Conclusions and recommendations
Why is construction important?
1. The
construction industry is of vital importance, not only because
of the sector's size, representing one twelfth of all value-added
in the UK, but also because its output—the built environment—underpins
most other economic activity, as well as contributing to the delivery
of the Government's social and environmental objectives. (Paragraph
6)
Industry structure and its implications
2. The
construction supply chain encompasses an extremely wide range
of activities, from quarrying to civil engineering to associated
professional services. It is a highly fragmented industry, dominated
by small firms with very little vertical integration. This, together
with the inherently project-based nature of the sector's work,
has profound implications for the way the industry operates. It
uses sub-contracting extensively, which in turn has consequences
for the composition of its workforce. Unreliable rates of profitability
have repercussions on the sector's approach to investing in areas
such as training and innovation, which are likely to be exacerbated
under current market conditions. Our Report looks at what can
be done to overcome the difficulties arising from the fragmented
nature of the industry. (Paragraph 15)
Recent construction industry reform
3. Since
its emergence from recession in the early 1990s, the construction
industry has been undergoing a gradual process of reform, which
we hope will not be jeopardised by the current economic downturn.
The influential Latham and Egan reviews called for a radical new
approach to construction—one in which client leadership
is key; where there is greater collaborative working between firms
within the construction supply chain; and where its workforce
is fully skilled. There has been progress on all these fronts,
but there is still the potential to achieve significantly more.
As such, we commend the industry's decision to set new targets
for taking forward the Egan agenda. We also welcome the fact that
these targets reflect the need to promote economic, social and
environmental sustainability in construction—the 'triple
bottom line'—themes which underpin this Report. (Paragraph
23)
Government responsibilities for construction
4. As
client, regulator and provider of funding, government can influence
the construction sector in many ways. The most important is the
purchasing power it holds as procurer of almost a third of construction
output. This is the main cross-cutting theme of our Report. However,
its ability to make effective use of its power is severely hampered
by the extent to which responsibility for different aspects of
construction policy and procurement is dispersed across government.
(Paragraph 29)
A Chief Construction Officer
5. To
overcome the problem of the fragmentation of construction policy
and procurement across government, we recommend the creation of
the post of Chief Construction Officer. Acting at a senior level
as 'champion' of the sector, the post-holder would provide a single
point of engagement between the industry and the public sector,
having operational involvement in policy and regulatory matters
across departments. He or she would hold both private and public
sector experience to command the respect of the industry and have
sufficient clout within government. Throughout this Report, we
highlight areas where a Chief Construction Officer could improve
the current situation. (Paragraph 34)
The role of the client
6. Success
in construction projects is driven by the knowledge and skills
of the client. Whether a construction client is frequent or infrequent
is more important than whether they function in the private or
public sector. Frequent clients are more likely to have invested
in their capacity to fulfil their role, thus delivering benefits
both for themselves and their contractors. Infrequent or inexperienced
clients are less likely to have an understanding of the construction
sector and the importance of their client role. This poses greater
risks for the delivery of their projects. (Paragraph 41)
7. Increasingly,
framework agreements are being used to develop longer-term relationships
between customers and their suppliers. They can improve project
delivery in terms of time, cost and quality. However, many public
sector clients are not yet managing their frameworks rigorously
enough to achieve all their potential benefits. One of the functions
of the Chief Construction Officer, in conjunction with the Department
for Communities and Local Government and others, should be to
ensure wider use and more effective management of frameworks,
where they are appropriate, both at central and local government
level. (Paragraph 42)
The Construction Clients' Charter
8. The
features of a 'good' client are the same whether they are frequent
or occasional customers to the industry. They include setting
clear and consistent objectives, appreciating the importance of
value rather than cost alone, and active involvement throughout
the project to manage risk. Following its extremely poor take-up,
we welcome the industry's intention to revise the Construction
Clients' Charter to reflect the new Construction Commitments.
This should provide a comprehensive outline of what being a 'good'
client entails. Once in place, we believe the Government should
lead take-up of the new Clients' Commitments and contribute to
the Strategic Forum's new target for client leadership by requiring
all major public sector procurers of construction works in central
Government to become signatories within the next two years. We
expect local authorities to make a similar commitment, and look
to the Local Government Association to encourage this, recognising
the benefits this would bring to those authorities and their council
taxpayers. (Paragraph 49)
Helping occasional clients
9. Occasional
clients in the public sector who lack sufficient procurement and
construction management skills should be able to draw on skills
from elsewhere. The centralised expertise provided by Partnership
for Schools shows this can be done. The Chief Construction Officer,
in conjunction with the Office of Government Commerce, should
establish where such skills gaps exist across the public sector.
