With Glenigan releasing the new 2015 UK Construction Key Performance Indicators, I recently attended the launch of the 2015 UK Performance Report at The Department of Business Innovation and Skills in London. I wanted to understand more about the KPI’s, what they mean and how key influencers in construction interpret them.
The Report aims to map trends and set benchmarks across the construction sector. In this blog I go through the key learning points I took away from the event:
Point 1: Construction is finally out of recession, but still a has long way to go until it has recovered
Allan Wilén, economics director at Glenigan, started the day by saying that the construction sector had finally come out of recession. This improvement in the market was seen from early project starts measured by Glenigan, this was particularly noticeable just before the 2015 elections. However with the market improving and construction volumes rising, inevitably costs of construction rise.
Construction profitability was seen to have dropped rapidly during the economic downturn, in the latest KPI’s it is shown to have increased significantly during the first part of 2015. However the ONS released figures showing a slowdown in growth, thought to be counter intuitive by Glenigan and other industry bodies.
Tom Crane, economist at Glenigan, then said that only 40% of projects in 2014 were completed on time. One of the worst sets of results recorded. Gillian Econopouly, head of policy at CITB, referenced the housing challenge. We are finally growing the number of new houses built which will help to meet pent up demand.
The overall takeaway from this is that although Construction is heading in the right direction, there is still a great deal of work needed to get it back to the performance levels enjoyed before the economic downturn.
Point 2: ‘The skills puzzle’ affecting construction recovery and hindering productivity growth
The KPI’s show a clear slowing in staff loss during 2015, stated Tom Crane. This has been with a decline in skilled workers, but has been balanced out by a modest upward trend in training, sustained over the last couple of years. The KPI’s also showed the proportion of the workforce under 24 has fallen alongside the proportion of women in construction, overall showing that the industry is having trouble bringing in a younger workforce, to replace those retiring.
Gillian Econopouly went on to say that productivity and profitability are improving. However due to staff shortages companies are finding it hard to release employees for training. Yet companies are creating new roles, as well as modernising other roles, something that has not been seen in construction for quite some time.
A cause for concern is the rise in fatalities in construction, showing a review and improvement of health and safety is needed. Gillian calls all of this ‘the skills Puzzle’ asking ‘how do we solve these issues to help the recovery of construction?’ Overall these issues are hindering productivity growth in construction, which, according to KPIs, has contributed to 20% of construction firms making a loss in the last 12 months.
Point 3: Overall environmental performance is improving in 2015, but there are still issues
Environmental performance was seen to be positive through 2014, reports Tom Crane. And according to the KPIs overall environmental performance is improving in 2015 as we are designing buildings which are more energy efficient than a few years ago. Stuart Blofeld of BRE Smartwaste, presents the findings on waste from construction and how it has reduced. He mentioned that the total waste figures in the KPI’s is only an average of waste produced, and is broken down further within these figures by; construction waste, demolition waste and excavation waste. Stuart then goes on to say how these 3 types of projects are all performing similarly and that smaller projects are managing their waste better than larger projects. Projects located significantly closer to a waste facility will produce more waste than a project located further away, possibly due to the cost of transporting their waste to a suitable facility. Finally Stuart went through an example and demonstration of Smartwaste’s new online waste monitoring tool for projects in the UK.
To summarise, environmental performance is improving and will continue to improve as we strive to design more energy efficient buildings. However in terms of construction waste, more needs to be done to manage this in an environmentally sustainable way.
Construction is edging out of recession and becoming more positive in terms of productivity and growth. There is a big emphasis on construction to perform better environmentally and to manage waste better going forward. However issues are still limiting recovery, mainly skilled labour. Ultimately, increasing investment in construction is needed to develop the industry skills base and to meet the overall rising demand of construction.
These KPIs show how our industry is changing, all be it slowly, and emphasises the need to keep informed about the needs and drivers influencing our customers. Competitive Advantage publish reports and conducts bespoke research that informs companies on these subjects.
Download the full version of the 2015 UK Industry Performance Report
More information about the online waste monitoring tool by BRE Smartwaste
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