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Select Committee on Public Accounts Second Report
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IMPROVING INDUSTRY PERFORMANCE
Co-ordination of initiatives aimed at the construction
industry
20. The Department of the Environment, Transport
and the Regions are promoting several initiatives to disseminate
good practice to the construction industry. Many industry bodies
have also been established to promote improvements reflecting
the large and diverse nature of the construction industry. Some
members of the industry find it difficult, however, to identify
the best source of assistance and where to devote their time to
facilitate the most improvement in their company or organisation.[18]
21. We asked the Department of Environment, Transport
and the Regions what could be done to refine and co-ordinate this
variety of bodies and initiatives. They said that the diversity
was not surprising, since the construction industry had 1.9 million
employees and has 140 different institutions representing a very
broad range of interests. The arrangements were complicated but
those working in the industry could relate to their own industry
body, which in turn could relate to the various industry programme
initiatives which the Department were promoting.[19]
Demonstration projects
22. As part of the Movement for Innovation initiative
contractors and clients have been encouraged to put forward demonstration
projects which reflect innovation and good practice from which
other companies and their clients can learn. By May 2000, however,
of 171 demonstration projects submitted only 31 had resulted in
case histories promulgating good practice.[20]
23. The Department was asked by the Committee how
they were ensuring that the projects selected demonstrated lessons
worth learning. They said that, when the demonstration projects
were launched, the first priority had been to capture the enthusiasm
of the industry to participate and to get companies to volunteer
projects. The criteria to qualify as a demonstration project were
now much tighter and the results of each project in terms of improving
construction performance had to be capable of measurement.[21]
Construction Best Practice Programme
24. The Construction Best Practice Programme was
established in February 1998 and in 1999—2000
cost £2
million. It is intended to raise awareness across the construction
industry of the need to change, to identify good practice and
disseminate it to enable companies to take action to improve.
It is estimated, however, that the programme has only reached
9 per cent of those working in the industry.[22]
The Department told the Committee that 9 per cent of the working
population of the construction industry represented a considerable
number of people and said there were difficulties in communicating
within an industry which has many different characteristics. It
was not possible to compel companies to follow the programme's
good practice. The key priority was to have a consistent improvement
strategy and to incentivise the industry to implement it.[23]
Commitment of the construction industry to improve
25. The Construction Industry Board was set up in
1995 to represent all sides of the industry and to promote improvements
in its performance. In June 2000 the Board reviewed its role and
responsibilities, and its remit was changed to develop policies
that would lead to improvements in the performance of construction
firms.[24]
We asked what the Board had been doing for the last six years,
and whether there was a lack of commitment on the part of the
construction industry to improve. The Department said that the
Board had made progress, but the industry needed considerable
help to modernise, as it consisted of a wide range of companies
of different types and sizes, operating in different sectors with
some more willing to improve than others.[25]
26. Such initiatives mainly involve large companies
dealing directly with government while further down the industry
the contact tends to diminish. It is important to involve the
whole industry. We therefore asked the Department what percentage
of the construction industry was involved with the Construction
Industry Board. The Department estimated that the Board represented
about 90 per cent of construction companies. The 10 per cent not
represented included small companies or the self-employed, who
elect not to become members of any trade association or other
body. The Construction Industry Board also comprised four umbrella
bodies representing a collective membership of over 150 trade
associations and professional institutions (Figure).[26]
Investment in research and development
27. In 1999—2000
the construction industry, with a business valued annually at
£65
billion, invested only £147
million in research and development. The Committee asked the Office
of Government Commerce if that low level of investment was another
factor demonstrating that the industry lacked the will to improve.
The Office said that, because the profit being earned by the industry
as a whole was low, it was difficult to find more money for research
and development and for training its workforce, though larger
construction companies were earning much more. The 1998 Egan ReportCRethinking
ConstructionChad
concluded that margins in the industry were too low to sustain
healthy development.[27]
The Department said it was possible that not all of the research
undertaken was being recorded.[28]
Conclusions
28. Given the size of the construction industry,
there is likely to be a role for a variety of organisations in
promoting good practice. The current range of advice on offer
carries the risk that people in the industry may find it difficult
to identify the source of assistance most appropriate to their
circumstances and where best to devote their efforts to bring
about improvements in the industry's
performance. The Department of the Environment, Transport and
the Regions working with the Construction Industry Board, should
develop a clearer marketing plan for the various improvement initiatives
with better signposting for potential users so that they can find
the most appropriate source of advice.
29. Demonstration projects which reflect good practice
in construction performance are an important means of disseminating
lessons. As at May 2000, however, only 31 of the 171 demonstration
projects submitted by the industry since November 1998 had been
accepted as demonstrating benefits which could be transferred
to other projects. The Department of the Environment, Transport
and the Regions assured the Committee that the criteria to qualify
as a demonstration project are now better defined. The Department
should nevertheless work with the Movement for Innovation to develop
a more robust method for measuring the performance of these projects
and sharing the lessons with the industry.
30. The Construction Best Practice Programme was
established in February 1998 to raise awareness across the construction
industry of the need to improve, to identify good practice, and
to disseminate to companies. It is however, estimated that the
programme has reached only 9 per cent of those working in the
industry. That figure admittedly represents over 170,000 people;
and difficulties also exist in communicating within an industry
which has many different characteristics. The Department of Environment
Transport and the Regions should nevertheless explore ways in
which the programme can be better presented so that it reaches
a higher proportion of the industry's
workforce.
31. The drive to improve the performance of construction
projects depends on public and private sector clients improving
their performance in their purchasing and management of construction
and also on the industry delivering better quality services. The
Department of Environment, Transport and the Region's
are seeking to work with those in the industry who are committed
to these changes. The Department should convince all sectors of
the construction industry of the benefits to both suppliers and
clients of achieving long-term improvements in the performance
of construction projects, and should secure the commitment of
all sectors of the industry to achieving that goal.
18 C&AG's report HC 87 (2000—2001) paras 13, 1.15 Back
20 C&AG's
report HC 87 para, 1.13 Back
22 C&AG's
report HC 87 para 1.9 Back
24 C&AG's
report HC 87, paras 1.5, 2.18 Back
25 Qs
38—40, 47—49, 56, 71 Back
26 Qs
62—63 and Evidence, Appendix 2, pp 18—19 Back
27 Rethinking
Construction by Sir John
Egan, published by the Department of the Environment, Transport
and the Regions and the Stationery Office in 1998 (ISBN 1851120947).
The report sets out the findings of a review to advise the Deputy
Prime Minister from the clients' perspective on the opportunities
to improve the efficiency and quality of delivery of UK construction
and to make the industry more responsive to customer needs. Back
28 Qs
15, 50—56 Back |
 
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| © Parliamentary copyright 2001 | Prepared 5 December 2001 |