Autumn 2021 UK Market Report
Key trends
NZC/sustainability
NZC and sustainability are increasingly becoming higher on the agenda for construction projects. While 51 percent of survey respondents said that lowest cost was the most important factor to clients, 15 percent rated NZC/sustainability as top priority and there were comments aligned to the thought that 'cost is king, but carbon is rapidly catching up'. This is partly due to wider public opinion being reflected by client and funding requirements. Investors and end users will seek to safeguard their reputations, and developers/investors want to ensure their developments meet future requirements.
Whilst only 21 percent of respondents to our survey said that they felt clients sufficiently consider future uses of buildings during design, there are increasing numbers of clients and developers considering the principles of circular economy of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Some are considering retrofit first and are reusing high value materials across their projects.
To reduce embodied and operational carbon, increased consideration is being seen by the construction industry. On 11 November, there will be the first Cities, Regions and Built Environment Day at COP26 which will help to highlight best practice and affirm commitments.
We spoke in the materials section of this report that current materials challenges are likely to impact the industry’s ability to build sustainably. Material price increases and enhanced costs for sustainable alternatives may affect uptake.
The conflict between commercial pressures and the need to transition to lower-carbon methods was clear in the responses to our recent LinkedIn poll, with 47 percent agreeing that the red diesel subsidy for off-highway construction machinery should be ended as planned in April 2022. However, 40 percent responded that the end of the subsidy should be postponed due to the level of commercial pressures contractors are facing.
A Construction Enquirer article, which summarised the findings of a survey by the Civil Engineering Contractors Association trade body, indicated that the end of the subsidy will amount to an added cost burden of between £250,000 and £600,000 per year for small and medium-sized enterprises in the industry.
In order to encourage use of lower carbon alternative fuels, such as hydrogenated vegetable oil, many contractors are calling for the government to introduce tax reductions for these, rather than the application of the full rate which will mean their cost is similar to white diesel.
With increased investment in technology and innovation, it is hoped that the ‘green premium’ will reduce, helping with viability and wider adoption. The government has recently announced subsidies of £5,000 from April 2022 for households to replace gas boilers with heat pumps, a low-carbon technology.
The subsidy will make the cost of a heat pump replacement more comparable with costs to replace a gas boiler. The £450 million of funding allocated will provide 90,000 subsidies over three years which the government hopes will help to increase capacity in the market and reduce unit cost.
Whilst replacement of gas boilers will be initially voluntary, it will become necessary to phase out gas boilers and the government has an aspiration for no new gas boilers to be sold after 2035.
Overall, £3.9 billion of funding has been announced, mostly for decarbonisation of public buildings, insulating and installing new heating systems in social housing and for those on low incomes, and helping to provide district heating schemes for homes that are unsuitable for heat pumps.
An innovation fund has identified £60 million which will be made available to drive technological innovation for developing clean heating systems that are smaller, easier to install and cheaper to run.
It is hoped that COP26 will spur continued action by both the construction industry to meet targets and the governments’ drive to mandate targets with policy and legislation. It is also hoped that VAT will be reduced/axed for retrofit projects to encourage reuse over new build.
The Construction Playbook and MMC
In December 2020, the Construction Playbook was launched, setting out the government’s aspirations to work with the construction industry to deliver public projects ‘faster, better and greener’. There are 14 policies which specify how public projects should be assessed, procured and delivered, helping to modernise the UK construction industry by providing greater certainty with long term plans for key programmes, incentivising innovation, placing value on outcomes, boosting productivity and embedding digital outcomes.
All central government departments and their arm's length bodies are expected to follow the Playbook on a ‘comply or explain’ basis, and evidence of its adoption has already been seen in tenders, framework requirements and project and programme delivery. The principles of the Construction Playbook are underpinning the tender for ProCure22 to become ProCure23 (P23), which has started under the Construction Works and Associated Services 2 (CWAS2)/P23 framework. Rationalisation, collaboration, an outcome-focussed approach, innovation, efficiency and consideration of whole life cost are all referenced, alongside the promotion of MMC.
