Select Committee on Business and Enterprise Written Evidence


Memorandum submitted by the Building Services Research and Information Association (BSRIA)

INTRODUCTION TO BSRIA

  BSRIA is a private sector, non-profit distributing Association of some 650 member companies. It primarily serves the technical and information needs of the specialist engineering disciplines covering heating, ventilation, air-conditioning and many other aspects of comfort in the built environment.

  BSRIA is primarily funded through private sector consultancy and trading activities and has a turnover approaching £10 million per annum.

  This response has concentrated on delivering evidence to the committee on three of the nominated topics:

    1.  Construction sector performance (specifically key performance indicators and productivity).

    2.  Encouraging sustainability (specifically the role of BREEAM, the role of the energy utilities, ways to improve the performance of new and existing buildings, and government policy on renewable forms of energy).

    3.  Construction research and development.

  Key conclusions and recommendations are highlighted in bold text.

1.   Construction sector performance—key performance indicators

  1.  BSRIA carries out on-going research into the performance of the UK building services industry on behalf of the DTI. The headline key performance indicators (KPIs) include data on delivery of design, installation and service, reduction of defects, and predictability of time and cost. Metrics on productivity and safety are also obtained.

  2.  The 2006 KPIs revealed a trend away from procurement on a lowest price basis (31% in 2001 to 16% in 2006) and greater evidence of negotiated contracts (from 22% in 2001 to 36% in 2006). This reflects the government's desire to see a greater emphasis on quality rather than lowest price.

  3.  However, price remains the dominant selection criterion in 64% of cases. In 2006, 48% of clients selected a building services contractor on a price or quality basis. This suggests that price remains the dominant selection criterion.

  4.  Even so, BSRIA has clear evidence that levels of client satisfaction with service in projects procured on a price-only basis are far compared with those that are negotiated.

  5.  The prevailing practice of selecting on lowest price militates against the government's commitment to carbon-dioxide reduction strategies and life-cycle costing. A constrained capital budget cannot easily accommodate the additional design effort and/or carbon-dioxide reduction technology that is required, such as solar power or greywater recovery. It is also very common for capital items that are considered non-critical, such as computerised controls, to be sacrificed on grounds of cost, when other advanced technologies in the building depend upon them. Hence procurement on the lowest price presents a major barrier to the government's ambitions for new buildings to become carbon-neutral.

  6.  Despite the efforts in the 1990s by Sir Michael Latham and Sir John Egan to eradicate the retentions and pay-when-paid, these practices are still rife in the UK building services industry. Such financial malpractice is damaging. It creates instability in the sector by compromising performance, growth, efficiency and employment.

  7.  The 2006 KPI data reveal that 82% of clients had assigned retentions. In 2005, only 7% of building services contractors reported satisfaction scores of eight or more with respect to retentions. 37% of building services contractors awarded a score of just one out of 10—the worst possible score for satisfaction with timely release of retention monies. Note that retention monies are very difficult to collect. Clients very rarely pay retention money voluntarily. It has to be continually chased, which wastes time and money and diverts effort. It also contributes to adversarial relationships.

  8.   BSRIA believes that the practice of assigning retentions is unfair and a financial burden that harms the industry and frustrates progress. Constructing Excellence and Accelerating Change challenged the industry to get closer to construction clients, to benchmark performance, and to raise standards. BSRIA believes that clients must improve payment terms to consequently improve the performance of the UK construction industry. If clients are unwilling to do this voluntarily, then the government should consider additional legislation and punitive measures for non-compliance.

2.   Construction sector performance—site productivity

  9.  The issue of site productivity was the subject of centrally-funded speculative research first commissioned in the early 1990's through a programme then managed by the Department of the Environment. The establishment of baseline data and more importantly a pool of appropriate expertise has been the basis of the more active interest in this subject in the latter decade.

  10.  BSRIA estimates that 20% of the average working day on a UK building site is lost solely due workforce organisation issues. This is a £6 billion per year problem for the UK construction industry. BSRIA research has shown that modern methods of construction can produce build rates that are more than 10 times quicker than traditional techniques. Constructing Excellence data also shows that three out of 10 projects have unsatisfactory quality standards at handover.

  11.   The government needs to do more to support integrated logistics initiatives that will reduce the number of vehicle movements to and from construction projects, and help improve the certainty of material delivery and distribution on site.