Where deficiencies are found, a process should be put in place
to address the issue, involving the sector skills council, ConstructionSkills,
where appropriate. (Paragraph 54)
The Office of Government Commerce's Gateway Process
10. The
Office of Government Commerce's Gateway Process offers a means
for public sector clients to assess and monitor their procurement
performance for construction projects and programmes. We are disappointed
by the low take-up of the Process. All public sector construction
commissioners should be aware of it. The effectiveness of the
scheme should be evaluated urgently, and action taken if the review
teams lack necessary expertise. Furthermore, and while the responsibility
for initiating reviews must rest with responsible senior officers
who will be able to assess when projects are ready, we hope the
practicability of giving the OGC power to enforce its use will
be explored. (Paragraph 59)
Achieving Excellence in Construction
11. The
Office of Government Commerce has used Achieving Excellence
in Construction as its primary means of driving best practice
in construction procurement across the public sector for almost
a decade. The initiative played a key role in raising performance
during its early days. However, the most recent strategic targets
for the initiative expired more than three years ago. Departments'
performance since 2005 suggests there has been no further progress
on the delivery of public sector projects on time, within budget
and with zero defects. This is not surprising given the OGC has
no powers to enforce use of its best practice guidance and there
are only four people in post to support the scheme. In short,
Achieving Excellence is now more accurately realising mediocrity.
(Paragraph 66)
12. In
the wake of the launch of the new industry-wide Construction Commitments,
we recommend the Government reinvigorates the Achieving Excellence
initiative by establishing new targets for public sector construction
project performance. The OGC should also put in place performance
measurement systems that collect data against all of these targets—not
just some. (Paragraph 67)
The Common Minimum Standards
13. The
Office of Government Commerce has set Common Minimum Standards
for construction procurement, based on the Achieving Excellence
in Construction guidance, which are mandatory across the public
sector. Yet anecdotal evidence suggests their implementation,
particularly at local authority level, has been patchy, due in
large part to a lack of awareness. We believe the Government should
now update the Standards to reflect the principles set out in
the new Construction Commitments. The OGC should also work to
promote greater awareness of the Standards; to measure their use
across the public sector; and to enforce compliance by central
government departments and their agencies. Local authorities,
with the support of the Local Government Association, should also
comply with the Standards in the interests of the communities
they serve. (Paragraph 71)
The Public Sector Construction Clients' Forum
14. We
welcome the establishment of the Public Sector Construction Clients'
Forum and its work to support the co-ordination of construction
activity and initiatives across government. We urge all involved
in its work to regard it as a permanent feature of the public
sector's engagement with the construction sector. (Paragraph 72)
Transforming government procurement
15. We
welcome the Transforming government procurement initiative
and in particular the OGC's new focus on implementing best practice
across the public sector. We are, however, seriously concerned
that the Office has been provided with neither the resources nor
the powers it needs to achieve this task. We recommend that the
OGC's staffing levels are reviewed. We also recommend that the
Government reviews the means by which the Office can better perform
the role of 'enforcer' of good practice across the public sector.
Several potential institutional levers exist already for it to
achieve this, but more may be needed. It should involve taking
advantage of its position as an office of HM Treasury. It should
also include greater engagement at permanent secretary or ministerial
level with other government departments. (Paragraph 78)
Recent and predicted growth
16. The
construction industry has enjoyed a period of sustained growth
for over a decade, in sharp contrast to the cycles typical of
much of the post-war era. Construction output in parts of the
industry, particularly house-building, is experiencing a sharp
downturn in the wake of the fall-out from the sub-prime mortgage
market crisis. While public sector expenditure is always subject
to a degree of political uncertainty, in the coming years the
industry currently expects to benefit from rising infrastructure
investment and greater spending in areas such as social housing
and education. (Paragraph 84)
Labour supply
17. One
of the main sources of capacity growth in the construction industry
in recent years has been the availability of skilled migrant workers,
predominantly from Eastern Europe. This imported labour has helped
mitigate the effect of skills shortages and facilitated the continued
expansion of the industry. However, it will not provide a long-term
solution to the construction industry's skills needs since, over
time, most foreign workers will return to their home countries.
