Memorandum submitted by Building Research
Establishment (BRE), Building Services Research and Information
Association (BSRIA), Construction Industry Research and Information
Association (CIRIA), Timber Research and Innovation Association
(TRADA), and The Concrete Society (CS)
1. Construction is a growing, vibrant business.
It underpins most of our economic activity and makes a growing
contribution, currently some £90 billion, (10%) towards GDP.
For comparison, manufacturing as a whole contributes 16% towards
GDP, defence only 4% and agriculture just 1%.
2. Recently a major driver for this growth
has been the increase in public sector activities pivotal to government
achieving it's objectives in such areas as hospitals, schools,
housing, transport, the Olympics and urban regeneration. Over
40% of government expenditure is now focussed on new construction
and refurbishment.
3. Not only is expenditure and economic
contribution high but so are the environmental costs and opportunities
with, for example, buildings accounting for around 50% of total
greenhouse gas emissions and production of materials accounting
for a further 10%.
4. Much construction activity is "world
class" and modern buildings are more comfortable and efficient,
utilise more natural lighting, are better ventilated, more flexible,
cheaper to heat (and cool) and use significantly less energy.
In addition most of its basic materials are now well understood
and, where appropriate, long lifetimes can often be achieved simultaneously
with low maintenance costs.
5. Construction's success is further witnessed
by its substantial exports, some £10 billion per annum, arising
particularly from the activities of constructors, engineers and
architects who deliver stunning buildings and amazing infrastructure
projects worldwide. Its design skills alone generated over £3.8
billion export income per annum through such projects as the Berlin
Reichstag building, the man-made river project in Africa, the
Denver Millennium and Tsing Ma bridges, Mei Foo station and Hong
Kong International airport.
6. This standing and economic strength have
not been achieved by chance. They have been achieved from the
education and training of first class design and construction
professionals underpinned by a substantial product manufacturing
base and a skilled workforce. The leading technology edge and
continuous improvement in what we do has been maintained primarily
by innovative manufacturers and constructors and through a strong
applied research and innovation base provided by a network of
applied research and innovation organisations working collaboratively
between government, industry and the universities.
7. Given the nature of the industry (fragmented,
project driven, SME dominated, weak IPR protection, cost driven
procurement and low barriers to entry) this applied research base
has, for seventy five of the last 80 years, received significant
government support. The market failures which led government in
the UK to support "common good" applied research, innovation
and related "change" activities are well understood,
have not gone away, and are reflected in the research and innovation
funding support almost all advanced societies provide to their
construction related industries.
8. A more detailed analysis of why construction
is different to other "industries", in terms of R&I
dynamics and investment is set out in Appendix 1 to this note.
It is for these reasons that the industry has failed to gain significant
benefit from the "Generic Research and Innovation" schemes
funded by the DTI, it simply does not "fit" the prescribed
standard model. It is this "lack of fit" which has led
to almost all developed (and most developing) societies to develop
specific support mechanisms for construction R&I.
9. Until 2001 the UK also provided such
sector specific support (indeed it pioneered such intervention
in the early 20th Century) which was instrumental to the success
described above and which has led to strong centres of excellence
at BRE, BSRIA, CIRIA, SCI, TRADA, CIBSE and others which have
provided the standards, knowledge base, applied technology publications,
guides and training that currently underpin much of what we do
technically both nationally and internationally.
10. The need for such support was reviewed
and confirmed by Sir John Fairclough in his 2002 government review.
Whilst welcomed by government and industry, Sir John's recommendations
have not been implemented by government. No reason has been given
for this, nor does anyone appear to take responsibility for the
non-implementation.
11. Since the transfer of the Construction
Directorate to the DTI in 2001 this long standing government support
has now fallen away, not through a considered analysis of the
issues, but rather `down the cracks' between government departments.
12. The construction related applied science
technological and sustainability issues we face as a society are
immense and the need to deliver real value in schools, hospitals,
housing, infrastructure and transport whilst minimising carbon
emissions (for which the built environment is responsible for
over half) are pressing. However, new knowledge needs to be continuously
created to address new market, social and political demands and
utilise new materials and technologies, for instance:
— How to combine whole life costing
with environmental impacts?
— Does "micro generation"
via small scale wind turbines use more carbon in its manufacture
than it generates in its lifetime?
— How to design shared occupancy
(eg old persons) housing to allow doors to be left open without
causing a fire risk?
— How do we get to zero carbon
buildings in just 10 years?
— Do "low/very low energy
cements" work as well as traditional products?
— How to ventilate schools properly
and yet achieve acceptable acoustic performance with low mass
structures?
— How to design hospitals to minimise
cross infection and make cleaning easy?
— How to reduce waste and landfill?
— What can we learn from world
wide research and innovation?
— How to make buildings and the
environments around buildings more secure?
— How to economically bring our
stock up to date to meet the carbon challenge?
— Can we agree "standard"
component interfaces to open up the market for MMC?
— How to import less timber and
make better use of UK resources?
etc etc... .
13. Given the industry dynamics (see Appendix
1) a company gaining advanced knowledge and capability in these
subjects cannot generally capitalise on that knowledge in terms
of higher prices or greater market share. That being the case
industry will not step forward and outright fund research and
Innovation in these areas, they rightly see that as a "common
good" applied science activity for government to fund. What
they have shown time and again however is that they will generously
support such research with time, expertise and materials.
14. Following the demise of the long term
government/industry collaborative R&I programmes, work on
providing solutions to these questions is now at best academically
biased and patchy rather than focussed on applied science and
practical tools and solutions developed with industry wide collaboration.
There is no obvious market driver to provide this knowledge and
we are, through lack of new knowledge and under utilisation of
existing knowledge, embarked on building a generation of assets
with poor sustainability characteristics which we will have to
live in and with for many years to come.
