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A £3 billion migraine


Improvements may have been made, but the construction industry is still wasting vast sums of money.

More could be saved if CAD was used to its full potential Estimates vary slightly, but construction is considered to make up about 10 per cent of UK GDP, currently measured by the DTi at £0.84 trillion. It performs a vital role in delivering improvements to both the economy and social infrastructure, through both the public and private sectors.

However, the UK is hamstrung by its tendency to leak construction profits like the proverbial builder's bucket. The past 20 years have seen myriad research vehicles analysing, investigating and probing the industry, reaching various conclusions about how improvements might be made.

Alarmingly, the figure of 30 per cent inefficiency is a recurring theme.

John Egan's Rethinking Construction report reflects on 'what is known about the amount of waste in construction. Recent studies in the USA, Scandinavia and this country suggest that up to 30 per cent of construction is rework, labour is used at only 40-60 per cent of potential efficiency, accidents can account for three to six per cent of total project costs, and at least 10 per cent of materials are wasted'.

Before Egan, Michael Latham aspired to see, 'a 30 per cent improvement in productivity', in UK construction.

Furthermore, an OECD study suggests that UK input costs are generally a third of those of other developed countries, but output costs are similar or higher. The message is clear - there is plenty of scope for improving efficiency and quality simply by taking waste out of construction.

In search of a cure Egan believes that, to drive dramatic performance improvement: 'The construction industry should set itself clear measurable objectives, and then give them focus by adopting quantified targets, milestones and performance indicators. This is evidently not the case at present.'

Peter Cunningham, director of productivity at Constructing Excellence, shares this vision of a leaner industry. He says that:

'Measuring and benchmarking performance is the first step for any organisation looking to understand and improve their performance'. His key objective is to assist and support companies, organisations and the industry to engage with performance in this measurement and as part of a continuous improvement process. The headline target for Constructing Excellence is to assist organisations to increase their productivity by 10 per cent by engaging with Constructing Excellence products and services.

In a similar vein, Mervyn Richards, at the government-backed Avanti Programme, aims to: 'deliver improved project and business performance through the use of ICT to support collaborative working'. Production information is defined as 'the information prepared by designers, which is passed to a construction team to enable a project to be constructed'.

From an extensive study of production information drawings during his career in industry, Richards concludes that about 18 per cent of waste within construction can be attributed to inefficiency in this area. He says:

'Duplication, non co-ordination and ambiguity at the design stage cause problems when projects get to build stage. The evidence shows that improvements in the quality of production information reduce the incidence of site quality problems and lead to significant savings in the cost of construction work.'

The role of IT Since 1987 there have been huge changes in the IT and CAD scene. Practically every design office now has a computer and access to the Internet. But this has not automatically led to better production information.

Necessary changes to the management of the design process have not been made; in consequence CAD systems are not being used to their full potential.

Avanti reflects that: 'There are enormous benefits to be gained, in terms of eliminating waste and rework for example, from using modern CAD technology to prototype buildings and by rapidly exchanging information on design changes. Redesign should take place on computers, not on the construction site. fiRight first timeflmeans designing buildings and their components so that they cannot be wrong.'

Clearly this is a significant area where improvements can be realised. CAD is now widely accepted to comprise about 75 per cent of modern office production information, across the UK.

So, to recap: 18 per cent of waste could be addressed by better management of production information - just over £4.5 billion. If CAD and, to quote Richards, 'management of electronic data', accounts for three quarters of this - then we have a £3 billion opportunity to improve using CAD alone.

Learning from others UK construction can learn from other major industries that have faced the challenge of improving productivity, such as car manufacturing, steel making, grocery retailing and oil and gas.

The Lean Construction report reflects that: 'Globalisation of the economy has led to increased competition in what is rapidly becoming a universal market.While the manufacturing sector has been relatively quick in responding to the changing business environment, the construction industry has lagged behind. The manufacturing industry has derived great benefits from measuring its performance through critical success factors as part of a regime of continuous improvement.

'The construction industry can adopt similar practices of performance measurement and comparison to develop a culture of filean constructionfl through continuous improvement. The objective of this approach is to lower costs and increase productivity, resulting in a sustained competitive edge.

This approach will involve development of metrics for performance measurement and benchmarking them with the best'.

Need for investment Lack of investment is a major factor. A DTibacked study found that within UK construction, 'there is deep concern that the industry as a whole is underachieving. It has low profitability and invests too little in capital, research and development and training.'

Egan's findings also pick up on this reluctance towards investing in people: 'There is a crisis in training. The proportion of trainees in the workforce appears to have declined by half since the 1970s and there is increasing concern about skill shortages in the industry. Too few people are being trained to replace the ageing skilled workforce, and too few are acquiring the skills required to get full value from new techniques and technologies'.

This knowledge gap is reflected in the latest statistics produced by cadtest, which has produced a reliable national CAD benchmark, hosted in association with The Architects' Journal. On a basic CAD skills assessment, the national average is currently 72 per cent. Worryingly, 40 per cent of candidates score below this figure. The need for basic CAD training is apparent.

The drive to improve standards and profitability is gathering momentum and support, not just from local and central government, but also from the industry's main client base. Underachievement can be blamed for a growing dissatisfaction among both private- and public-sector clients.

Projects are widely seen as unpredictable in terms of delivery on time, within budget and to the standards of quality expected.

Investment in construction is seen as expensive, when compared both to other goods and services and to other countries. In short, construction too often fails to meet the needs of modern businesses, and rarely provides best value for clients and taxpayers.

The message is clear. Clients need better value, and construction companies need reasonable profits to assure their long-term future. There is a pressing need to draw all the promising developments in construction together and give them direction.

Listen to clients We have seen the introduction of client-led initiatives such as the Construction Round Table (CRT) - a small group of leading customers from different market sectors, committed to making significant improvements in the performance of the construction industry.

This group - which includes BAA, government agencies, London Underground, M&S, McDonald's, Railtrack, PowerGen, Mobil and Unilever - is expected to invest some £5 billionplus a year in construction and related supply over the next five years. The goal is to reduce the cost of projects by at least a third, while improving standards.

In addition, several hundred construction clients have joined forces to sign 'The Clients' Charter'. This focuses on improving quality in several areas, including:

lpromoting a collaborative approach to design, with design quality ensured through the process and with fewer changes;

lcredibility through annual reporting of performance and demonstration of continuous improvement;

lacceptance of the need for measurement, team-building and training;

lraising the industry's performance to improve national and international competitiveness.

The clients' conclusions are clear. They demand to see: 'A quality-driven agenda:

Quality means not only zero defects, but right first time, delivery on time and to budget, innovating for the benefit of the client and stripping out waste, whether it be in design, materials or construction on site. It also means after-sales care and reduced cost in use. Quality means the total package - exceeding customer expectations and providing real service'.

To give the final word to Egan: 'We wish to see, within five years, the construction industry deliver its products to its customers in the same way as the best consumer-led manufacturing and service industries'. The time to take positive action has arrived.

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