This means there is an ongoing need for the UK to invest in its
own construction skills base. (Paragraph 92)
The planning system
18. Although
largely outside the scope of our inquiry, the planning system
fundamentally determines the capacity of the construction industry
through the supply of land, which can be developed and the uses
to which that land can be put. This constraint affects all parts
of the sector, from quarry products, through house-building, to
infrastructure. The Committee looks forward to engaging further
on this issue in the next Session, when it will be scrutinising
the National Policy Statement for energy. (Paragraph 95)
Construction price inflation
19. Despite
the offsetting factors of recent migration and the current economic
slowdown, a combination of high demand, skills shortages and rising
input prices has led to construction price inflation running at
above the overall rate of inflation. However, we cannot predict
what the effect of the current industry downturn will be. Construction
price inflation poses a cost risk to construction firms on long-term
contracts. It also reduces the cost certainty for public sector
clients of long-term projects such as the Olympics. (Paragraph
98)
Helping the industry plan for additional capacity
20. If
the construction industry is to have an incentive to improve its
capacity to deliver in the long run by investing in training and
new ways of working, it requires the security of a long-term flow
of work. The public sector is beginning to acknowledge the role
it can play in engaging early with the construction supply chain.
It is setting longer-term investment programmes for public services,
introducing a new approach to planning, and has clearly committed
to 'zero-carbon' homes by 2016. However, it could still do more
to improve the flow of information to the construction industry,
particularly when programmes are delayed, amended, or abandoned.
We believe that there is scope for greater co-ordination of major
construction projects to mitigate the effects on construction
price inflation and to ensure a steady workflow for the industry,
although the industry must recognise that its health is only one
of the factors the public sector has to take into account. Like
any other client, different parts of the public sector will expect
to arrange their construction projects to meet their own needs.
(Paragraph 107)
21. One
of the responsibilities of the Chief Construction Officer should
be leading the Public Sector Construction Clients' Forum's work
on capacity planning. The post-holder should work with departments
both to improve the flow of information on construction programmes,
and to advise on their co-ordination. As the industry's largest
single client, the public sector ultimately benefits from such
early engagement. (Paragraph 108)
Recent economic performance
22. Overall,
the construction industry is getting better at delivering a quality
product for the client, and the proportion of projects completed
on time has increased, but there still remains significant room
for improvement in finishing projects both to time and to budget.
(Paragraph 111)
Raising performance through integrated teams and
supply chains
23. The
fragmentation of the construction industry has contributed to
its poor performance on delivery to time and cost. Integrated
working not only improves value for the client, but also allows
time for firms in the supply chain to develop business relationships
with each other, creating an environment that encourages investment
in capacity and innovation. Despite the potential benefits for
all involved, progress in adopting integrated working has been
slow. We welcome the new targets for the period 2008 to 2012.
We are encouraged that the industry bodies have recognised their
responsibility. The Government should also play its part through,
for example, effective framework arrangements; engagement with
the industry on its long-term construction programmes; and departments'
compliance with the Common Minimum Standards. (Paragraph 118)
Early engagement with the supply chain
24. Government
is not doing enough as client to engage with the supply chain
early on—a key feature of integrated working. As a result,
the public sector is missing out on efficiencies that would deliver
a cheaper and better quality end-product. (Paragraph 120)
Maximising whole-life value
25. A
whole-life value approach to construction procurement seeks to
maximise the benefits and minimise the costs of a project across
its life-cycle. It requires an integrated project team able to
develop a design that creates best value for the client. However,
it also requires clients to have the skills and long-term perspective
to make investment decisions which are not based on short-term
price. Government has made progress in encouraging a whole-life
approach in the public sector, but in the words of the Minister:
"There is a good deal more to do". We welcome the emphasis
placed on whole-life value in BERR's Strategy for Sustainable
Construction. We also welcome the publication of the OGC's
supplement to the Green Book on whole-life appraisal in
construction, which the Office should now seek to embed in procurement
practice across government. It should support this by ensuring
clients have the information to accurately quantify whole-life
costs and benefits. Finally, the Government should make it mandatory
for all public sector projects with a value in excess of £1
million to use a structured mechanism for assessing their design,
such as the Design Quality Indicator. (Paragraph 127)
Collaborative contracts
26. Integrated