  12.  Data from the Health and Safety Executive shows that health and safety performance in the construction industry is not improving. After a number of years of improvement, the accident statistics for construction are now getting worse. Provisional figures announced in April 2007 show fatalities for 2006-07 at 78, up from 59 in 2005-06.

  13.   The government should use existing independent research on construction project performance to challenge project costs, project programmes, safety and quality in public sector supply chains. The government should then use the independent organisations behind this research to work with its construction supply chain to help apply key recommendations, study project performance and help to improve industry practices.

  14.  The construction industry has an ageing workforce. Many workers are leaving the industry, while an inadequate quantity of young people with the right skills is entering. This applies to professional personnel as well as site workers.

  15.   BSRIA believes that the government should support initiatives to integrate good quality non-UK workers into the industry. This will involve selecting people with the right skills, helping them clearly understand the safety, quality and technical standards required on UK projects, supporting their development of the skills outlined above, and assisting them with English language development. The withdrawal of funding of English courses for non-English speaking workers must be reversed, as this is a vital mechanism for improving the productivity of a UK construction industry increasingly dependent on migrant labour.

  16.   Government should instigate an R&D programme to fully identify the scope for improvements in site productivity, focusing on the nature of delays measuring the performance of the UK construction industry independently and properly, covering: safety, quality, productivity and environmental actions.

  17.  Conventional thinking requires that desired capacity is met though the creation of additional labour resources through training. However, additional capacity can be released for productive work simply by removing the present inefficiencies of current working—even without the added benefits from offsite manufacture. To do this however, requires a re-orientation of resources from conventional trade skills support to a more focused development of higher-level skills. This is outside the target zones of Sector Skills.

  18.  Government needs to develop integration skills to cross the traditional (institutional) boundaries of architecture, mechanical and structural design and contracting. It is the elimination of waste at these interfaces that will release time and resources in construction activities. This will challenge current models of higher education courses, which are usually accredited by the institutions themselves.

3.   Encouraging sustainability

  19.  BSRIA believes that the design and construction industry is committed to improving the environmental performance of new and refurbished buildings. However, more needs to be done to ensure that measures to improve sustainability are delivering the expected benefits. In particular, BSRIA believes that government policy has focused too much on technology, and not enough on ensuring that buildings are designed to easy to operate, manage and maintain after handover, with systems that can default to off, rather than default to on.

  20.  BSRIA is concerned that there is a widespread failure to meet targets for sustainable construction and refurbishment. In many cases, claims of low energy, sustainable performance—particularly through the application of renewables technologies—are not being borne out in practice. Such technology is leading to difficulties in management and maintenance, particularly where there is insufficient expertise in the end-user organisation to manage the technology. BSRIA believes that complicated engineering solutions should be a choice of last resort. Much more should be achieved through passive design, such as increased insulation, daylighting, and earth-coupled ventilation, before designers reach for innovative, risky and complex technologies.

  21.  Hence BSRIA believes that the renewable energy obligations, required and enforced by local authorities, should be re-defined and made more flexible. Government policy should not force building designers to specify renewables in contexts where they are not appropriate, and particularly not in cases where the budget could be more effectively spent on simpler, more robust (and preferably passive) carbon-dioxide reduction measures that will have a greater chance of success.

  22.  BSRIA strongly supports the findings in the recent NAO report Building for the Future: Sustainable Construction and Refurbishment on the Government Estate, specifically those comments relating to the practice of relying on BREEAM ratings as a proxy for actual improvements in a building's environmental performance. BSRIA also agrees that government departments should conduct post-occupancy evaluations to assess whether completed construction and refurbishment projects have delivered the specified level of performance.

  23.  Given that very few public domain, independent and detailed post-occupancy studies of buildings have been carried out since 2001, BSRIA is concerned that the construction design community is still failing to close the loop between aspiration and reality. The majority of post-occupation studies regularly reveal energy consumption (and thereby carbon dioxide emissions) in excess of the design target. Occupant satisfaction with thermal comfort, lighting, indoor air quality, noise, and health are also often lower than the designers anticipate. A recent DFES investigation into the performance of recent ostensibly sustainable schools shows that energy use in new schools is rising despite attempts to reduce it.

