in the construction products sector over the past seven years, that our industry is at the forefront of innovation and therefore best placed to support and push government. We at the CPA have sought to demonstrate this through our most recent publication – an Executive Summary of Innovation in the UK Construction Products Industry, which outlines how much of the R&D and innovation underway marries up with the government’s policy goals.

There’s more innovation possible though, and part of the £167 million Challenge Fund from the government will be spent on this. Most of the money will go on two centres – the Construction Innovation Hub and the Active Building Centre at Swansea. These are designed to increase productivity in the sector through digital systems data and analytics, while reducing energy and carbon costs respectively. Achieving only half the results they aspire to would still ensure the industry progresses to a much better place.

Despite the structural shortcomings I mentioned earlier, the encouraging examples of genuine drivers of change suggest that if we can all work together and deliver with government what has been promised in terms of procurement ‘pull’ as well as funds, then the prognosis for our industry is good, very good indeed.