Apparently Winston Churchill first declared, in 1934, that we should “never let a good crisis go to waste”.
And in 2009 Constructing Excellence published their report “Never Waste A Good Crisis”. This report argued for innovative responses to the economic downturn from the construction industry to improve performance in the longer term. Andrew Wolstenholme, the chair of the review team who produced the report, now chairs the Construction Leadership Council.
Earlier this week, I attended Constructing Excellence’s members’ forum to present back the work of the asset management task group, which I chair and saw a very interesting presentation by Tom Crane, Economist at Glenigan, summarising their 2014 UK Industry Performance Report. Tom’s presentation left me asking myself if we have indeed wasted a good crisis, the economic downturn we are now moving out of to improve industry performance.
Whilst the report’s Key Performance Indicators (KPI’s) show an industry succeeding in a number of areas, they have worryingly declined in a number of key areas.
As a consequence of increasing demand, material and labour costs have increased leading to extended delivery times and 60% of projects not being delivered on time, one of the worst levels of performance ever recorded by the survey.
Growth in volumes of work has led to increased staff turnover, reduced investment in staff training and a reduction in workforce diversity.
Worst of all client satisfaction has fallen for the last three years, with ratings for service and value for money having declined further during the last year.
Like me, many will be old enough to remember the last economic downturn of the early 1990’s and will see a pattern repeating itself. The industry supply and demand balance being played out as a difference in negotiating position between client and supply chain. The key consequence of which are
- Contracting organisations suffering heavy losses as they misjudge material and labour inflation, missing the economies turning point and
- Clients getting poor service and value for money as demand expands beyond the capacity of the industry, reduced during the downturn.
This all leads me to conclude that yes we’ve have indeed wasted a good crisis.
However, let’s not forget that that the next economic downturn will be along in a few years. Current demand will reduce sometime in the future and those businesses which will survive the next recession will now be innovating to deliver better quality buildings, which have better whole life financial and sustainable performance and deliver better client satisfaction.
So we’ve wasted this crisis let’s not waste the next.
John O’Brien is chairman of CE’s asset management task group, founder and MD of consultancy LCMB. LCMB help clients improve their return on build asset investment by improving the productivity and performance of buildings and by improving their whole life financial and sustainable performance. John O’Brien can be contacted on t: 01295 722823 m: 07711 032137 e: [email protected] w: www.lcmb.co.uk if you are interested in learning more about the asset management task group.