Site Productivity
The COVID-19 pandemic has continued to impact site productivity in a variety of ways during 2021, due to social distancing, self-isolation requirements and issues regarding availability and delivery of materials.
During Winter and Spring, site productivity stabilised as contractors gained confidence at working within new parameters over the course of the pandemic. Despite using restricted numbers of operatives, to comply with social distancing requirements, there were some reports of greater efficiency of individual output. Many contractors embraced technology and the use of modern methods of construction (MMC) and off-site components, which reduced onsite labour requirements.
Site productivity estimates by contractors who responded to our Summer survey reduced slightly to 70 percent, with 81–100 percent site productivity. However, for the first time since our Autumn 2020 report, 11 percent was estimated under 60 percent site productivity.
The easing of restrictions and arrival of “Freedom Day” in England in the summer brought new challenges; high numbers of contract tracing alerts, or “pings”, were sent throughout July, with the press reporting this as a wider societal issue. The so-called “pingdemic” touched all areas of life, including food supplies, retail opening hours, transport, factory production and the NHS. Construction was also impacted with sites affected by people needing to self-isolate. In some instances, this delayed on-site progress and trade start dates, causing subsequent consequences as the effects knocked on to other projects.
Our most recent survey, conducted in Autumn 2021, has seen significantly lower estimations of site productivity with only 41 percent of contractor respondents saying that site productivity is between 81–100 percent. Despite changes to self-isolation rules, projects continue to be impacted by COVID-19 cases, and issues with materials availability and increased lead-in times are affecting progress.
Key statistics from our Autumn survey:
- 91 percent of contractor respondents said that the Construction Leadership Council (CLC) Site Operating Procedures and Branch Operating Procedures continue to be followed on their projects despite these being reference documents since the lifting of restrictions in July.
- 83 percent of contractors who responded to our Autumn survey said that delivery issues are affecting their projects. Issues reported include repeated rescheduling of deliveries and the shortage of heavy goods vehicle drivers resulting in contractors being asked to collect materials.
- Data from the Office for National Statistics show that since July 2021, the construction industry had the highest percentage of all businesses who were unable to procure materials, goods or services that they needed from within the UK, had changed suppliers or found alternative solutions.
Mitigation
To overcome the issues being seen, contractors are:
- Increasing the use of off-site components, technology and automation where possible
- Placing early/advanced orders, with some looking for funds/surety before contract to reserve subcontractors
- Resequencing/reprogramming works
- Looking for alternatives
- Combining deliveries where possible, either with other sites or other subcontractors/suppliers.
Labour
In our Winter 20/21 survey, 73 percent of respondents said that there was currently a shortage of skilled labour in the UK and 81 percent said that a shortage of skills labour post-Brexit would increase construction costs.
Labour and skills challenges have become more apparent over the course of the year with the number of contractors responding that they have experienced labour supply issues increasing from 17.5 percent in the first quarter to 81 percent in the third quarter. There has also been an increase in the number of contractor respondents reporting increases to labour rates, from 44 percent in the first quarter to 93 percent in the third quarter.
Data from the ONS shows a record number of vacancies in the construction industry, with the highest number of vacancies and the fastest rate of increase since records began in 2001. The high number of vacancies is a wider trend, with the number of job vacancies from August to October 2021 rising to a new record of 1,172,000 which is an increase of 388,000 from the pre-COVID-19 pandemic level (January to March 2020), with 15 of the 18 industry sectors showing record highs.
Mitigation
- It is recognised that government initiatives to facilitate more apprenticeships will help to attract talent to the industry. However, there is concern whether this will result in enough tradespeople within sufficient time
- In our Summer report, we looked at how the construction trade could attract and retain talent by marketing the industry to students, mentoring, and promoting wellbeing initiatives and flexible working
- It is hoped that increased digital roles and growth in the use of MMC/off-site components will help to change the image of construction.
Materials
Our Spring survey reported 80 percent of contractor respondents and 63 percent of non-contractor respondents experiencing problems with projects and the supply of materials in the first quarter. Since then, this has intensified with heavy goods vehicle (HGV) driver shortages and energy price increases exacerbating the situation. Lockdowns and COVID-19 cases have stifled production during the pandemic. Shipping delays and a surge in demand as countries look to support economic recovery have resulted in material price increases, longer lead-in times and availability issues.
