The challenges of sustainable construction are plenty and lie not just in adopting innovative practices (such as the use of technology and more sustainable construction materials), but in reconciling the fragility of our planet with parties' willingness to change typical risk allocation against a backdrop of adversarial behaviour, the fragmented nature of the construction industry, complex legal arrangements and, of course, profit. To add to these stress points we now need to factor in the impact of COVID-19 both in terms of the way we work and the impact on the economy.
It is no secret that the construction industry is a major polluter. According to Historic England, the built environment accounts for 42 per cent of the UK's carbon footprint. Two of the most obvious areas where action is urgently required relate to the sector's reliance on fossil fuels and its dependence on the excessive use of water and concrete. Why are these materials so heavily used? Fundamentally, they are limitless. As long as we continue to expand the built environment in all of its forms, the demand will be there, but the relatively short-term benefits of our existing practices are now understood and there is more recognition than ever of a need to change course.
But, of course, we are all too aware in the current pandemic that the industry itself is vulnerable. As the Confederation of British Industry (CBI) highlighted in their report Fine Margins, even during relatively good times the sector exists in an environment of low profit margins, with the 10 largest UK contractors making an average negative profit of -0.1%. A lack of confidence and investment in the sector has encouraged an operating environment that is both "short-termist and unsustainable". In the now 25 years since the publication of the Latham report, UK productivity as a whole has increased slightly, while that of the construction industry has not.
According to the CBI, we need to take a different risk approach to pave the way for positive cashflow throughout the supply chain, with one route being a reduction in the use of retentions and the speeding up of payment. This would, they say, enable businesses to invest more money in new technologies and explore innovative solutions to challenges. The challenges thrown up by the pandemic underline the merits of this approach: the importance of positive cashflow throughout the supply chain to keep construction businesses afloat has been stressed by the UK Government and by industry bodies such as Build UK and the Construction Leadership Council.
Adopting new technologies and innovating to solve challenges and increase productivity takes time. But the UK Government has launched a £72 million fund for the "Transforming Construction Alliance" to deliver the Construction Innovation Hub. The Hub makes a big commitment, stating that they will "be a catalyst for change" in seeking to transform construction through digital and advanced manufacturing technologies, bringing together world-class expertise from the Manufacturing Technology Centre, the BRE and the Centre for Digital Built Britain.
In terms of digitisation, an enormous number of construction projects already make use of Building Information Modelling (BIM), using 3D and 4D digital representation for the design, scheduling and costing of new projects. BIM is also used to inform the eventual asset management of a building, providing a go-to source of information for the whole lifecycle and facilitating activities such as renewal, enhancement, decommissioning and disposal. Drones are increasingly common and allow progress to be tracked using fewer people, but without the risk to health and safety. Telematics track how vehicles are used, picking up on safety concerns and allowing users to plan how to use them economically and sustainably.
Balfour Beatty, in their report, Innovation 2050 – A Digital Future for the Infrastructure Industry, predict a human-free construction site within the next 30 years where robots will work in teams to build complex structures, with elements of the build being self-assembled. But it is unlikely that all elements of a build will be automated. It seems more probable that construction workers will instead gain the skill of programming 'cobots', machines that work alongside humans, to assist with the bulk of tasks. These changes will inevitably have consequences for construction contracts, particularly as regards the allocation of risk – for instance, when sub-contracting to providers of robots, who will take responsibility for mistakes and errors in workmanship? Will providers of robotics be able to obtain insurance coverage in the same way as traditional contractors? What happens if a provider becomes insolvent in the middle of a construction project? There will, inevitably, also be concerns surrounding confidential information and the protection of sensitive project data.
It is also predicted that infrastructure will move on from traditional concrete and steel to include new materials which will respond to their surroundings (i.e. the ever-warming planet). Self-healing concrete, which repairs cracks without the need for human intervention (providing an obvious life-cycle benefit), is one example. Other examples include kinetic technologies such as Pavegen and Lybra, both of which enable flooring to capture energy created from movement.
Single-purpose assets are likely to become less common, with a trend towards anticipatory design that takes a more holistic approach (a topic we will discuss in greater depth in one of our subsequent articles). This is likely to be especially pertinent for those developers investing in commercial office space in particular, because of the increasing requirement of occupational tenants for sustainable office environments that reduce their carbon footprint. Understanding the corporate and cultural considerations of the market will only become more important. In a post COVID-19 world, where it is not a given that traditional commercial tenants will want to lease as much office space as they once did, developers will need to adapt to beat the competition.
Talking about and anticipating these projected changes is fine, but cost and low profit remains a major barrier to innovation. The most commonly used building contract on largescale developments in the UK, the JCT Design & Build Contract 2016, is often so heavily amended to place all risk with the contractor that it can act as a barrier to innovation. However, standard form contracts do exist which facilitate a different ethos than the best value tender driving the whole approach to procurement.
Examples include the NEC4 Alliancing Contract, with its hallmark of being a multi-party (rather than a bi-lateral) contract with an integrated risk and reward model. This form allows all members of the supply chain, or 'Partners', to have an equal voice and share in the performance of the alliance as a whole as opposed to their own individual performance. The key benefit of alliance-based procurement of projects is said to be the focus on deeper collaboration. Target cost contracts, also NEC4 options, which can allow the contractor to share in the benefits of project cost savings may also provide good incentives to value engineer and think differently.
There are, of course, challenges. Developers, often funded, need project cost and time certainty and the classic design and build contractor will naturally seek to complete a project to its own financial benefit while completing works within the confines of the contractual requirements. While construction contracts and procurement methods in themselves may stymie innovation and sustainability, these contracts only reflect market realities. To change formal relationships and approaches requires all players to embrace a new path.
Author: Matt Pearson
