The liquidation of Carillion in January 2018 has highlighted the importance of Organisational Resilience in the UK construction industry. Whilst the full extent of the company's collapse on clients and sub-contractors will take many months to emerge, the spotlight is firmly on this sector. Questions are now, rightly, being asked about the resilience of companies in the industry to withstand the disruptive forces that shape the business environment.
Latest Report: Organisational Resilience in UK Construction
Our latest report, The Organisational Resilience of the UK Construction Industry: Are we built on a house of cards? was not inspired by the Carillion crisis. However, recent events have certainly given the findings a new perspective. Our research highlights that the industry has weaker foundations than other sectors. The findings are not assumptions or knee jerk reactions to recent events. The government's own figures and other independent research point to construction being a less resilient sector than others and one that is less able to adapt to economic adversity.
Given that the UK is in a period of economic uncertainty as a result of the Brexit referendum, organisational resilience assumes even greater importance. Weaker than expected economic growth appears to be having a direct impact on business investment and construction output is struggling to grow. There are cost pressures due to the weakness of Sterling and the public sector remains under budgetary constraints. Alongside these fiscal and economic factors, the industry is struggling to address skills gaps and skills shortages. The emergence of digital technologies and competitors adopting off-site and modular construction are further examples of disruptive forces. And these examples are not exhaustive.
A resilient construction industry is good for the UK economy. We have a £500 billion infrastructure pipeline to deliver, 200,000 new homes to build each year and challenging emissions reduction targets to meet. These challenges also present huge opportunities. Resilience is not solely a defensive strategy but one which is a forward-looking strategic enabler.
BSI Setting the standard
There are a range of benefits in addressing resilience, including improved competitiveness, improved financial performance, protecting reputation and operational efficiencies. BSI has identified strategic leadership, agility and robust governance as some of the key factors in building resilient organisations. And whilst there are many others, we know that it requires a strategic approach and is achieved over the long-term. BSI has published a standard BS 65000:2014 Guidance on Organizational Resilience which gives guidance on achieving enhanced Organisational Resilience.
However, there are structural factors, which the industry still has to address to provide a more robust framework for resilience organisations to thrive. Procurement practices, approaches to collaborative working up and down the supply chain, payment practices and digital maturity are familiar issues. We need to tackle them if the sector is to be enabled to address the problem of resilience.
Kick-starting the debate
There is no silver bullet to building more resilient organisations and a more resilient industry. But the industry is in the spotlight again for the wrong reasons. This is a real opportunity to enable the industry to weather the storm, grasp opportunities as they arise and put itself onto a firmer footing for the future. We believe our report kick-starts the debate and provides a basis for a more mature conversation about the resilience of our industry.
The report was launched at the CE Annual Reception at the Houses of Parliament last week. The gallery from the event can be viewed here.