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UK Construction Industry

The UK Construction Industry is Changing – What’s Your Next Move?

The UK construction industry is facing the greatest amount of change for decades.

That’s my hypothesis.

You could be forgiven for thinking that the UK construction industry doesn’t change that much over time. But I think at this particular moment the amount of change is possibly at its greatest for sometime – and failure to move with the change might be your ultimate mistake. So what is influencing this change? Here are my highlights.

‘failure to move with the change might be your ultimate mistake’

The political landscape is changing.

You don’t need any reminding that the political landscape is changing at an unprecedented rate. However, Brexit and the recent inauguration of Donald Trump as President of the USA (putting ‘America First’) gives rise to two very significant changes in our trading environment. As the UK will indeed will push for free trade agreement with the EU’s single market – a situation that is yet to be confirmed of course – the red line of our negotiations is over immigration control rather than trade. So what is to happen should we not reach a position of free trade with the EU? Will sterling fall further causing costs to rise on imported goods? Will we be subject to World Trade Organisation rules on tariffs? Will there be a greater skills and labour shortage? Will we still work with OJEU? How will your ability to compete in the UK construction industry change?  Unfortunately not even I can help you out with this one. We are still very much in the dark and my only advice would be to invest in long lasting search light and survival kit – this won’t be resolved in two years – it will take much longer than that.

Change brings opportunities. On the other hand, change can be confusing. (Michael E Porter)

The age of responsibility.

From the banking crisis of 2008; to global corporations and the general wealthy using overseas tax havens to avoid paying taxes; to zero hours contracts and poor corporate governance seeing organisations like BHS drop out of existence leaving it’s workforce empty handed; whilst an overwhelming section of society are now being classified as JAMs (Just About Managing) the gap between rich and poor continues to grow. And as Mark Carney promised in his Mansion House speech in 2015 to put an end to Bank’s Age of Irresponsibility – there’s a sense in me that society is attempting to move towards the Age of Responsibility; and the UK construction industry has a critical part to play in this.

Encouraged by the The Public Service (Social Value) Act 2012, and with investment in infrastructure, housing and public sector building remaining strong; the construction sector is custodian to huge sums of money, which by the way it is channelled through our projects can deliver significant community benefits and social return on investment (SROI). Whilst government and local authorities are continuously challenged with reducing budget deficits there is however evidence in the market place to suggest that greater attention is being driven towards obtaining greater value in return for the spend – in the form of social return – and that this will be a key differentiator in the procurement process.

there’s a sense in me that society is attempting to move towards the Age of Responsibility; and the construction sector has a critical part to play in this

Digital is now expected.

Digital technology is changing the way we all behave – regardless of sector. If you are reading this article and you are from the UK construction industry and you don’t know what ‘BIM‘ is… where have you been for the past 6-8 years? The UK Government’s 2011 agenda for widespread adoption of BIM Level 2 working on all it’s projects beyond 2016 is now 12 months behind us. Now we simply talk ‘Digital’ with the rest of the world’s industries, and no longer is it just about the use of 3D modelling to support the design and decision making processes of our schemes; it’s now about the entire process of construction – how we plan, how we procure, how we design, how we deliver and how we operate our built assets through a collaborative digital environment. Failure to keep up with this agenda is inexcusable now – it’s just the way it is.

If you are reading this article and you are from the construction sector and you don’t know what ‘BIM‘ is… where have you been for the past 6-8 years?

Are we about to Trump the environment.

When I asked a room of UK construction industry people 10 years ago the question, do you believe in climate change? About half over the room said they did. Today when that same question is asked almost the entire room is supportive – an indication that there has been a positive shift towards believing our role in climate change. But my fear is that while we have a leader of the western world denying our role in climate change, some of the hard work our sector has put in over the last decade may start to be undone. Not  yet at the top of the our political wish list – there are signs that debate is starting to emerge as the Liberal Democrats have warned Theresa May not to use Donald Trump’s climate change denial as an excuse to “backslide” on environmental commitments, according to the Independent.

What’s your next move?

I’d like to say that the next 2-5 years will be ‘business as usual’ in the UK construction industry. But that would be cruel. The things that I have discussed above are going to test the best of us. Undoubtedly as a result of Brexit there will be changes in our trading environment, coupled with potential swings in the economy. The demands of society are insisting we become better custodians of public sector funds and give greater social return on their investment. Digital is expected to be part of your business DNA now. And for some of us the climate change still matters – but for how long.

In business, choosing the right strategy to succeed is vital. And in these changing times having a strategy is key. What’s your next move?

Join me at my upcoming webinar: Strategy Masterclass with Tim Whitehill, 14th March 2017 1-2pm

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