team-working needs to be underpinned by contracts that foster
collaborative rather than adversarial relationships between clients,
their contractors and their sub-contractors. Unfortunately the
industry does not seem able to do this for itself. As a result
clients must take the lead. There are useful standard contract
forms such as the NEC3 Engineering and Construction Contract,
recommended by the Office of Government Commerce for all public
sector construction projects. Despite this, a large proportion
of government construction is still let using a variety of traditional
contractual arrangements. Led by the OGC, departments should work
towards the use of collaborative contracts as a matter of course,
and ensure they are adopted throughout their supply chains. (Paragraph
132)
Project insurance
27. Integrated
Project Insurance provides single cover for the entire project
team, and could foster integrated working by encouraging the collective
ownership of a project's target budget. It is an emerging concept,
but one that could deliver benefits for all members of the project
team. We encourage the OGC to set a target for the approach to
be piloted across a range of departmental construction projects
so it can be properly evaluated. (Paragraph 136)
Retentions
28. The
practice of holding a retention against contractors as an insurance
against defects undermines efforts to promote team-working and
integrated supply chains in the construction industry. It also
damages the cash-flow of smaller sub-contractors and reduces investment
in training and innovation. Government has other means by which
it can ensure the sector delivers good quality projects, for example
where it has long-term framework arrangements in place. Given
that the practice is at odds with the Government's promotion of
integrated working through the Common Minimum Standards and the
Construction Commitments, we urge it to require all parts of the
public sector to end retentions as soon as possible. (Paragraph
143)
The 'Fair Payment' Charter
29. We
welcome the introduction of the 'Fair Payment' Charter. The OGC
should ensure all central government construction clients have
affirmed their adoption of the Charter by the end of 2009. The
Office should then aim for all local authorities to have signed
up to it by the end of 2010. The OGC's monitoring of implementation
should ensure that clients are adopting the principles of the
Charter throughout the construction supply chain, and not simply
between themselves and their main contractors. Where construction
firms believe their client is not abiding by the principles of
the Charter, we urge them to make representations to the Minister
and to the OGC. (Paragraph 146)
Project Bank Accounts
30. Both
the Office of Government Commerce and the National Audit Office
have endorsed the use of project bank accounts as a means of improving
payment practices and facilitating integrated working. Central
government procurers should now start to make use of project bank
accounts, where practicable and cost-effective. The OGC should
monitor take-up and evaluate the benefits. (Paragraph 149)
Amending the Construction Act
31. The
Construction Act provides the legal foundations for successful
team-working. However, it is widely accepted that it still has
some weaknesses. After years of consultation the Government has
developed proposals, which it believes will address many of the
industry's concerns, particularly those of sub-contractors. They
appear to strike a sensible balance between the interests of main
contractors and sub-contractors. BERR's aim now should be to ensure
the amendments fulfil the policy objectives the Department has
set out, and do not leave room for exploitation. It is vital that
the next Session's opportunity to reform the legislation is taken.
(Paragraph 155)
Measuring Performance
32. Integrated
working should give teams an incentive to evaluate their performance
and apply lessons learnt to future projects. Greater use of post-occupancy
evaluation (POE) has the potential to benefit construction teams,
their clients, and future clients through increased use of evidence-based
design. We welcome the OGC's decision to mandate POE for central
government departments, building on its initial pilot project,
although we note that the work is mainly focused on office buildings.
Once established, the scheme should be extended to cover all parts
of the public sector as soon as possible to collect information
on a range of different types of building. We hope the OGC and
the industry will be able to use the information gathered to inform
the construction of future public sector buildings. (Paragraph
161)
Improving economic sustainability
33. Overall,
integrated team working can provide the way out of the vicious
cycle of adversarial relationships and poor performance that have
characterised the construction industry for so long. Paragraphs
23 to 32, above, have outlined a number of ways in which this
can be facilitated. However, it requires a culture change by all
the sector's participants—clients, contractors and sub-contractors.
As the single largest construction client, government should be
taking the lead in tackling that challenge. (Paragraph 162)
'Bogus' self-employment
34. The
widespread practice of wrongfully classifying directly employed
workers as self-employed, otherwise known as 'bogus' self-employment,
creates significant costs for construction workers, clients, the
wider industry, and the Exchequer. To tackle the problem, HM Revenue
and Customs' Construction Industry (tax) Scheme now places a greater
onus on contractors to verify the employment status of their sub-contractors.
