Fine Margins - Delivering financial sustainability in UK construction

1 April, 2020

A detailed report by the Confederation of British Industry (CBI) into the risk management practices of the UK construction industry.

Contracts

Risk

Risks and Opportunities

There are few UK industries quite as ever-present as construction. The places we call home and our places of work, the transport infrastructure we use daily, the energy and power networks we rely on: the construction industry acts as the literal foundation for much of our economy. But when construction goes wrong, communities suffer. Essential facilities like hospitals are delayed. Too few houses get built where they are most needed. Vital transport connections are abandoned, obstructing growth across the UK. The reality is that the construction business model is not fit for purpose. Many of its challenges are of the industry’s making. Adversarial behaviours built up over many decades by clients and contractors used to ‘battling it out’. Problematic approaches to risk allocation and procurement resulting in missed opportunities to get things right first time. Conversations focusing on price rather than value, pitting businesses against each other rather than encouraging them to collaborate. Compounding this, three and a half years of political uncertainty have ground down confidence, support and investment in UK construction, creating an operating environment that is short- termist and unsustainable. And yet there is consensus among businesses about how to do things better. Government can play its part; introducing policy change that will improve behaviours across the industry, stimulating collaboration and growth. As a major client, it can lead the way in intelligent procurement behaviours. With its new majority it has a mandate to green light construction and infrastructure projects that will deliver promised investment in every part of the UK and meet commitments to ‘level up’ the country. But the industry itself must step up too. It is business’s investment in skills, technology and innovation that will rapidly improve the industry’s impact on the environment and create a safer, future-proofed built environment. Adopting the recommendations in this report will strengthen the long-term financial sustainability of the industry, paving the way for a brighter future for the UK construction industry and everyone who relies up on it.

Attachments

  • fine-margins-february-2020-cbi.pdf ( 3 MB )