What future for our industry?

What does the future hold for our industry?

On the front page of the Financial Times yesterday was an article about the incredible decline in construction output during 2011. Overall construction workload fell by a staggering 39%. This is the most significant fall for the past 35 years. There were turnover statistics from several of the major construction companies, including Kier and Balfour Beatty, which indicated the considerable reduction in their construction turnover in the period.

The quarterly GEP figures issued for Quarter 1 suggested that construction output was down by nearly 5% in the period. There are no regionally adjusted figures so I would anticipate that the decline in the regions is far greater as the overall figure will be bettered by investment in the South East.

This catastrophic level of change in any industry will inevitably reshape the future considerably. For the construction industry, clearly we will never go back to the past and the type of industry it was over the past 15 years will not be seen again. We are in a period of flux at present where there is little workload or revenue, but at the same time there are improvements in technology which could reshape how we design, deliver and operate buildings for the future.

All businesses are keen to set out a vision of sustainability which looks to provide steady employment and profit for those involved in the businesses, something which is clearly under considerable threat in the construction industry at present.

As I look into the future I believe it is impossible to predict where we will be in 2 or 3 years time. Long term investments are a considerable gamble with the future being so unpredictable. Many firms are shrinking their regional presences and looking to develop opportunities in the South, which will obviously drain talent from the regions. Organisations are consolidating and changing on a regular basis. International markets continue to be the lifeline of most organisations that are able to stay afloat.

This generation has never seen such a dramatic downturn, and construction leaders are drawing on much of their experience to maintain business sustainability. While it may be difficult to predict where any of us will be beyond the next 12 months, all we can hope is that when we do see a light at the end of the tunnel, the future will be different, but secure, as well as exciting and challenging. Hopefully we can all learn lessons from this period and ultimately ensure we all have a better future.

Living in a recession

Illustration by Claudia McGehee.

We are all in a very strange situation at present. We currently sit in the middle of a recession where all around us budgets are being cut funding is disappearing and businesses are contracting. On top of this we have the added unknown of a potential new Government and changes in policy.

For business all of this presents a new set of challenges. We have to try and second guess what a new Government may do and how we can plan a strategy around this. Many of the plans we are making are based upon how we operate today. However in less than a year the Government could very quickly implement new policies which would affect everything we do. You only have to look at the change of policy by the Learning and Skills Council to see the massive impact that this had on the construction industry in such a short space of time.

A counter to this uncertainty is the amount of opportunity which appears during such times. Companies looking at joint ventures or working together are on the increase. Markets which were previously saturated now provide opportunity. Even recruitment is providing opportunity. Over the last 10 years one of the greatest challenges to our business has been in recruitment for our needs. Now we find incredibly talented people working in warehouses or maintaining gardens.

Recession is just another business challenge where risk and opportunity have to be balanced for long term sustainability.

Investing in Standards During a Recession

Going back to the 80s I was one of the greatest critics of the BS5750 and the Quality Assurance process. I remember wading through huge documents and ticking thousands of boxes just to be able to demonstrate we had carried out everything in accordance with our procedure. The reason for my criticism was that I was not convinced that this delivered any real value to the business.

However, over a number of years the standards have been reviewed and have been changed to ISO 9001 which used the Demming plan, do, check, act model.

We spent a lot of time as a business reviewing ISO 9001 and decided to develop our own continuous improvement wheel based on plan, do, check, act. We used the 9001 standard as a base however. I remember in the past when we had a QA audit there was two weeks of frantic activity before the Auditor arrived to make sure that every box was ticked and every piece of paper was in the right place. Now we look forward to the auditor arriving and make no special arrangements for these particular days. We use the audit as opportunity for continuous improvement.

We have named out internal management system _scils (_space Continuous Improvement and Learning System) and have been able to integrate other standards within it without major change.

We have recently been accredited with ISO 14001 in relation to environmental standards. Far from believing that quality standards are a hindrance I have now moved my thinking to believe that such standards are imperative in time of recession. Particularly with ISO 14001 it has structured our thinking in relation to waste and risk. We now look at every aspect of the business and consider where waste is being produced and how we can minimise it. By measuring what we use in the first place we can monitor resource movements and percentages against others.

We are now aiming to include the ISO 18001 standard within our _scils model to ensure that our Health and Safety achieves the highest standards.

During a recession when process, waste and risk are very important I would recommend any business to invest in these standards to ensure that the organisation is run as efficiently and effectively as possible as I believe they add real value.

Batten Down the Hatches

Wikipedia

Over recent months one of the terms which I keep hearing in our industry and in particular from architects is that they plan to ‘batten down the hatches’ and ‘ride out the storm’. I think in the past this has been the way many architectural businesses have responded to recessions and generally the profession is badly hit by such down turns. Much of this is caused by the fact architects depend upon capital spending and in recessions this is one of the first things to be cut.

Over the past decade our industry has made huge strides forwards in relation to its approach and technology. There is no doubt that there is still further to go but my worry is that much of the hard work we have done in relation to partnering or integrated working will be stopped and potentially be forgotten.

As an industry we need to continue to invest in training and development.. With Building Information Modelling and integrated project delivery we are on the cusp of a revolution. Unfortunately many companies are battening down the hatches and cannot afford to invest.

I also worry that by battening down the hatches the storm will happen around us and when many companies open the hatches there will be no industry left.

At _space we made the decision to think very carefully about how we move forward but do not intend to batten down the hatches or bury our heads in the sand. We will continue to invest in our people and technology and think differently about our industry.

Hopefully this will stand us in good stead for the future and in fact help us weather the storm.

We are always looking at how we can diversify our offer to enable us to sustain our business for the long term.