Many government departments are embracing the use of MMC for projects including Department for Education, Ministry of Justice and the Department of Health and Social Care. Achieving the balance of a steady supply of projects and avoiding a ‘feast or famine’ situation is key for MMC success. In general, an integrated and committed pipeline of government investment for construction and infrastructure projects is required to alleviate skills shortages and encourage innovation. Funding will allow the industry to embrace digitalisation, improving project delivery and outcomes by increasing efficiency and reducing waste.
Digital and data
Integrating new technologies during the design, construction and operational phases of assets can reduce costs, programme and disruption while improving performance and safety.
Some examples of digital and data tools and their potential uses are:
Data analytics
- A Delphi study by the University of Warwick - (R)evolution Barriers and Enablers of Project Data Analytics in Infrastructure Projects – has found that project data analytics has the potential to dramatically change project delivery, yet it is poorly understood and adopted currently
- Collection of data (such as cost, programme and other project data) to support planning and decision making — ensuring attainable outcomes and robust budgets
- To track delivery of projects in real time for monitoring progress and budget
- To enable data-driven decision making by collecting better data from projects going forward.
Artificial Intelligence (AI) and machine learning
- In September 2021 the government published the National AI Strategy which sets out three pillars to ensure that the UK is at the forefront of the AI revolution, recognising the “power of AI to increase resilience, productivity growth and innovation across the private and public sectors”. The three pillars are: - Investing in the long term needs of the AI ecosystem - Ensuring AI benefits all sectors and regions - Governing AI effectively
- Machine learning in the form of generative design can identify and mitigate clashes between different models or to explore solutions to find the optimum design
- AI and machine learning can help assign priority to issues, highlighting key risks for focus and mitigation
- Use of robots, sensors, etc. can make project delivery more efficient by capturing information for analysis to highlight risks and labour opportunities, etc.
Digital twins
- A digital twin is a realistic, virtual representation of something physical. The object of study is fitted with sensors that produce data about the physical object’s performance, which is relayed to a processing system and applied to the digital copy. Using the data, the virtual model can then run simulations, study performance and generate possible improvements to the physical object
- The Centre for Digital Built Britain is a partnership between the University of Cambridge and the BEIS, running the National Digital Twin programme. This will enable an ecosystem of connected digital twins, to foster better outcomes from the built environment and deliver an Information Management Framework, ensuring secure resilient data sharing
- Numerous benefits have been identified from the formation of a National Digital Twin, such as better outcomes for the public, higher performing and more resilient infrastructure, better risk management and less disruption and waste. It will also allow for greater resource efficiency, enabling the circular economy in the built environment
- Overall, it is indicated that a National Digital Twin will generate approximately £7 billion of value per year from cost savings and efficiency gains.
3D printing
- 3D printing can reduce waste and improve efficiency as the machines used are very quick, enabling fast production and the efficient use of materials including those which are recycled.
- A project example of 3D printing is on HS2. HS2’s London tunnels contractor, Skanska Costain STRABAG Joint Venture, is pioneering printing concrete with computer-operated robots to build structures on site rather than transporting them as pre-cast slabs by road before being assembled and lowered into place by cranes. The reinforced concrete structures are to be printed with a strengthening unique internal lattice structure, which not only significantly reduces the quantity of concrete required but also cuts waste. Overall, the process is estimated to reduce the amount of concrete used and contribute to lowering carbon by up to 50 percent – robotics and fewer deliveries, could achieve even greater carbon reduction.
The increased use of digital technologies and data analytics is crucial to improving many of the issues faced by the construction industry, to make it more efficient and sustainable:
- Skills shortages can be alleviated by the greater use of automation
- Viability of schemes can be improved due to the greater efficiencies of utilising Building Information Modelling (BIM)
- Compliance with energy and NZC targets can be assisted by robotics on site, improving tolerances and therefore thermal efficiency.