  24.  In some cases, POE studies reveal that some new buildings are performing much better than the typical building stock. However, the reasons for this improved performance needs to be highlighted and communicated to the construction community and its clients to enable good practice to be replicated.

  25.  BSRIA therefore believes that government should do more to support the use of design assessment and feedback tools. The last proper research into building performance (that strongly influenced the development of airtightness regulations in the UK, and popularised post-occupancy evaluation and feedback) was the DTI-funded PROBE studies (Post-occupancy Review Of Buildings and their Engineering) carried out in the late 1990s. This research work urgently requires updating. Much post-occupancy is not in the public domain, and where it is, it is often not independently verified, does not use benchmarked methods of assessment, and is of varying quality.

  26.   As a matter of urgency, BSRIA believes that the government should commission a new investigation into the in-use performance of a range of building types using the same robust methods of energy assessment and occupant satisfaction surveys as applied in the original PROBE studies.

  27.  BSRIA also believes that far more should be done to ensure that buildings are subject to proper commissioning and fine-tuning in the early stages of occupation. It is a chronic shortcoming in UK construction that clients inherit poorly commissioned buildings. These buildings are often handed over to their users in a perfunctory manner, with the minimum of familiarisation training and professional aftercare. Rarely is enough time given to fine-tuning the building for the occupiers' needs. Education in the use of complex systems such as lighting controls and building energy management systems is also lacking.

  28.  BSRIA strongly supports moves by various industry bodies, such as the UK Green Building Council and the Usable Buildings Trust, for at least 1% of the contract value to be set aside for a "soft landings" approach to handover. This should include post-occupancy analysis, fine-tuning and energy labelling during the first two years of occupation.

  29.  A Soft Landings process should set out the expectations for a project in a way that can be checked and verified afterwards. Being explicit about the expectations also enables a building's design to be reality-checked as the design progresses. Changes can be reflected in a project's targets in a way that is visible to all. Soft Landings should also include a plan for the occupant migration process from an existing building to a new building in a way that occupiers understand what they are going to get, for example in terms of comfort conditions and controls interfaces. The handover and fine-tuning period should then be followed up by a period of professional aftercare by the designers for at least the first year. This should include energy assessments and occupant surveys to check that assumptions are being followed achieved in reality.

  30.   BSRIA believes that Government should take the lead and introduce a Soft Landings policy for all public sector procurement, to the extent that it has championed the environmental assessment method, BREEAM. BSRIA also believes that government should set aside research funding to create a robust suite of tools and procedures to enable this to happen. This would lend strong support to forthcoming legislation on energy certification for public sector buildings. This should also become mandatory in PFI and PPP procedures. (Note that this will require an improved service from the energy utilities as discussed in paragraphs 33 and 34).

  31.  BSRIA believes that government should be doing more to place an obligation on energy suppliers to deliver accurate energy consumption data. The onus is on the consumer to force the utility to deliver accurate energy readings, rather than on the utility. When an actual reading reveals overpayment, the utility automatically issues a credit note rather than refunding the consumer, enabling the utility to earn interest on the overpayment at the expense of the consumer.

  32.  The practice of estimated readings rewards over-billing and hampers attempts at managing energy efficiency. For example, the energy savings of using compact fluorescent lamps rather than traditional light bulbs can be swamped by variations in the estimated reading. Consumers will not know whether they are benefiting or not. This makes budgeting difficult, and cost-benefit analysis highly inaccurate.

  33.  There is a sound argument for requiring improved information attached to utilities billing that allows users to evaluate their own energy and consumption in relation to wider benchmarks. This is analogous to the requirements imposed on credit card companies to display interest rates and charges in a standard form. Historical normalised trending and use of comparative benchmarks could greatly assist in this process.

  34.  As part of the above process there should be pressure for utilities to adopt technologies permitting actual meter readings as opposed to the current practice of relying on estimated readings. Smart metering should become the norm for new build and meter replacement.

4.   Construction research and development (R&D)

  35.  Construction R&D is frequently considered as being disconnected from the conventional description of capacity in the construction process. In reality, the presence of a vibrant, sustained and well-managed long-term R&D base is a principal means of developing high-level skills needed to meet emerging markets. It encourages transfer of skills from other industries, and provides a steady stream of well-rounded and engineering thinking and process skills into industry. It also up-skills staff in private companies through collaborative projects.

