The built environment and the construction sector has an important role to play in the UN’s Sustainable Development Goals. It can improve the lives of people, protect the natural environment, and enable our economic prosperity.
However, research carried out in 2017 and published in our report, The Organisational Resilience of the UK Construction Industry (March 2018), was able to show that UK based construction firms are vulnerable to the risk of failure, resulting in a disproportionate number of insolvencies as compared with other sectors, which in 2017 was approaching 3,000 firms per year, having a direct and costly impact on society.
For instance, two years on from the high-profile Carillion collapse, it was widely reported the impact had cost more than 3,000 jobs in the company, along with 75,000 more impacted through its supply chain, 450 public sector projects were spun into crisis with increased costs, and the company had left behind more than £7bn of failed debt. It is reportedly the largest corporate failure ever dealt with by the Official Receiver, costing the taxpayer more than £150m.
Our report concluded that a resilient industry will be good for its clients, for the workforce, for communities and for the economy, and therefore called for an industry level response to improving the organisational resilience of construction sector firms by implementing the following recommendations:
- Further research into the resilience of the industry and the characteristics which appear to make it more vulnerable to shocks and the reasons why the failure rate is higher than other industries.
- Learning the lessons that will emerge from the collapse of Carillion and the impacts on the industry as a whole.
- Develop a more robust evidence base of the benefits to the industry of embracing approaches to organisational resilience to address concerns over the required investment.
- Develop industry-specific approaches which enable construction companies to identify and understand the external influences that threaten the sector as well as those that are driving positive change.
- Develop approaches to support leaders in construction to up-skill them and enable them to provide the strategic leadership required to drive organisational resilience, including the abilities to identify the sudden shocks and incremental changes.
- Develop industry-specific approaches to enable construction businesses to build resilience into their business plans and their business processes in line with the BSI’s model and BS 65000.
- Identify the key knowledge gaps and the skills needed in relation to organisational resilience to develop a roadmap to address these shortfalls.
- Leadership from government to continue to place the strategic priorities for industry improvement in the context of the resilience of the industry, including skills and training, digitisation, procurement approaches, pipeline visibility and approaches to collaborative working led by clients.
Project Five Consulting is a boutique management consultancy dedicated to improving the organisational resilience of construction sector firms.
It is our mission to passionately create and transfer knowledge that develops the resilience of organisations in the construction sector.
Organisational resilience is a relative and dynamic concept. It is a goal rather than a single activity. For all organisations, maintaining high levels of resilience will require a determined effort to continuously improve a complex flow of interactions between people, processes and systems, in order to build robustness, agility and adaptiveness across the entire organisation and its supply chain.
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