UK Construction Market Report 1Q 2024
Hot topics
Key statistics:
Digital and
artificial intelligence
of survey responses have had at least some experience of using Chat GPT to support a workplace activity.
Working patterns and future work environments
of survey respondents believe that the shift in working patterns impacts the delivery and design of commercial offices.
Climate change and
sustainable construction
the amount of total carbon emissions the global construction industry and built environment is estimated to contribute.
Digital and AI
In line with previous surveys, around a quarter of respondents say they have used Chat GPT or another AI tool in their workplace. We expect this trend to grow at a pace in the short to medium term as advancements in AI and digital tools accelerate, offering the construction industry options for optimising project efficiency.
Respondents again ranked a lack of knowledge about potential uses as the top barrier to adopting AI. Indeed, such was the even spread of answers, among other reasons selected, an almost ‘all of the above’ conundrum needs solving to implement AI and the subsequent benefits it can bring.
It is estimated that the industry loses £21 billion a year through errors that occur throughout the lifecycle of a project. Such losses arise from, for instance, repeated design work and material wastage — issues that can be rectified with tools like workflow engines and visualisation software.
With the rise of this technology comes an increase in technician jobs available across the construction industry. At a time when skills shortages are impacting project viability, these newer roles can attract talent from further afield who may have yet to consider a career in construction.
Furthermore, construction workers can be vital enablers in the progress of generative AI technology. AI tools still need to interface with both existing technology infrastructure and workers so that they can better refine their understanding of a working environment. These processes will need continued optimisation and ought to allay fears of users feeling threatened by AI.
The House of Lords’ Communications and Digital Committee recently published its report on the government’s AI strategy. The report cites Goldman Sachs research ranking construction as one of the least likely industries to see jobs threatened by AI. Indeed, analysis indicates that just 6% of workloads will be automated by AI tools.
Working patterns
Hybrid and flexible ways of working
Around half (44%) of our survey respondents believe that the shift in working patterns impacts the delivery and design of commercial offices.
The shift in working patterns has spawned from the rapid digitalisation required to maintain working practices during the COVID-19 pandemic, a mass adoption and acceleration that, one RIBA Journal article author notes, might have taken another ten or even twenty years to happen.
Studies regarding the future expectations of working from home and hybrid working have produced varying results. IWG’s recent survey of CEOs found that three-quarters expect there will still be a hybrid working model five years from now. Our Gleeds Worldwide Chair, Richard Steer, also recently wrote an article for CIOB that referenced research by KPMG. The study found that 64% of 13,000 global CEOs surveyed believe there will be a total return to the office by the end of 2026.
Our own survey respondents indicate there may be some disparity between employees and employers regarding the split of working preferences in 2024, with a 60% office working and 40% home working split most popular for employees, while employers are considered to prefer an 80% office working and 20% home working split.
Changing workspace designs
While hybrid working is high on the 'ways of working' agenda, there are several other key factors that commercial landlords cannot ignore in workspace designs and employers are encouraged to consider them in their policies.
Fundamental drivers such as the office's role, climate crisis, virtualisation, diversity and inclusion, and health and wellbeing have been reshaping working patterns for some time now and increasingly so in the last few years.
The IWG: Future of Work paper put it succinctly: "Out go banks of workstations on open-plan floors, to be replaced by spaces for collaboration, creativity and socialising."
Employees elect where they choose to work based on whether they need spaces to collaborate or concentrate. Younger employees or those in junior roles also tend to visit the office more to learn from senior colleagues. Ultimately, employers are challenged with creating an ecosystem of workspaces that fosters productivity and opportunity.
The push for companies to reach net zero carbon can benefit considerably from adopting a flexible working policy. An IWG study found that a switch could reduce urban carbon emissions by as much as 70% in London due to less frequent commuting and using environmentally efficient shared spaces.
Regarding environmental credentials in the design of spaces, regulations are getting tighter, and tenant expectations are rising. As a result, buildings with high sustainability certifications can charge tenants higher rents.
Improvements in workplace environmental quality are closely linked to reducing carbon emissions but can also improve the employee experience during office visits. The RIBA Journal article notes that decades of office design dominated by efficiency drivers such as cost savings and ignorance towards the likes of sick building syndrome have left workplaces lacking in environmental quality. Now sought-after buildings include roof gardens, terraces, winter gardens and biophilic designs. Such features allow users an enhanced experience as they feel closer to nature.
