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Building Productivity into the Construction Sector

15 May 2018

The modern approach to production always seems to focus on the new ‘hi-tech’ industries. The most profound impact though of these modern approaches will have the biggest impact on our most traditional of industries.

We have only made consumer electronics and TVs for the last 50 years or so.  We’ve only been making cars for the last 100 years.  But we’ve been in the business of construction for millennia. Sometimes though for our most traditional industries, change can take the longest to make due to custom and practise.

One traditional industry – agriculture, has undergone a rapid change in the last 20 years.  In 1840, 24% of the population worked in agriculture[i], which for its time was a low number due to the rapid industrialisation of the UK. These days, agriculture employs less than 1.3% of the UK workforce.  However, the adoption of new technology has meant that labour productivity has increased by 250% since 1973[ii].

Productivity in the construction industry has flat-lined since 1994, whilst the whole economy has improved by around 30%[iii].

The publication of the UK Government’s Made Smarter review in October 2017 highlighted that through adoption of modernised digital approaches by businesses, the size of the prize for the UK economy is an eye watering £455Bn over the next ten years. 

And the sector that has by far the most to gain from this new digital approach is construction, with a predicted £88.9Bn of additional value – that’s 20% of the total.  Compare that to £17.5Bn for the aerospace sector (a sector that the UK is a world leader in) and you can see that the construction sector’s prize is 5 times that for aerospace.

There are no silver bullets to improve productivity in any industry – however that does not mean we should not try. Looking to other countries, we can see that this is not a ‘UK’ specific issue.  In fact, UK productivity beats some of our European neighbours – even Germany who is often viewed as the paragon of productivity virtue![iv]

Digital transformation offers huge potential to manufacturing over the next decade.   The construction sector has the greatest opportunity to embrace this new digital world and through techniques such as offsite manufacture, profoundly increase productivity.  This will have significant benefits both for business through improved profitability and societal through the provision of high quality affordable housing.

Scotland’s construction industry is expected to grow over the next five years according to forecasts by the Construction Industry Training Board.   A 3.9% growth in public housing each year is expected for the 2018-22 period with private housing growing at just under 3%.  Much of this driven by the Scottish Government’s target to build 50,000 affordable homes by 2021.

 

Scotland has demonstrated its commitment to improving construction productivity through the establishment of the Construction Scotland Innovation Centre (CSIC). This centre has been created to allow businesses to gain hands on experience of current technology that will improve building techniques and productivity.  Focused on Business, Product, Process and Service forms of innovation; CSIC offers advice, funding, facilitation and access to the appropriate expertise.  It facilitates collaboration with Scottish businesses, academia (through 13 partner universities) and public sector organisations.

It’s for anyone within the construction industry to use, with annual membership packages and pay-as-you-go models on offer.  The centre’s Innovation Factory has been designed to give businesses hands-on experience of labour-saving technologies in advance of purchase to de-risk any investment decisions, with everything from robots to offsite manufacturing cells and innovative timber cutting and assembly equipment.

A productive construction sector will be at the heart of a productive economy.  Providing much needed infrastructure improvements which attract foreign investment coupled with a sustainable and low-cost approach to new housing will also provide the societal benefits on affordable housing that the UK needs.  

My challenge to you is to think how you can improve your construction business by at least 10% in the next 2-3 years and I encourage you to engage with the CSIC for a low risk approach to achieving this.To find out more about how to take advantage of the Innovation Factory, contact the CSIC team on hello@cs-ic.org, 0141 212 5250 or www.cs-ic.org. 

Blog post by Nick Shields, Director of the Scottish Manufacturing Advisory Service (SMAS) at Scottish Enterprise.
isory Service (SMAS) at Scottish Enterprise.

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