Why are we, as a nation, so engrossed in productivity at the moment? The so-called ‘productivity puzzle’ is a regular topic of debate, and with good cause: the latest figures, released in April 2016, show the biggest fall in UK productivity since the financial crisis in 2008.
Productivity in Construction: Creating a Framework for the Industry to Thrive, is the latest report from the Chartered Institute of Building aimed at kick-starting a wider debate into productivity, looking not just narrowly at construction’s own productivity, but how the built environment supports productivity growth in the UK as a whole.
Commenting on the report Paul Nash Senior Vice President of the CIOB said: “Better buildings and infrastructure contribute to productivity not just through their primary function or by increasing economic output. By making people happier, safer and healthier, benefits which are often overlooked, the built environment encourages society to be more productive.”
The report uses the Government’s 15-point productivity plan as a framework, illustrating how, point by point, construction acts as an agent of change to improve productivity within the wider economy, how it might improve its own internal productivity, as well as highlighting the opportunities and challenges in delivering improvement.
The report also suggests that current statistical data which measures construction’s productivity can be misleading. When the value of design, the materials and components, and much of the plant and machinery used on site are not counted. It also questions how well the measures we see account for the improvement in quality or, for that matter, fewer site deaths.
Construction analyst and report author Brian Green further explains why caution is needed in interpreting the bald statistics: “Firstly there’s a need to measure more effectively the productivity of the whole process of delivering the built environment, rather than just what happens on site. Otherwise we end up missing the beneficial impacts of, for instance, better design or off-site manufacture. Secondly we need to look at what construction does rather than what it is and how it impacts on the wider economy. And, thirdly, it is worth noting that as nations develop they often choose to spend more on repairing, maintaining and adapting the existing built environment. This work tends to be more labour intensive than new work, so can have the effect of suppressing the overall labour productivity figures.
“Paradoxically, you could be building more productively to a higher quality, with innovation in design, product manufacture and construction management, while the statistics suggests the industry is becoming less productive.”
“As the OECD states, productivity is about working smarter, rather than working harder.”
Given the way we measure productivity, the path taken by the UK construction sector may well be, to some extent, inevitable. In most advanced nations productivity growth in construction is poor and has been for many years. That this is a global issue suggests that difficulties in improving productivity are likely to be within the nature of the industry rather than specifically within the UK.
The factors that can boost productivity are well known, at least in theory, and have been for many decades. This suggests the problems holding back progress lie deep within the industry.
The report seeks to identify what these factors might be, supported by survey evidence from across the industry, policy makers and industry experts showing a wide consensus on many of the policies that should boost construction productivity.
While the report makes a number of practical recommendations from its findings – such as tying public investment to training and job creation; developing new business models and financial models with incentives directed more towards productivity; and creating construction innovation and excellence hubs – it expresses two more fundamental concerns.
Firstly: we may be measuring productivity wrong.
The value of the design, the materials and components, and much of the plant and machinery used on site are not counted, and it’s difficult to measure improvements in quality or safety.
Secondly, and perhaps most importantly, it stresses that as the quality of the output construction produces generally boosts the productivity of the rest of the economy, productivity in construction should not be seen as an end in itself.
While construction productivity must improve, it must improve in such a way that enhances the productivity of the whole nation. Any understanding of this should be at the heart of policy making.
The full report can be accessed below.