UK market intelligence: Boost productivity rather than compromise net zero
As recessionary clouds gather over the UK economy, it is no time for the construction sector to compromise on its sustainability ambitions.
Our latest UK Market Intelligence report (UKMI), recognises that the coming months could see some clients reassessing the business case for capital investment. Some may pause, defer or scale back their projects; or scrutinise cost savings before deciding to proceed.
Businesses should focus on best practice, expertise and technology to boost productivity and make better informed decisions that strike the right balance between short-term cost, long-term value and enduring environmental priorities.
Martin Sudweeks, UK Managing Director of Cost Management, said:
Given that the most modern, energy-efficient technology and materials are rarely the cheapest, there’s a danger that this desire to cut costs now may lead the construction industry – and its clients – to rein in their sustainability ambitions. Preventing this will require rational, whole life decision-making and the sector coming together to drive the efficiencies needed to keep its net-zero agenda on track.
This warning comes against a turbulent economic backdrop, with the Bank of England base rate at a 14-year high, a quarterly reduction in construction new orders of 10.4 percent in Q2 2022, and a likely softening in construction output. Inflation remains high, and the UKMI’s forecasts for real estate and infrastructure tender price inflation across 2022 have both been raised to 9.0 percent. Though in 2023 this is expected to reduce to 3.5 percent for real estate, and 4.5 percent for infrastructure.
Given the current squeeze on the sector, we are reiterating the importance of boosting productivity and strengthening business cases for investment in net zero.
We recommend that clients follow several key tactics, including sustainable procurement approaches, keeping project team structures and processes lean, fostering a digital-first culture across the supply chain, accurately measuring embodied carbon alongside construction cost, and operating a programmatic approach to align all of these goals.
Martin Sudweeks continues:
“Recent evidence from several public sector capital expenditure programmes show it is achievable to reduce costs while keeping on track for net zero. The returns on investment for energy efficient technologies and retrofit projects are better than ever, and improving day by day.
We can make construction processes and procurement more sustainable while keeping costs in check with the right blend of expertise and technology. It is about turbocharging productivity and allowing decision-makers to strike the right balance between short-term costs and long term economic and social value.