CIOB releases new report on construction industry capacity

The report, Capacity Constraints in Construction: Rethinking the Business Environment, looks at some of the industry’s biggest challenges including recruitment, training and retention and the volatile nature of the sector, which results in hundreds of construction businesses collapsing each year, and the impact this has on the wider UK economy. CIOB says it wants to drive policy makers and industry leaders to look beyond short-term fixes and explore longer-term solutions that not only alleviate immediate challenges but also shift the sector towards being more resilient, more progressive and more productive in the future.

• Report includes detailed look at the root causes of ongoing issues with recruitment and retention as well as high levels of insolvency
• It suggests that for companies to operate more effectively, the business environment in which they operate needs to change to reduce volatility for the long-term
• Several policy areas highlighted where changes could help the industry improve and deliver on key government housing and infrastructure targets 

CIOB worked with experienced economist Brian Green to compile the report, which aims to explain to policy makers how the current business environment for the industry is responsible for many of the ongoing issues and how it can potentially be shifted to create a more stable environment for construction businesses of all sizes.

Brian Green said: “Construction is regarded as the most volatile major sector of the economy and it repeatedly faces capacity challenges. This means firms within the sector shape themselves to withstand swings between having too much work and too little resource and having too little work and too much resource.  It is inefficient and debilitating to the industry.  

“Unsurprisingly, there have been multiple reports over many decades into the construction sector to solve the problems this causes. They have tended to focus on the symptoms of this volatility, suggesting solutions such as improved contractual arrangements, better training, technical solutions such as prefabrication, improved health and safety, or ways to improve the image of the industry. Implicit in many of these reports is the notion that firms within the industry are acting irrationally and need to change. 

“This report takes a different tack. It assumes firms are likely to be responding rationally to their business environment. So it argues that rather than simply seeking to force changes on the industry we should look to change the environment within which it operates. The industry and its firms would inevitably adapt of their own accord. These changes should include seeking ways to reduce the volatility and improvements to the institutional framework that determines what gets built where and when. Underpinning this, there should be greatly enhanced information to help steer decision-making.” 

David Barnes, head of policy and public affairs at CIOB, said: “The UK Government’s 1.5 million new homes target over the five-year parliament has continued to receive a great deal of scrutiny, particularly on the construction sector’s capacity and capability to deliver. This report seeks to shift the dialogue from aspirational targets to understanding and analysing the deep and often challenging structural issues faced by the sector which make it volatile and unstable. This detailed analysis of the sector showcases the need to change the business environment, and the report details the five key policy objectives we believe need focus to improve performance and reduce capacity constraints on the sector.”