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Building a Better Future for the Construction Industry

The Construction Alliance blog
Monday, 8 February 2016

"Don't sideline SMEs on skills" says NFB national chair


In the Autumn Statement 2015, Chancellor George Osborne announced the introduction of an apprenticeship levy on businesses with salary bills in excess of £3 million.

Employers will pay 0.5% of their overall wage bill into a central fund, which will be used to encourage greater apprenticeship intake across the country. The National Federation of Builders (NFB) continues to welcome all attempts towards tackling the shortage of skilled workers, especially in the construction industry. In this sector, we have always believed that fostering collaboration between educational institutions and local SMEs is essential in order to promote a sustainable skills strategy. While the question of whether an apprenticeship strategy driven purely by an arbitrary number, that is the three million apprenticeship starts, can also guarantee quality apprenticeships is a debate for another day, we do need assurances over how SMEs will fund apprenticeship training.

I was therefore surprised when Nick Boles, the skills minister, explained that smaller businesses will receive apprenticeship funding coming from leftovers, after larger companies have used up their share of the fund. Boles specifically said: "While it will be possible for any employer who pays the levy to use their contribution on their own apprenticeship across the economy we don't expect all employers to use all their money. The levy money that is not used by those employers who have paid it will then effectively be recycled to support the apprenticeships of those employers who don't pay the levy."

The admission that smaller firms are going to see funds reassigned to them after large companies have taken their share of apprenticeship funding is shocking. What we need is an approach that brings together educational institutions and local businesses - especially SMEs. They have a better understanding of their own regional requirements and are appropriately equipped to supply much-needed local training and skills. Much progress has already been made through initiatives such as the National High Speed Rail Training Colleges in Doncaster and Birmingham and the Advanced Manufacturing in Sheffield. We need to maintain momentum by making sure that construction SMEs are at the forefront of this skills drive by putting them in the best possible condition to do so.

When I started my term as national chair of the NFB, I said that we need to harness the billions of pounds of planned public infrastructure work to invest in training young people and re-training experienced workers. Not to be too blunt, but this objective will not be achievable if Mr Boles' statement is any indication of the government's position.

- Simon Carr, national chair of the National Federation of Builders



posted by The Construction Alliance : 14:08
 
 

Monday, 28 July 2014

Where have all the bricks gone?


The current  demand for bricks is outstripping supply to such an extent that it has reached regional news as a general news item. Within a 24-hour period the Construction Alliance has been asked to contribute to two programmes asking: "Where have all the bricks gone and what is the impact on our industry?"

The facts are startling. Lead times are now as long as nine months, and manufacturers are becoming reluctant to give a lead time for fear of facing repercussions if they can not deliver. Brick prices are inevitably rising and we have seen increases of over 20% in the year. Most distressing for our balance of trade figures and for a heavy, low value, high energy product, brick imports are up 63% in the year. This is particularly affecting smaller businesses who do not need large regular supplies of the same brick and companies who do not benefit from national supply contracts with manufacturers.

Half the battle for our industry is to be aware and to be able to plan around these shortages. Within Stepnell we are doing our best to schedule deliveries as quickly as possible and scouring suppliers for appropriate bricks with the shortest lead times. In one extreme case, where we were suddenly short of 150,000 bricks, despite an early order, we were able to work with our client and local planners to quickly identify an alternative and thereby reduce the impact on our site programme.

Building new capacity
This shortage is the result of the long, hard recession that has seen demand slump and the less efficient brick plants close. A sudden increase in demand, principally driven by support for the housing market, has outpaced the industry's ability to switch on mothballed sites, or more likely, to build new capacity within the UK. If manufacturers can see a long-term demand in the UK and believe that energy policy and other regulatory pressures will remain benign, then they will invest in the UK and we are already seeing this happen. We should support this investment for the benefit of both our industry and our site programmes.

The link to the BBC Midlands piece on brick supply is http://www.bbc.co.uk/news/uk-england-28437677

- Mark Wakeford, Construction Alliance Chair






posted by The Construction Alliance : 16:18
 
 

Monday, 12 May 2014

An Industry Payment Charter


One of the first issues that the Construction Leadership Council has addressed is late payment within our industry.  The reason for its priority is because correcting the culture of late payment is seen by the Council as crucial if we are to succeed in creating the world class industry envisaged in Construction 2025.