  36.  There are abundant examples of this in practice. In the early 1980's the post of Energy Manager emerged from the availability of skills from the public utilities and Department of Energy-funded R&D that preceded the energy crisis in the late 1970's. Latterly, the inclusion of airtightness in Part L of the Building Regulations has been possible on a large scale due to R&D activity that began in the early 1970s. Without research-derived skills, it is unlikely that capacity would have existed to meet the short timescales demanded by legislators.

  37.  BSRIA would encourage the inquiry to reconsider the findings of the report undertaken by Sir John Fairclough: Rethinking Construction Innovation & Research, commissioned by DTI and published in February 2002. Although much of the R&D capacity analysis in Annex C is now significantly overstated (due to the withdrawal of sector-based funding schemes), the main conclusions and supporting arguments remain sound and achievable. Acting upon them would also add substantially to both the efficiency and sustainability of the supply side of construction.

  38.  Unlike much R&D that supports the development of new technologies and products, R&D in the construction sector frequently supports open processes that are used within changing project teams. This R&D therefore has little opportunity to develop intellectual property that can be used to generate revenue to support further R&D.

  39.  Historically, much of this effort was carried out within former nationalised industries (for example, CEGB, British Gas,) as well as the central government procurement agencies such as NHS Estates, Property Services Agencies and the former government laboratories such as BRE and TRL. These latter agencies were particularly important in providing evidence-based research underpinning legislation.

  40.  All these mechanisms have now been dismantled in favour of reliance on the private sector funding R&D against additional grant aid through the DTI innovation products. New investment in technology-based R&D is now almost exclusively carried out in university research departments. However, this does not benefit the open protocol knowledge, nor does it support the standards-making activities referred to earlier.

  41.  Welcome though the new DTI innovation funding programmes are, they may not be ideally matched to the new sustainability challenges that face those that supply goods and services though the construction industry's supply chain.

  42.  BSRIA understands that government wishes to use the necessarily limited innovation funding to create new products and services that can increase productivity and national competitiveness. To this end BSRIA applauds the reduction in the number and complexity of support schemes.

  43.  Unlike much of UK industry (though not uniquely), the construction sector has no significant market leaders able to create a dominant pull on reforming technologies or processes. The largest company in construction (Balfour Beatty) has less than a 3.5% market share. It is also very much a project-driven industry rather than a serial manufacturer.

  44.  The current DTI support products have, at their root, the premise that a single company can take direct benefit from IPR exploitation (and development) from a partner. It has difficulty in recognising the benefits that can flow from advances that create advantage for a large number of players, none of which could, or should, be exploited exclusively for individual gain. The development of standards on collaborative working is an example.

  45.  BSRIA recognises that there are many single-issue NGOs that address some of the areas covered above. Carbon Trust, WRAP, EST and CABE for example, all derive funds from the public purse in some form, but do not have a mandate to drive the wider sustainability agenda as it affects construction.

  46.  Elsewhere in Europe it is the norm for construction R&D supporting strategic initiatives to be seen as a national asset both to ensure internal cost efficiencies and to place national companies at a trading advantage, particularly for exports. For example Denmark is now an acknowledged leader in the supply of wind turbine technology where this has been derived from a combination of R&D, home market transformation process and legislative activity.

  47.  Within the European context, the UK National Platform has been established to represent UK interests. It is unique in publishing a national strategic programme. However, unlike most mainland European countries, the UK does not have a national construction research programme through which large-scale projects can be quickly formulated. It is a lack of extant national projects (with their associated networks) that makes access to the large scale EU funding possible. Based on the ECTP meeting held in January this year, it was clear that the UK is poorly prepared in comparison to others.

  48.   In order to make the National Platform have any value it is necessary for it to have some vehicle by which it can turn good intent into action. We believe that a newly formulated DTI funding product, designed from the outset to be directed at truly collaborative demonstration and deployment projects, would both provide the means to satisfy this need for construction as well as other sectors of industry.

  49.  The levels of funding required to have a profound effect are not large in comparison to sums expended overall, and indeed could quite properly be derived from some form of top-slicing from existing programmes such as those mentioned earlier. Since much of the revenue is already derived from construction-based work (for example. from landfill tax, which takes approximately half its funds from construction waste), this would go some way to restoring equity of application.

May 2007





 
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