Modernise or die. That is the dramatic message delivered to the built environment community in the Farmer Review of the UK Construction Labour Model this week.
The government-endorsed review, authored by 25-year construction industry veteran and chief executive of real estate and construction consultancy Cast, Mark Farmer, claims that a lack of innovation and collaboration, coupled with a non-existent research and development culture in the industry, is hampering the sector.
“If you buy a new car, you expect it to have been built in a factory to exacting standards, delivered on time and to a predetermined quality,” says Farmer. “This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery. There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market.”
And Farmer reckons he might have a solution. Among the many recommendations in the report (available to download at www.cast-consultancy.com) is the introduction of a system similar to the carrier bag charge – that little stick that nudges us to think about the automatic action we are programmed to make.
The “carrier bag charge” would levy a tax equal to no more than 0.5% of a scheme’s construction costs on developers that purchase construction goods and services that do not support industry innovation, such as modular or off-site built housing. It is a small fee and one that would be easily avoidable, is the argument the review makes.
“The construction industry is in dire need of change,” says Farmer. “With digital technology advancements pushing ahead in almost every other industry and with the construction labour pool coming under serious pressure, the time has come for action.
“The construction industry doesn’t have the impetus needed for this change. It requires external action to initiate change,” he adds.
The report says the current pace and nature of technological change in society is such that unless the built environment community embraces this trend at scale, it will “miss the greatest opportunity to improve productivity”.
And if it takes a tax to force and industry to be more tech- or innovation-focused, then why not?
Paul Stanworth, managing director of Legal & General Capital, says: “With such a chronic shortage of homes in the UK, we see rapid evolution as a ‘must have’ for the industry, not just a ‘nice to have’.”
L&G has already latched on to that need by launching Legal & General Homes and investing in a 550,000 sq ft warehouse near Leeds, which will become the largest modular homes construction factory in the world. It has ambitions to build thousands of homes in a bid to help plug the gap between the current annual housing output of 132,000 and the requirement for 250,000 homes a year.
“This construction method is safe, clean and fast, providing a high level of consistency and durability,” says Stanworth. “We hope that the Farmer review galvanises the entire sector to invest in innovation and secure its future.”
“There is significant scope for radical transformation through the adoption of new technologies and advanced manufacturing approaches,” adds Laing O’Rourke chief executive and chairman Ray O’Rourke. “This will deliver the quality housing stock the UK urgently requires and directly address the acute skills gap that threatens our future.”
Tech touches every part of the real estate industry, from the materials used, the methods of construction, the fit-out of a building, to how it is let, sold and marketed. To ignore that may well sound the death knell for the industry. So while dramatic, perhaps Farmer’s exclamation does ring true: modernise or die.
Will the built environment crumble without forced adoption of innovation? Tweet us your thoughts @estatesgazette using the hashtag #moderniseordie
