Blog: The Great Productivity Challenge
Stephen Good, chief executive of the Construction Scotland Innovation Centre, challenges the sector to be more adventurous to avoid standing still.
We may still be living in rather uncertain times in the Scottish construction industry, but if I could offer one piece of advice to a business looking to secure its future it would be this – whatever you’re thinking of doing, think bigger. Be open to change and embrace new opportunities, because doing things the way you’ve always done them is the biggest risk to the future sustainability of your business.
It doesn’t matter whether you are a start-up SME or an established major contractor, the message is relevant. Every business interested in its future must make the decision between standing still and progressing. History is littered with examples of businesses that failed to progress and paid the ultimate price. Nimble, dynamic businesses that think and act in an efficient, lean manner tend to be more resilient.
There’s a widely held perception that the Scottish construction industry’s productivity is poor and it’s true that there is a widening gap between the productivity of the Scottish economy as a whole and that of the construction industry. Demonstrating this, construction sector productivity has declined since 2008, remaining significantly below 2008 for GVA per construction worker.
However, even very small improvements in productivity can drive significant gains for the Scottish economy, and impact on both the cost to the client and bottom line profit. That’s why it’s so important that we as an industry make improving our productivity a priority.
The industry has a range of unique characteristics that create some challenges for increasing productivity. It is a diverse and fragmented sector that ranges from one-man-bands to major contractors, from suppliers to architects. There are so many different processes, including planning, financing, design, procurement construction, operations and demolition, and your average project will bring together a huge range of different businesses to deliver a solution.
A particular challenge is the fact that construction clients are often not the project’s end user or customer, which places the focus on short-term costs rather than lifetime value. The industry also suffers from some negative perceptions and this makes it difficult to attract and retain skilled workers and graduates. It is continually failing to convince women, for example, that it can offer them rewarding career prospects. As long as this remains the case, the industry is missing out on a huge untapped pool of talented future leaders.
Construction Scotland Innovation Centre recently marked its second anniversary by co-hosting a conference, alongside Construction Scotland, which was attended by more than 300 leading industry figures. One of the day’s key themes was improving productivity. CSIC and its partners have put an immediate focus on increasing industry awareness of the benefits of improved productivity, and we are supporting the delivery of a series of events to help companies achieve this.
Areas that have the potential to significantly advance construction efficiency include the widespread use of digital construction and BIM, effective performance measurement, greater use of smart construction techniques like modularisation and off-site fabrication, and improved job-site efficiency through more effective use of technology, people, processes, materials, equipment and data. Appropriate procurement policies and practices that support collaboration and timely planning would also make a huge difference.
CSIC is 100 per cent focused on supporting business innovation and collaboration and I strongly believe that these are two of the biggest keys to improved productivity. Across our 13 Scottish university partners, we have a wealth of expertise and transferable research around productivity challenges faced by other industries. It would be remiss of the construction industry not to tap into that expertise.
An example is industry’s Offsite Hub, where nine of the most advanced offsite manufacturers in Scotland have recognised that there’s a huge market in the south of England that they are well placed to deliver solutions to. Rather than each of them trying to do it themselves, they are pulling together in a coordinated approach to tackle key issues, including how they grow the skills that will allow them to expand their capacity into wider UK markets, and ultimately offer a value proposition underpinned by efficient productivity.
Given that the construction sector has often been perceived as risk averse, traditional and conservative, one challenge for CSIC is to encourage firms from opposite ends of the innovation scale to work together. To inspire businesses to share information, we’ve introduced experts from out with construction, like the pharmaceutical industry, into workshops to share their experience of the benefits that working together on common problems can bring. We are here to invest in innovative new projects, and often these deliver greatest impact when the businesses work together, sharing ideas, knowledge, challenges and rewards. Collaboration is key.
There is a whole section of society, not just in the construction industry, that finds the word ‘innovation’ a bit scary and they associate it with risk and cost, the same way people wrongly believe improving productivity means working harder for longer. Our message is that the risk really lies in doing nothing. We’re not here to help you take risks that will make a business fail; we’re here to challenge and support businesses to do things better - and ultimately drive more profit.
To find out more about the Profit through Productivity programme, visit www.cs-ic.org/productivity
The next free event in the Profit through Productivity programme is:
Business Breakfast – ‘Engaging in Change and Developing a Culture of Continuous Improvement’
Aimed at business leaders and managers who are looking to introduce a culture of change within the business. Understand how to create the conditions to engage the workforce, identify opportunities to ‘do things better’ and deliver process improvements to benefit the business.
Date: 9th December 2016
Venue: Hampden National Football Centre