The success of this new approach will depend on the collective
'buy-in' of contractors. Government must also ensure HMRC has
the power and resources to monitor and enforce compliance. (Paragraph
177)
35. We
welcome the setting up of the Vulnerable Worker Enforcement Forum
and look forward to its recommendations. We hope it will give
particular attention to whether the Gangmasters Licensing Regulations
should be extended to cover construction workers. More generally,
the public sector as client has a major role to play in providing
long-term security of work for construction firms, which departments
should actively take advantage of. Among the benefits this would
bring is a real encouragement for contractors to take on more
direct employees. (Paragraph 178)
ConstructionSkills and the Levy
36. The
structure of the construction industry and the nature of its work
create disincentives for many employers to invest in training
and skills. The CITB-ConstructionSkills Levy provides an effective
means of tackling this problem, which has the support of the majority
of those who pay it. The Levy provides a vital means of funding
for training, which contributes to the long-term skills needs
of the sector. We support its continued use. (Paragraph 185)
Training routes into construction
37. Given
that migrant labour is unlikely to provide a stable long-term
solution to the skills needs of the construction industry, it
is vital to attract more domestic recruits to the sector. The
initial take-up for the now abandoned Construction GCSE suggests
there is an appetite within schools to engage with the industry
early on. We support the development of the new Construction and
Built Environment Diploma and hope that it will provide a credible
qualification and entry route for those considering a career in
construction, as well as meeting the skills needs of employers.
Given the importance of developing skills in this vital sector
of the economy, its effectiveness must be rigorously and regularly
reviewed. (Paragraph 189)
38. It
is a disgrace that only a quarter of construction companies are
training apprentices. We support ConstructionSkills' efforts to
provide more flexible routes to on-site experience for trainees
and their sponsors, such as through programme-led apprenticeships.
Employers must now do their part by taking on more apprentices,
tapping into the large number of people who want to work in the
sector. The Government should also review its support for adult
learners and specialist trades to provide greater flexibility
of training provision to meet the needs of the construction industry.
(Paragraph 194)
Training the existing workforce
39. There
has been considerable progress in raising the skill levels of
the existing construction workforce. We welcome the establishment
of the National Skills Academy for Construction and support its
project-based approach to delivering training. We also commend
the high level of take-up of the Construction Skills Certification
Scheme (CSCS) and hope the industry will be able to achieve 100%
coverage by 2010. However, clients must play their part in reaching
this target. Public sector clients in particular should adhere
to the Common Minimum Standards, and contractually oblige their
supply teams to ensure their workforces are CSCS-carded. Contractors
not committed to the Scheme should not be invited to tender for
work. (Paragraph 198)
Workforce diversity
40. The
vast majority of the construction workforce is white and male.
This means there is a potentially huge pool of untapped talent
which could relieve capacity constraints in the sector, and make
the composition of its workforce more representative of wider
society. Government as client to the sector is in a powerful position
to effect change by ensuring contractors provide employment opportunities
to atypical recruits. We welcome the explicit inclusion of promoting
a diverse workforce in the industry's new Construction Commitments.
We recommend that the Government strengthens this by making equal
opportunities part of the Common Minimum Standards for public
sector construction procurement. (Paragraph 204)
Health and Safety
41. We
welcome the Strategic Forum's commitment to ambitious targets
for reducing the number of workplace fatalities and major injuries
over the coming years. After a period of steady decline in construction
fatalities since the turn of the century, the number of deaths
has increased significantly since 2005/06. Housing repair and
maintenance has had the worst record, primarily because so much
of the sector operates in the informal economy. To tackle this
the Health and Safety Executive must devote more resources to
inspection, whilst HM Treasury should look at ways of reducing
the size of the informal economy, for example by conducting a
full analysis of the overall consequences of cutting the rate
of VAT on all repair and maintenance work. (Paragraph 218)
42. More
generally, government as client has a vital role to play in improving
performance. The Common Minimum Standards already state that clients
should ensure all contractors are assessed for health and safety
when tendering for work, and all workers should be registered
on the Construction Skills Certification Scheme. But this is not
happening. The new Construction, Design and Management (CDM) Regulations
2007 place a much greater emphasise on the client's role in ensuring
health and safety, whilst the Corporate Manslaughter and Corporate
Homicide Act 2007 provides the punishment in the event of a fatality
due to organisational failings. The Government should use both
of these to enforce a change of approach in public sector construction