The digital workplace is ever evolving, and we now see the benefits virtualisation brings to developers and design teams. Digital twins — which create virtual models of physical objects — allow users to manage the usage and efficiency of their assets. Sensor technologies can gather data on environmental quality and occupancy levels. Smart building systems can then distribute appropriate heating, ventilation and cooling levels.
Diversity, equity and inclusion (DE&I) is now a board-level agenda item. The RIBA Journal article points out that the industry has been designing buildings for extraverts for years, with expansive reception areas and open-plan work areas. Modern office design, however, requires more empathy to suit a variety of activities. Quiet and project areas of varying sizes are seen as essentials in the footprint of an all-inclusive workspace.
The IWG: Future of Work paper also notes that 15–20% of the population are neurodivergent and vastly underrepresented in the office workforce. Offices can often create a hostile environment or be over-stimulating for those with conditions such as autism or ADHD. Adjustments to flexible working policies and adapting workspace design to manage issues with noise and lighting are now vital aspects of design managers' thought processes.
Health and wellbeing have found their way up the agenda, and as wellbeing is now reported to be significantly below the levels reported pre-pandemic, it is given key consideration in the design of office spaces.
A number of desirable accreditations for building developments now base much of their scoring criteria on how users interact with their buildings. BREEAM has a 'health and wellbeing' category, NABERS measures aspects such as air quality and natural light, and Active Score rates buildings in a way that measures facilities in a building that encourages active travel and commutes amongst its users.
Changing demographics and cultural shifts will continue to impact workspace design. Office space users are demanding more from the surroundings they spend much of their week occupying. Successful developments will ultimately be those that are futureproofed, can stay agile, and respond to innovation.
Climate emergency
The climate emergency continues with news that last year was the hottest on record. The construction industry has long known it has a vital role to play in reducing carbon emissions, with estimates that it and the built environment together contribute 38% of the total.
Last year’s COP 28 saw the launch of various initiatives where collaboration within the construction industry will be essential if objectives to build greener are to be met.
Buildings Breakthrough, an initiative seeking to strengthen international collaboration around decarbonising the built environment, targets near-zero emissions and resilient buildings as the new normal by 2030.
Similarly, Canada and the United Arab Emirates, along with an inaugural cohort of endorsing countries that include the United Kingdom and Ireland, launched the Cement and Concrete Breakthrough initiative to make clean cement the preferred choice in global markets, targeting near-zero emission cement production established and growing in every region of the world by 2030.
Meanwhile, ‘A Playbook for Nature-Positive Infrastructure Development’ uses some of the world’s most significant infrastructure projects as case studies demonstrating a wide range of nature-based solutions that put nature at the heart of infrastructure design.
Procurement Act 2023
The Procurement Bill gained Royal Assent in October last year. It aims to regulate a process whereby one pound of public money in every three is spent on public procurement, totalling around £300 billion annually.
While the majority of provisions in the Procurement Act 2023 are not anticipated to go live until October 2024, it is important for those involved in public procurement to start becoming acquainted with the Act, particularly as it provides the basis for secondary legislation, guidance and electronic registers under the new regime.
The overall aim is to grow the economy by creating a simpler, more transparent system which can deliver better value for money and reduce costs for both the private and public sectors.
An increased transparency of contracting authorities’ work pipelines should help the industry respond to opportunities across the supply chain. For instance, larger contracting authorities will need to publish a pipeline notice at the start of the financial year. This notice will set out any contracts worth at least £2 million they intend to procure over the next 18 months.
One of the more pertinent sections of the Act for the construction industry is S74 in relation to contract modifications — providing grounds on which modifications to an existing contract are justified.
Contract management in the construction industry has plenty of room for improved efficiencies, so steps to address this are welcome. Permitted modification for additional goods, services or works can go some way in improving financial resiliency in supply chains.
Undoubtedly, the Act could further bolster ESG considerations, so it will be interesting to watch developments this year on guidance such as Procurement Policy Notes and on secondary legislation pending the outcome of the two public consultations.
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