How infrastructure programmes can meet the challenges of the Farmer Review
The Government’s formal response last week to Mark Farmer’s report: Modernise or Die did not hold many surprises. While endorsing the majority of Farmer’s proposals, Whitehall has been eager to point out that action around several recommendations is already underway, including reform of the CITB and efforts to boost residential delivery through modern methods of construction, as outlined in the Housing White Paper
At the same time, the Government has made clear that it expects an active contribution from industry to address the challenge posed by Farmer’s review – that of raising productivity through investment in new skills and methods.
The elephant in the room remains how to fund and facilitate necessary change.
Whitehall has passed over Farmer’s recommendation to raise a charge of 0.5 percent of a project’s total construction value from clients that cannot prove how they are delivering skills and innovation improvements, on the grounds it would risk damaging developer confidence and lead to cost inflation. At the same time, although the Construction Leadership Council (CLC) is pushing for a £250 million sector deal from Whitehall through the Industrial Strategy Challenge Fund, direct investment by the state beyond this is unlikely to be forthcoming.
There is, however, a third way - which is to leverage major programmes as a means to building capacity and capability within our industry. In guaranteeing a pipeline of work, these projects provide the certainty the supply chain needs to invest in innovation.
By thinking intelligently about how we design, commission and deliver these programmes, we can build the skills and methods the sector needs for the future.
We have already seen this with programmes like Crossrail, which has helped create world-class capability around tunnelling and underground rail infrastructure that can now be exported by UK plc. HS2, with its High Speed Academies, is now building on these earlier advances. Long-term frameworks such as Highways England’s Road Investment Strategy are similarly being designed to encourage innovation in skills and methods as a means to boosting productivity on the road network.
Private sector programmes on this scale are fewer and further between, but in the UK the biggest opportunity lies in the expansion of Heathrow. This scheme is at the most opportune phase of its development, with the client taking a hands-on approach to designing the supply chain. Forging close partnerships with suppliers across the UK to build the capacity and skills needed to deliver a highly efficient project is being placed at the heart of the programme. More productive working practices and innovation will be enabled through Heathrow’s hub logistic plans, that will also offer opportunities for the supply chain, including SMEs and manufacturers across the whole country.
These ideas – like those from Mark Farmer’s review – are not completely new and were central to the development of the largest major project at Heathrow, T5. Boosting productivity in the build through offsite construction and the standardisation of design elements - more akin to the manufacturing sector’s approach - enabled productivity and innovation to be embedded in the project. What has changed now is the urgency with which these techniques need to be developed and rolled out not simply on a single programme, but across the sector.
We need to identify how the skills and innovations developed for one part of the sector or one programme can be harnessed to boost productivity in others.
As Mark Farmer suggests, it is essential that the Government, clients and the construction industry share the responsibility for doing so. Together, we need to identify how the skills and innovations developed for one part of the sector or one programme can be harnessed to boost productivity in others – and to then shape programmes accordingly.
As the burden is shared by all three parties, so will be the benefits – in the form of world-class capacity and capability which drives industry innovation and ultimately the productivity of UK plc.
First published in Construction News.