15. Whilst there is awareness within government,
and in some areas agreement as to the problem, there does not
appear to be the political or administrative will (possibly because
the issue is not "sexy" or "immediate" and
no one department of government "owns" the issue) to
address the issue on a pan-governmental basis.
16. The consequences of this policy "oversight"
have been dire, as exampled by the breakdown in knowledge flow
to the industry to allow it to confidently take advantage of new
techniques and technologies.
17. The following table prepared by the
industry RTO's (Research and Technology Organisations) makes the
scale of the collapse clear:
| Titles | Typical new titles per year 2000-05
| New titles 2006 |
| BSRIA | 186 | 21
| 2 |
| Concrete Society | 69 | 9
| 5 |
| CIRIA | 450 | 35
| 15 |
| TRADA | 119 | 21
| 16 |
| BRE | 1,276 | 87
| 25 |
| Total | 2,100 | 173
| 63 |
In presenting these numbers one should emphasise that whilst
on the face of it the decline is from 173 to 63 new titles per
year (a decline of 63%) the underlying situation is somewhat worse
as a much larger proportion than hitherto of the "new"
titles are now just makeovers/updates of older documents. The
increased flow of research funding to the universities does not
impact on these figures as it is not their role to, and they do
not, produce "applied science" based guidance documents
for industry.
It is important to appreciate that, as a general rule, technical
publication is not in itself a commercially viable enterprise
if the cost of the research is included in the budget.
18. This then is a "slow" crisis in which,
over time, this fragmented industry will lose access to up to
date knowledge and thus it's ability to improve and remain competitive
internationally. Given the size of the sector, its related VFM
issues for government as a client and its underpinning role in
UK plc's infrastructure, it is clearly important that Government
considers the consequences of its (accidental?) withdrawal of
support for this type of activity. If the competitive and sustainability
consequences are serious—and we have demonstrated that they
are, then they must be addressed, however difficult that might
be given the lack any government department willing to accept
responsibility or Minister ready and able to address the issues
on the behalf of government as a whole.
19. The sums required to help fund this sort of "public
good/industry sponsorship" research have been very modest
(£23 million in 2002) in the context of the size of our industry
when compared to the support given to other sectors (such as agriculture
at circa £240 million per annum through DEFRA and
the £200 million per annum available to "high tech"
industries through the DTI innovation support programme). There
are appropriate (that is generated through construction activities)
internal government funding streams, such as the carbon tax, aggregates
levy and landfill tax credits, some of which could be used for
this rather than other purposes, without additional taxation.
20. This is not a matter of additional spending, it is
simply a matter of intelligent, joined-up government.
APPENDIX 1
RESEARCH AND
INNOVATION IN
THE CONSTRUCTION
INDUSTRY
21. Government's (ie DTI's) generic assumptions regarding
R&I mechanisms do not work well in the context of construction,
which is fundamentally different from manufacturing in the following
ways:
| Construction | Manufacturing
|
| Delivers contracts. | Makes products and ships them.
|
| One off designs for one client. | Generic design.
|
| Contractors, sub-contractors and sites. |
Fixed production/assembly lines. |
| Application specific. | Generic products—application specific rare.
|
| Location driven solutions/requirements. |
Minor variants for export markets. |
| Local. | International. |
| Profit = target profit—(actual costs—estimated costs) + savings on specification + contract variations +/- litigation.
| Profit = price—cost of manufacture—cost of sales.
|
| Innovation—process or new materials/products; market pull usually a weak driver.
| Innovation—incremental or substitution; market pull often a powerful driver.
|
| Marketing based on planning permissions, experience and risk averse clients.
| Marketing based on classic four Ps (product, price, place, promotion).
|
| PI insurance (contract very rare). | Product liability insurance.
|
| Building Regulations, CDM, H&S at work, "Standards".
| Product safety, H&S at work. |
| Itinerant labour force. | Static labour force.
|
22. All differences affect the R&I landscape, but
in particular:
— All construction activity is "project"
rather than "product" based. Disparate teams come together
for the duration of a project and often do not work together again.
For technological progress to be made in such a changing environment
teams need clear, reliable, independent, freely available advice
on the "how" and the "what" if they are to
confidently integrate new technology into the end product.
— Construction is a high risk endeavour where
the potential liabilities greatly exceed the profits enjoyed by
the partners. Litigation/claims are rife in our industry. Designers
and constructors are generally unable to trial prototypes and
may never have designed nor built a similar end product previously.
In such an environment insurance is very expensive and there is
a natural conservatism regarding the use of the "new and
untried".
— Unlike in manufacturing, "first mover
advantage" is minimal as IPR is difficult to protect and
little capital or time is required to copy another's improved
processes, technological integration etc. Most contractors who
tried the technology driven "first mover advantage"
approach to growing their turnover and profits over the last 20
years have now given up doing so.
— Clients, unsurprisingly, prefer certainty
to experimentation. Indeed, their first question is often "how
much insurance do you have?".
— There is only weak linkage between the universities
(deliverers of basic research) and industry. Industry requires
"applied outputs" from trusted intermediaries that they
can readily use to make progress whilst defraying their risk.
We are unaware of any such "applied guidance" emanating
from the universities.
23. These are the fundamental reasons why the construction
industry does little company based R&I. However, in the context
set out above and for reasons based on a sense of shared social/sectoral
responsibility, in the past the industry has often been an active
contributor to shared R&I actions within a sector or grouping.
24. The reasons set out above also explain why the construction
Research and Technology Organisations (RTO's) exist in the form
that they do and why governments around the world generally have
special applied science support arrangements for construction.
30 April 2007
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