While we’re all wondering where construction is heading, five experts mull the facts and indicators
Speculation about the economy and government news of investments and cuts can paint a confusing picture. So a recent RIBA initiative gathered five experts, deeply grounded in the research and practice of construction, to discuss where we are going.
Armed with figures from the Office of National Statistics, the RIBA’s Future Trends Surveys and early indications of construction activity, the experts sat down to work out what the shape of construction might be in 2025, the government’s horizon for its construction strategy, before homing in on the next six months. Around the table were Simon Rawlinson, head of research and insight at EC Harris; Richard Steer, chairman at Gleeds; Cluttons head of research, Sue Foxley; Adrian Dobson, RIBA director of practice; Aziz Mirza of the Fees Bureau; and, expertly chairing the discussion, Adrian Malleson, head of research at RIBA Enterprises.
So what will be the shape of development in the UK? As a global city, London will remain a place apart, ever expanding, enabled by infrastructure such as Crossrail Two. ‘That will affect how people live and work,’ pointed out Rawlinson. The current paradigm of village hopping as people move out of the city, while still relying on it, shows no sign in abating, according to Foxley. ‘There are areas of incredibly high potential value, as in East London, yet people who can move straight to Kent.’
The much heralded growth areas of Milton Keynes and Cambridge are still ahead of us, but Steer highlighted that it is these points of demographic pressure in the south east where it is hardest to get planning. A sure sign of a new market for professionals, including architects, as facilitators.
Set against the global city is the hub city, as seen in Calgary, Canada, for example, or potentially Schiphol in the Netherlands. These are not just places to fly in and out of, but are also places to meet and make use of contacts forged in this networked age. The group pointed to opportunities in the UK for Birmingham as centre of the rail network and, more significantly, Manchester Airport City which is investing £800m in creating a ‘globally connected business destination’.
‘The idea that you have to create a team anew every time is a barrier to performance and might need testing’ – Simon Rawlinson
Changing professions?
There was much discussion of how the professions might change in the years to 2025. By becoming first facilitators, then collaborators, came back the answer. Foxley said that the nature of big regeneration projects, such as King’s Cross, ‘force people to work more collaboratively’ – from planners of different local authorities to those in the technology, telecoms and media sector. ‘All our jobs have changed tremendously,’ said Foxley. ‘We are covering the social side of it, the policy side, we’re doing more multidisciplinary working. On the other hand we need more specialists.’ Rawlinson drew an analogy with the film industry where the credits show an ‘amazing array of specialist unique talent... the construction industry describes itself as fragmented but it is not fragmented in a creative way.’ This contains some lessons for the production line analogy that is regularly cited. ‘The idea that you have to create a team anew every time is a barrier to performance and might need testing. Then the question is: What is it about that film model that forces people to collaborate really effectively?’
Disruptive technologies
The government’s Construction 2025 strategy has BIM at its heart. But how will it affect the industry more widely? Dobson asked whether the specialisation that it will require might affect the structure of the professions, as it has in advertising where a third of staff are now busy writing code. Architecture could, perhaps, see a similar shift.
It was clear that around the table few had picked up any excitement about BIM. Steer struck a cautionary note: ‘We are starting at the wrong end. We are looking at how many square feet we need, when we should be looking at how much we can afford the energy costs on, then look at what we can afford to provide, how many square feet and how much it costs to build that, which is almost insignificant.’ BIM could help with that.
So what of the occupiers? Foxley saw BIM as a methodology that has barely interested them so far. ‘Unless the culture and the heart come with it, they want what they want – and might want to change the toilet halfway through,’ she explained. In her experience, neither tenants nor even owners were asking for BIM. ‘Property is an utter irritation to most occupiers… although they are interested in [the process] for staff retention and interior colours, where they are quite particular.’
Rawlinson felt that: ‘If BIM is seen as just a technology it won’t deliver.’ He compared it to electronic point of sale systems, which have nothing to do with getting cheap, varied stock on the shelves, but enable it to happen. ‘You really need a big picture like this,’ he concluded.
The next six months
Moving to the smaller picture, the next six months, Aziz Mirza pointed out that the profession has been more optimistic over the last year as measured by the RIBA’s Future Trends Survey. They are most positive about the housing sector but less so about commercial, and see public sector work trailing. This is also reflected in workloads – which follow the general direction of the Future Trends Survey, though at a lower volume. The RIBA’s Dobson reported that while London leads on workload revival, regions are also seeing increases more quickly than expected.
However, chair Adrian Malleson asked the fundamental question about underlying growth: how sustainable is it? Figures show it’s fuelled by consumer spending, not export or manufacturing. Foxley agreed that confidence is boosting spending but was clear that the upturn depends on the global economy and London occupiers remain cautious.
Given the importance of housing in driving early post-recession growth (as well as for housing people and as a political football), government intervention in the sector was seen as critical. But not, so far, either successful or imaginative. By stepping in on high loan-to-value mortgage provision they have merely acted as a market substitute. ‘They are not supporting the supply side for a healthier balance,’ said Foxley.
‘It’s very difficult to turn round and say we are having a 25% fee increase. The client will just go to someone else’ – Richard Steer
Where’s the money?
Beyond this, across all sectors, is the question of where money is coming from. Rawlinson pointed out the difference between short term project funding – always tricky to secure with investors wanting quick returns – and longer term finance, which has lost its historic leverage. There is funding for projects within the M25 corridor, mainly because investors are desperate to put their money in somewhere, given the low returns elsewhere. Those to watch, with money to build, are some cash-rich housebuilders, and developers using their money and joint ventures to put together major schemes (such as the Walkie Talkie at Fenchurch Street) that make a demonstrable difference to their asset value.
So who will be the winners and losers? In architectural practice, the niche, front end, reputation practices were seen as continuing to be important (with their relationships with clients the key), combined with bigger practices which can deliver production drawings. Rawlinson thought it was individuals who would be winners. ‘Professionals moving between organisations will mean the losers will be the principals,’ he said. As large projects get off the ground in the next six to 12 months, those with experience will be in demand, with salary negotiations reflecting that. The missing generation of those who have not worked on major projects would be particularly noticeable in what could return to a war for talent, and the cushioning import of skilled European Union architects seems less likely this time around.
But Steer warned that fees are unlikely to follow. ‘It’s very difficult in our market to turn round and say we are having a 25% increase. The client will just go to someone else,’ said Steer. ‘You can lose on a pitch and think your competitors will never do it on [their price], but because everything takes so long it can be three years before the client realises it and then it’s not worth changing.’ Foxley asked if a design premium on property would filter down to professionals. This is still a difficult issue and Rawlinson felt it remains a problem for long term relationships with clients. ‘The real issue is process efficiencies,’ he said. ‘A rethink of how to do things for less money has to be the root of change in the next iteration of industry.’
So for those coming into the profession now, what would the advice be? ‘Change careers to IT,’ joked Rawlinson. But from the data and discussions it seemed safe to offer graduates some hope. ‘If you’re at the end of training now you are luckier than before. You’re emerging into light rather than darkness,’ said Dobson. Foxley advocated a solid grounding and then evolving your own niche, with Rawlinson advising: ‘Think carefully about your route to influence. It is conventionally based on an idea of a hierarchy in a large practice, but you can be an absolute specialist in a very tight area which doesn’t increase the management of large projects.’ Steer rounded off optimistically: ‘At the end of the day, it is a good industry.’