The reasons why this is crucial include:
  • Collaboration throughout the supply chain is less likely to happen where payment is late or uncertain.  Without secure payment business will stop and the rationale behind securing our futures is ignored in favour of survival today.
  • An improving market requires cash to support increased levels of working capital, investment in staff, plant and corporate infrastructure.  Trading in a time of great change requires organisations to be nimble and opportunistic.  Both become increasingly difficult when payment is delayed.
  • Trading in improving markets can be a dangerous time to be contracted to an organisation with depleted cash resources.  Long payment terms will inevitably mean that the size of debts owing when a company goes in to receivership will be significantly greater than where payment terms are shorter.  (A doubling of terms from one month to two could double the size of debt owing.)  This means that a company going down is likely to drag many more with it as the individual size of debts owed to companies will be significantly greater.

The Council has therefore endorsed a Charter that promotes good practice and, through wide dissemination, aims to start changing the culture of late payment within our industry.  The Charter sets basic parameters, starting with fairness and openness, and includes some relatively easy targets to be achieved in terms of payment arrangements.  However, organisations should be under no illusions that these are the minimum terms and that best practice is better than this.  Companies are already using zero retentions and faster payments to attract the right supply chain partners, which may force the general pace of change.

The Council wished to promote a Charter that most organisations in the industry could sign up to, recognising the financial pressures that many companies are under.  They also wanted to encourage the openness that measurement and benchmarking can provide, as this is a significant mechanism to promote fair payment.  Public clients could then use these metrics to select appropriate suppliers under the new OJEU procurement regulations which are due out over the next twelve months.

Three messages should be clear to all companies within the construction industry.  One: Treat your supply chain fairly and pay them as fast as you can.  This should ensure that you get the best from your suppliers, which will enable you to provide the best possible service.  Two:  Beware of clients who take time to pay or do not treat you fairly.  Ask yourself why they need extra time to pay and what happens if they can’t?  Three:  Sign up to the Construction Payment Charter to demonstrate your commitment to your customers and suppliers.  Ask your clients to and suppliers to do likewise.

- Mark Wakeford, Construction Alliance Chair



posted by The Construction Alliance : 14:53
 
 

Wednesday, 18 December 2013

Construction 2025 - Our Survival in Our Hands


Industry and Government recently launched the 2025 strategic plan for construction setting out a vision for how they can together make Britain a global construction leader.

But what makes this improvement strategy so different to other industry actions plans like the Latham and Egan initiatives and, what is its relevance to us in our individual companies?

Construction 2025 is quite different to what has come before. It sets out far-reaching ambitions on sustainability, efficiency, and international growth. Its ethos, culture and delivery approach are fundamentally different.

For starters, this is the first time we’ve seen a joint government and industry strategy for growth. Both private sector and central government recognise the challenges ahead of us and that any solution requires a joint and collaborative response.

It’s also the first time we’ve had a Leadership Council driving the strategy. Past strategies have been left to single organisations to promote and there has been no coordinated approach to embedding new ideas or creating a focus.

And this is the first time an eminent report has been published at the bottom of the economic cycle when organisations are desperately looking for answers to problems within the environments in which they operate which they are struggling to solve. This recession has also reduced many companies’ capacity making it difficult for them solve these problems without external and coordinated help.

Pressures forcing industry change
There are enormous changes unfolding in our current business environment which we can’t control or direct, and we are only just beginning to recognise their implications. These include the way people value our services and what they expect from us. Education and skills are changing too – we need new skills-sets and expertise within our teams to stay competitive.

IT and communications are changing at lightning speed. Our managers must deal with significantly more information and make faster decisions. Construction practices too are different to what they were just a few years ago. There is a greater drive for buildings to be more sustainable and energy efficient and to deliver better acoustic and thermal performance. We now work within tighter financial constraints, from the banks and HMRC.  The general all-round tolerances in which our businesses operate are getting tighter.

Working smarter

I know that in my own regional business we are facing a hugely competitive and rapidly changing environment and that our only solutions (and working harder and longer is not one of them) involve working smarter. Smarter for us covers a range of initiatives:  it means working with our suppliers to provide our customers with better value. It means working with our people to give them the knowledge and skills to plan better and innovate and implement new ideas and processes. It means trying to find the next generation of managers and operatives that our business needs to succeed. We do this by organising our own school visits and work experience programme, and by trying to retain a high level of trainees and apprentices.

Construction 2025 is a strategy for our industry, but its strength lies in the fact that organisations can use it to identify the actions that they need to take to survive and succeed, and the necessary commercial strategies such as BIM and fairness in supply chain payments they need to embrace to give them competitive advantage.