Data from the latest building materials and components released from the Department of Business, Energy and Industrial Strategy (BEIS) shows that there have been significant material price increases; the ‘All Work’ material price index increased by 24.2 percent between February 2020 and September 2021.
Although materials price escalation has been significant, e.g. fabricated structural steel increased by 76.6 percent and imported sawn or planed wood increased by 81.1 percent between February 2020 and September 2021, there is some evidence that increases are slowing. For instance, the percentage change in the ‘All Work’ Construction Materials Price Index was less than 0.1 percent in the month to September, from 2.8 percent in the month to August and 5.3 percent in the month to July.
Outlook for key materials
The majority of respondents to our Autumn market survey felt the issues with materials/products supply would continue until at least mid-2022, with 31 percent of respondents anticipating even longer. Price rises seem to have slowed compared with earlier in the year, however, it is anticipated that energy price escalation will have an impact particularly for energy-intensive products such as steel, bricks and cement, knocking on to associated products such as cladding. Longer lead-in times and challenges with deliveries are also expected to remain.
Generally, there are doubts that material prices will return to pre-pandemic levels due to the investment required to achieve climate targets.
Key trends
Net Zero Carbon (NZC) and sustainability
NZC and sustainability are becoming increasingly higher on the agenda for construction projects, with 81 percent of respondents to our Spring survey saying that they had noticed an increase in requirements to achieve NZC on their projects.
While 51 percent of survey respondents to our Autumn survey said that the lowest cost was the most important factor to clients, 15 percent rated NZC/sustainability as the top priority and there were comments aligned to the thought that 'cost is king, but carbon is rapidly catching up'.
The 26th UN Climate Change Conference of the Parties (COP26) further highlighted the urgency of the climate emergency. In the run-up to COP26, the government published its Net Zero Strategy: Build Back Greener outlining how the UK will deliver on its commitment to meet net zero emissions by 2050. The Environmental Act was given Royal Assent on the 9th November 2021 making provision for targets, plans and policies for improving and protecting the natural environment with consideration for air pollution, biodiversity, water quality and waste.
Digital and data
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
- The 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.
The digital transformation journey is well and truly underway in all parts of the construction industry. As companies move from a simple augmentation of existing processes to transform the way they carry out their business or the services they offer, we are likely to see significant changes in productivity and efficiency in the design and construction of projects.
Wellbeing
Out of our Spring survey respondents, 81 percent said that wellbeing is becoming a more important part of the design of projects that they are working on. This is expected to continue as it is seen to be important to promote health, and research has shown that wellbeing improves attainment and productivity by reduced illness and improving morale and outlook.
Diversity and inclusion (D&I)
Out of respondents to our Summer survey, 56 percent said that they think that the construction industry is taking the improvement of D&I seriously. 57 percent of respondents thought that greater opportunity for flexible working, something seen following the pandemic, would help to increase diversity, along with increased targeted apprenticeships and mentoring. Creating working environments where employees feel they can bring their whole selves to work and establishing an industry that is fair, inclusive and respectful will help improve engagement, productivity and attract new entrants.
The Construction Playbook and MMC
In December 2020, the Construction Playbook was launched, setting out the governments’ aspirations to work with the construction industry to deliver public projects ‘faster, better and greener’. There are 14 policies that 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.
Many government departments are embracing the use of MMC for projects including the Department for Education, the 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.
To learn more about the Construction Playbook and hear our specialists view into what this means for the industry, detail of the key policies and if it will be enough to drive change to 'build back better', visit our website here.
Summing up
The construction industry has demonstrated great resilience during 2021, as work has carried on during lockdown restrictions at the beginning of the year and through the continued difficulties arising from the pandemic.
As challenges with materials are expected to continue to at least mid-2022 alongside labour supply and wider societal issues such as rising energy prices and HGV driver shortages, the key watchwords continue to be flexibility, adaptability, collaboration and innovation as we go into 2022.
"The increased collaboration in the industry should continue to be met as we adapt to meet climate change."
