So, as 2018 begins, BESA and ECA look close to achieving the beginning of the end for retentions, as Peter Aldous MP introduces a first reading of a Ten Minute Rule Bill with the aim of amending the 1996 Construction Act. The Welsh Parliament already announced that from the 1st January 2018, project bank accounts will be used on government construction projects over £2 million.
If government, as construction’s biggest client, takes the lead to end retentions it could signal their disappearance from private sector projects too – a relief to building services consultants, contractors and installers who have suffered from this damaging practice.
In other developments, the Construction Sector Deal was finalised as part of the government’s Industrial Strategy. The aim is for £170 millions of public sector money, and £250 millions of private cash, to create a ‘hub to commercialise technologies capable of building assets which are cost effective and energy efficient’.
If you cut through the government-speak in that statement, the construction industry is being offered the support to make modular and off-site construction, as well as digital tools a more attractive option on projects.
Construction as a whole should see its margins improve
A focus on training
Alongside support for use of modern tools, training is topping the agenda for the construction sector.
Easier access to training and a more effective approach to promoting careers in the industry are expected to improve performance overall. Training for existing employees is also included, so that the sector can up-skill itself in the coming years.
The end to retentions isn’t officially linked to the Construction Sector Deal, but the two do go hand-in-hand. Retentions impact negatively on cash flow and business certainty, both factors that tend to push training down the agenda for companies who simply can’t afford the investment.
And this in turn has contributed to a lack of knowledge about how to apply offsite, modular and digital.
It looks like 2018 could mark a really important turning point for the construction sector. But you don’t get something for nothing, and government isn’t simply being unusually generous. In return for financial support, construction is expected to step up its game.
There are four objectives at the heart of the Construction sector deal:
33% reduction in the cost of construction and the whole-life cost of assets.
50% reduction in the time taken from beginning to end of new build and refurbished assets.
50% reduction in greenhouse gas emissions in the built environment.
50% reduction in the trade gap between total experts and total imports of construction products and materials.
More for less and at speed
Let those four points sink in.
The government wants more sustainable buildings, constructed faster and for less money – and they have to operate more efficiently too. We also have to watch the source of materials and products too.
Those are some very big asks of a sector which has been slow to embrace the new, or to adopt new ways of working (see my last Hub column on that topic).
The question is therefore, can construction deliver what its biggest customer wants? Particularly if that customer is offering to help.
Construction is one of the largest sectors in the UK economy – with a turnover of £370 billion, contributing £138 billion in value added to the UK economy and employing 3.1 million people (9% of the total UK workforce).
Now that government is paying this sector the attention that it deserves, the industry is going to have to become focused on delivering what the customer wants.
The upside of dealing with this challenge is that it’s not only the customer who will benefit from a change in approach.
By making better use of technology that’s already available, construction as a whole should see its margins improve, particularly if the tide turns against retentions and the expensive legal wrangling that comes with it.
This definitely looks like a case of the customer being right.
Karen Fletcher is editor of Modern Building Services.
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