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Perfect storm or burning platform? Better together – excellence in 2014 and beyond

Understanding value diagram

Last week was the annual gathering of the 50+ national, regional, local and younger generation organisations that make up the UK Constructing Excellence movement. Peter Hansford, the government’s chief construction advisor, presented the joint government-industry Construction 2025 vision, but it emerged in the convention hall that for CE and the leading edge of the industry, this is not ambitious enough, we need those levels of performance sooner.

Construction 2025 Targets

The sector is being driven to do more for less, and to think globally and long-term, not just locally and short-term, about the solutions it offers. We face major challenges in delivery, for example in housebuilding, schools, low carbon refurbishment, water and rail programmes. The industry needs to make a step change in such delivery. The economy has created a ‘burning platform’ and a fundamental challenge to the way we do business and the future prosperity of our industry, and leading players need to respond radically. We need to move beyond incremental efficiency improvement and so-called best practice to achieve genuinely exceptional performance so that it figures among the world’s leaders. These leaders will:

  • have increasingly global, long-term business models,
  • be data and knowledge-rich,
  • be able to fund, deliver, operate and manage at higher levels of risk,
  • be coordinated – not fragmented – and collaborative in their approach to innovation, and
  • as a result, be rewarded for the value they create.

Vison diagram

The business relationship between client and contractor will be revolutionised. Businesses will only survive if they can deliver client outcomes and create improved performance that allow the UK industry to thrive at home and to compete at a global level. Key to this is to see the sector as the built environment supply chain, from operation and management of built facilities to commissioning, assembling, manufacturing and design. ‘Right to left thinking’, or the ‘increasing circles’ as the CE fraternity has grown to label them.

Industry business model needs to change from a vertical contracting model, with profit derived mainly through revenue, to an integrated model where organisations get rewarded for the value they create. Industry needs to stimulate innovation and overcome the structural, transactional, contractual and competitive barriers which currently fragments its efforts.

In short, the industry needs to be remodelled to create the clear, predictable and sustainable long-term value that will be increasingly demanded by investors, customers and end-users.

My next blog will cover some of the practical things that the Constructing Excellence convention challenged leading companies to address.

(This article first appeared on building.co.uk)