procurement, and to drive culture change across the sector. (Paragraph
219)
Environmental sustainability: the construction
process
43. Reducing
the environmental impact of the construction process is a key
part of Government and industry's Strategy for Sustainable
Construction. We support new targets for reducing waste, and
for cutting energy and water consumption. Achievement of these
is likely to stem mainly from economic incentives, as well as
higher fuel costs. Any increase in taxation must be accompanied
by greater enforcement activity against fly-tipping. The public
sector as client also has an important role to play in improving
the construction process. Integrated team delivery can reduce
the waste arising from construction projects through early planning
and engagement with the supply chain. We saw examples of this
in our visits to the Royal London Hospital and the 2012 Olympic
site in Stratford. Rigorous enforcement of the Common Minimum
Standards by the Office of Government Commerce should also include
requiring that all public sector projects are registered for the
Considerate Constructors Scheme, or some equivalent. This will
demonstrate best practice to the private sector, and help improve
the public image of the industry. (Paragraph 230)
Environmental sustainability: the public sector
as client
44. The
joint Government and industry Strategy for Sustainable Construction
includes a range of challenging targets for improving the environmental
performance of the buildings it procures. If the Government is
to meet these, a whole-life approach to project design will be
key. HM Treasury must mandate the use of carbon accounting for
the appraisal of all public sector construction projects. The
Office of Government Commerce should also rigorously monitor progress
against the BREEAM requirements for all new build to be rated
'Excellent' and all refurbishments 'Very Good'. However, the BREEAM
standard should not be used in isolation to assess projects—it
should be complementary to more specific output-focused targets
for environmental performance. (Paragraph 239)
Environmental sustainability: the housing sector
45. What
the Government cannot influence through its purchasing power it
must achieve through regulation. Changes to the Building Regulations
have led to significant improvements in the energy efficiency
of new buildings. We support the Government's target for all new
build homes to be carbon neutral by 2016, and the role of the
Code for Sustainable Homes in achieving this, but we recognise
the extremely ambitious nature of this target. The existing housing
stock also needs to be made more sustainable. To this end, we
continue to believe the Government should conduct a comprehensive
review of the incentives for homeowners to improve the environmental
sustainability of their dwellings. (Paragraph 244)
Strategy for Sustainable Construction
46. Overall,
we welcome the Government and industry's joint Strategy for
Sustainable Construction and hope that it will set the agenda
for improving the long-term environmental performance of the sector.
However, policy responsibility for sustainable construction is
particularly fragmented across government. The Strategy itself
is the product of six different departments. It sets out which
bodies are responsible for particular targets, but no individual
has overarching responsibility for its delivery. A Chief Construction
Officer would make an important contribution to co-ordinating
policy delivery across departments and promoting sustainable construction.
(Paragraph 245)
Construction R&D
47. Unlike
most other developed countries the UK does not have a dedicated
publicly-funded research and innovation programme for its construction
sector. We believe this is unwise. Research and innovation is
necessary to meet the Government's targets for sustainable construction
and its own needs as a client. The structure of the construction
industry and the nature of its work mean that the usual commercial
drivers of R&D investment are either missing or very weak—if
there is market failure, government support has to be provided.
There needs to be an urgent assessment of the level of support,
and how it should be supplied, followed by monitoring to ensure
the support continues to meet the industry's needs. A Chief Construction
Officer would be best placed to do this. We recognise that increased
spending in one area has to be offset by decreases elsewhere,
or an increase in revenue. However, the industry pays a considerable
amount through the Landfill Tax and Aggregates Levies. We believe
there is scope for recycling a proportion of these funds to the
industry to help fund research, even if this means additional
funds have to be provided, either from the taxpayer or the industry.
Finally we note that a Chief Construction Officer could also co-ordinate
public sector spending through the modest programmes that already
exist to ensure its effectiveness is maximised. (Paragraph 263)
The Building Regulations
48. The
construction industry believes the Building Regulations are too
complex, and changed too often. We agree. We welcome the Government's
proposals to create a framework to manage changes to the Regulations
over a three-year cycle, and to limit amendments on any single
issue to once every six years. We hope that this will effectively
address the industry's concerns on the timing of changes and the
way in which frequent changes hinder its strategic planning. We
hope too that the Department for Communities and Local Government
will use the first review cycle, which will begin in 2010, to
address inconsistencies and overlaps in the current Regulations.