One of the most important themes of Construction 2025 is collaboration. This is vital within supply chains if we are to maximise innovation in both processes and products. Collaboration will be essential between our organisations that represent our individual sectors if we are to improve our industry image and tackle longer-term issues such as clarity in the demand for our skills and enforcing common standards throughout the industry.

If our industry is to deliver its strategy then individual organisations will need to identify this call to arms. They will need to mobilise their teams to work towards the objectives laid out in Construction 2025 and they will need to recognise that to do nothing will be tantamount to commercial suicide. They must support the forums and organisations that promote collaboration as not only many of the long- term sustainable answers can only come from these groups, but these organisations are well placed to support their members through the changes ahead. All this and more will need to be done in the interest of creating long term profits for our own companies and the industry as a whole.


- Mark Wakeford, Construction Alliance Chair



posted by The Construction Alliance : 11:17
 
 

Friday, 17 December 2010

Procurement to be a major campaign issue


CECA members and others in the construction industry are concerned that in the focus on CSR and the Government’s drive to reduce public spending, which CECA supports, positive areas of public policy reform are being overlooked.
Procurement is an area in which a programme of positive reform of the way in which both clients and contractors procure construction services from their supply chains could make major efficiency savings and reduce a burden on contractors that has grown significantly in recently years.
  • Implementation of PAS 91 across the infrastructure sector – Government’s own estimates suggest that this alone could save construction industry £250 million a year
  • Introduction of standard reference form for contractors, offering potential resource savings for both clients and contractors
  • Roll-out of more suitable forms of indexation for long-term contracts, ensuring appropriate transfer of risk between contractor and client, improving competiveness of bids
  • Mandatory restrictions on the number of firms allowed to tender for public sector contracts, ensuring contractors do not have to face unacceptably high bid costs.
The key element is to drive waste out of the delivery of infrastructure. In 2010, CECA and ACE demonstrated that business needs effective transport infrastructure to ensure productivity and growth. Effective and efficient infrastructure is a matter of national importance, a key part of the economic recovery and must be delivered with less waste. Procurement must be high on the agenda in 2011.
- Phil Morgan – head of external and public affairs, Civil Engineering Contractors Association



posted by The Construction Alliance : 13:17
 
 

Wednesday, 6 October 2010

Procure smarter


In his speech to the Tory Party Conference this week, cabinet office minister Francis Maude said that the Government was entitled to receive "handsome discounts" from its suppliers.
The Construction Alliance is very concerned that the existing procurement practises and mechanisms for awarding work continue to be used and that the savings that Government needs are simply being achieved through reducing the overall budgets. 

It would be far more effective to ‘procure smarter’ than procure traditionally.

We believe that there are many inefficient practises in procurement and our members would be pleased to support the work of the Government’s spending advisor Sir Philip Green on waste. If he is successful then the industry will be able to combat the effects of falling turnover and the significant impact of reduced training of apprentices and young managers.

The member federations of the Construction Alliance have been suggesting mechanisms to improve the efficiency of Government procurement. The Strategic Forum for Construction, which is construction’s only pan-industry body, is now concluding a number of initiatives aimed at improving efficiencies within the industry.  Key amongst these are better integration of supply chains, preparations for the carbon economy, better health and safety and work on Construction Commitments.  Also on the agenda is better regulation to reduce some of the structural inefficiencies within the industry.

-       Mark Wakeford – chief spokesperson, the Construction Alliance



posted by The Construction Alliance : 09:40
 
 

Wednesday, 15 September 2010

You can make the difference


The Construction Alliance is a collaboration of trade organisations that represents a wide cross-section of the construction industry.

The Alliance has been formed at an opportune time. The UK faces unprecedented fiscal pressures that will affect both public and private investment and our markets are changing as our customers alter their priorities and demand ‘more for less’. Our position within the supply chain, with our all-round visibility, puts us in a unique position for advising The Strategic Forum for Construction on viable and practical steps that our industry can take to meet these challenges head on.

We have set up this website to communicate with our founding trade federations. We hope to use it as a platform to debate ideas and issues with members who wish to help us in our mission to inform government thinking and to promote best practice throughout the industry.

The Forum is currently addressing how our industry can deliver ‘more for less’ and I look forward to hearing members’ ideas for promotion at the Forum and to keeping members informed of our deliberations. I urge you to participate in this debate, either through the discussion board on the website, or through your trade federations. It is an important debate which could dictate our working environment for the next generation and it is our members, with front line experience, who will make the informed difference.

-       Mark Wakeford – chief spokesperson, the Construction Alliance



posted by The Construction Alliance : 12:35
 
 

 
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