We are, though, disappointed that a more radical simplification
of the rules is not under consideration and believe the possibility
should be re-examined. (Paragraph 268)
TrustMark
49. Companies
need to be able to show that they are competent to give their
clients confidence and to ensure a level playing field for competition
amongst suppliers. We hope the TrustMark scheme will, in due course,
become a recognised symbol of quality for builders in the same
way that CORGI is for gas installers. This will take time, but
with some 16,000 builders already registered, the initiative has
made good progress since its launch in 2006. It is in the interests
of reputable companies that the scheme should succeed and we believe
that the onus for funding and publicising the scheme falls on
the industry and not the Government. (Paragraph 272)
Constructionline
50. The
Government must reduce the burden that multiple public sector
pre-qualification schemes impose on construction firms, particularly
SMEs. Constructionline was set up to address this, but it has
proved unsatisfactory for the industry. The Government should
either make it work, or abandon it. If the consensus is that Constructionline
cannot work as intended, then the Office of Government Commerce
should consider how it might develop core criteria and mutual
recognition between schemes. (Paragraph 276)
Cover pricing
51. The
current controversy over 'cover pricing' can only have damaged
the construction industry's reputation, and is at odds with the
drive to raise standards. We cannot pre-judge the final verdict
of the Office of Fair Trading's investigation. However, we do
believe that its outcome should be to ensure that the practice
of firms coordinating with each other to lose tenders for public
sector work, as well as more serious instances of making compensatory
payments, are both stamped out. It must, however, achieve this
without damaging the industry's capacity. We also recognise that
sensible clients should have procurement systems which do not
create incentives to engage in cover pricing in the first place.
(Paragraph 282)
Applying the lessons: The 2012 Olympics
52. The
2012 Olympic Games is a unique and complex construction programme
managed by a one-off client. The adoption of an integrated team-working
approach will be key to the delivery of the Games on time and
to budget. Early indications suggest the Olympic Delivery Authority
(ODA) is adopting most of the best practice required to foster
such integrated working. However, construction work has only just
begun. We hope in particular that the ODA will ensure its payment
and contract practices are mirrored throughout the supply chain.
We are disappointed that the construction industry itself has
not been more enthusiastic in bidding for the main Olympic contracts,
and we hope the ODA will have a better response for its remaining
construction contracts. (Paragraph 289)
53. The
ODA has made good progress in delivering a socially sustainable
2012 Olympics. It is demonstrating exactly the sort of engagement
with the workforce that we would like to see in all large public
sector construction projects. We are particularly encouraged by
its health and safety record to date. We welcome also its commitment
to provide substantial training opportunities and promote workforce
diversity. If other public sector programmes followed this approach,
it would significantly improve the industry's capacity to deliver.
However, these efforts will be undermined if contractors are allowed
to use 'bogus' self-employed workers. It is regrettable that the
Authority cannot legally mandate direct employment across the
programme, but it should encourage a strong preference for it
as far as possible. (Paragraph 294)
54. The
ODA has shown that environmental concerns can be met if they are
designed into the construction process from the outset. The challenge
for the Authority in the future will be to ensure that contractors
for the various Olympic venues adopt the same attitude, and that
concerns over short-term costs do not militate against designs
that promote whole-life value. (Paragraph 296)
Final Remarks
55. 2008
marks a potential turning point in the construction industry reform
agenda. Whilst we recognise the current difficulties facing the
sector, we hope that this Report, in conjunction with the launch
of the Construction Commitments, the industry's new Accelerating
Change targets, and the Strategy for Sustainable Construction,
will provide the impetus for widespread improvement in the sector's
performance in the long term. The industry has recognised that
it has ultimate responsibility for ensuring its continued health,
but government actions can help. The Government, because of its
role as both client and regulator, can and must be at the forefront
of the drive to embed best practice, and to facilitate the transfer
of learning from frequent to infrequent clients. It needs to provide
organisations such as BERR, the Office of Government Commerce
and the Health and Safety Executive with the resources and power
to achieve this. Furthermore, to give strategic leadership for
the sector, there must be someone who both government and the
industry accept as having overall responsibility for construction.
Truly joined-up working between government and industry, and between
different government departments, would be immeasurably improved
by the creation of a post of Chief Construction Officer. And the
Government should remember that, as the industry's largest single
client, helping the sector to improve means that it and the taxpayer
will directly benefit. (Paragraph 297)
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