Professional Documents
Culture Documents
Construction Journal February March 2019
Construction Journal February March 2019
Construction Journal February March 2019
10 16 22
A sustainable footing Creating a lasting community Better data
Why the sector must be more How London’s Olympic Park has What to do to make the most of
effective at procurement been transformed the data we generate
rics.org/journals
Construction
12
Contributing
to society
Social value: what is it and how do we achieve it?
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Construction
Contents
Editor: Steph Fairbairn
T: +44 (0)20 7334 3726 E: sfairbairn@rics.org
30
While every effort has been made to ensure The more things change …
the accuracy of all content in the journal,
The fourth NBS National Construction
RICS will have no responsibility for any errors
or omissions in the content. The views Contracts and Law Report reaffirms that
expressed in the journal are not necessarily better communication and collaboration
those of RICS. RICS cannot accept any are required to prevent disputes arising
liability for any loss or damage suffered by
any person as a result of the content and the
opinions expressed in the journal, or by any
16 33
person acting or refraining to act as a result Creating a lasting community Insolvency solutions
of the material included in the journal. All Queen Elizabeth Olympic Park has made After Carillion’s collapse, we should look
rights in the journal, including full copyright
a transition from sporting venue to a for warning signs of contractor insolvency
or publishing right, content and design, are
owned by RICS, except where otherwise
community space that is sustainable in
described. Any dispute arising out of the every way 34
journal is subject to the law and jurisdiction The year in case law
of England and Wales. Crown copyright Some key issues came before the courts in
material is reproduced under the Open
2018, as this round-up explains
Government Licence v.3.0 for public sector
information: nationalarchives.gov.uk/doc
/open-government-licence/version/3/
rics.org/journals 3
Construction
Introduction Briefing
rics.org/journals 5
Construction Opinion
Leader
What it means
for the sector to
be sustainable
Although the environmental component of sustainable development is critical in
construction, it cannot be achieved without integrating it into considerations of
good-quality placemaking and social value
Julie Hirigoyen
Sustainability is shorthand for sustainable see bit.ly/UNSustDGs) as a global call to For us, sustainable development is about
development, a term originating in the 1987 action to end poverty, protect the planet creating a better life for everyone, both
Brundtland Report, Our Common Future, and ensure that all people enjoy peace and now and in the future. This includes:
where it was defined as ‘development that prosperity by 2030. These interconnected ••having access to quality education, jobs,
meets the needs of the present without goals are all in the spirit of the original services, housing and leisure
compromising the ability of future Brundtland definition of sustainable ••living in an environment that is healthy,
generations to meet their own needs’ development, covering issues as broad resilient and stable, now and in the future
(bit.ly/UNcommonfuture). This original as climate change, economic inequality, ••living and working in a society that
definition encompasses economic, social innovation, sustainable consumption, is democratic, just, engaged, diverse,
and environmental needs. In recent and peace and justice, among others. responsible, supportive and vibrant.
years, however, the term sustainability The way we at the London Sustainable This is something that LSDC measures
has frequently been used to refer to Development Commission (LSDC) interpret for London in its Quality of Life Indicators
environmental responsibility alone. sustainability is also in the spirit of reports, which will soon align with the
This is an unhelpful simplification. Brundtland (london.gov.uk/LondonSDC). SDGs (bit.ly/LSDCquality).
In 2016, 170 countries agreed to 17 UN The LSDC advises the mayor how to make The construction sector is central to
Sustainable Development Goals (SDGs; the capital into a sustainable world city. achieving sustainable development, first
40%
Intergovernmental Panel on Climate are keen to communicate the value they
Change special report (bit.ly/IPCCsr15) we bring to communities, more and more
know that we must limit global warming companies are investing in measuring social
to 1.5ºC, and that by 2050 all businesses value outcomes. When done well, efforts to of the UK’s carbon
and nations will need to operate at net measure social value are highlighting which footprint can be
zero carbon emissions. Recently, the UK activities are particularly beneficial for local attributed to the
government has asked for advice from the communities, encouraging more targeted
independent Committee on Climate Change investment with a greater impact.
built environment
on setting a date for meeting this target. All of this will require quantity
The World Green Building Council (GBC) surveyors, project managers and other All businesses and
has meanwhile confirmed that to achieve built environment professionals to improve
nations will need to
this, all new buildings will need to be their skills and gain new ones, quickly,
operating at net zero carbon emissions by and deepen their knowledge of low-carbon operate at net zero
2030, and all existing buildings some time and wider sustainability measures. carbon by
2050
before 2050. The UK GBC has launched Significant work has already been done by
a programme called Advancing Net Zero the Green Construction Board to establish
that will see construction and property the knowledge and skills required for the
businesses work together to lead the transition to a sustainable construction
transition to a net zero-carbon built industry, and to define standard protocols London population
environment in the UK. The multi-year for data collection and knowledge transfer
is projected to
programme will develop consistent by built environment professionals
approaches for the measurement, mitigation (bit.ly/GCBValuation). Importantly, increase by
and reporting of in-use energy performance
and whole-life carbon emissions.
In London alone, population is projected
RICS itself stressed the importance of
sustainability factors wherever relevant
in its revisions to the Valuation Global
70,000
every year, reaching
to increase by 70,000 every year, reaching Standards – the Red Book – in 2017
10.8m in 2041 (bit.ly/Londonplan). This (rics.org/rbvaluation). 10.8m in 2041
means that just to meet demand at least So, it seems clear that the long-term
66,000 new homes need to be built every financial performance of built assets will
To meet demand,
single year, as well as providing spaces for be motivated as much by environmental
tens of thousands of new jobs. If London factors and social value as by basics such as at least
is to achieve the mayor’s objective of
becoming a zero-carbon city by 2050, a
commitment made in the draft London Plan
location and connectivity – precisely what
one would expect and hope for from a broad
interpretation of sustainable development.
66,000
homes need to be
and the London environment strategy, new
development needs to be net zero carbon Julie Hirigoyen is a commissioner on the LSDC built in London
from both construction and operation. and chief executive of the UK Green Building each year
Similar moves are being made by other Council @JHirigoyen
metropolitan mayors and by businesses
that have London and global footprints, Further information: @LondonSDC
rics.org/journals 7
Construction Opinion
Sustained
interest
With government rhetoric on the environment at odds with its emphasis on the
economy, Construction Journal spoke to two key construction industry figures
to get their views on some of the most significant questions
Q: Heathrow Airport has embedded as this wants to leave. Traditional for electricity. It is disappointing that a
sustainability in supplier contracts environmental impacts are going to be similar pricing and funding model could not
for construction of the third runway, more straightforward to measure and have been worked out for Swansea, where,
including key performance indicators manage, but there are supply chain risks once completed, the electricity would have
and evaluation criteria. What is the such as modern slavery that need to be been provided at a very low price indeed.
best way for construction companies considered, along with other community This decision is full of the same short-term
to target and track the sustainability impacts such as social value. The challenge capital cost-driven thinking that dogs many
of the supply chain? with implementing such measures in construction projects of all sizes in the UK.
AB: The client’s desired outcomes in terms complex projects is that the supply chains SG: We often get mixed messages from
of overall sustainability need to be defined are often fragmented and multi-tiered. government about the wider green agenda;
at the earliest stage of the project, well Effective supply chain collaboration is yet increasingly I see these aspects being
before the brief has been fully developed, key for any aspect of project success. integrated into more projects to improve the
which means that project targets can be sustainability of UK plc. While on one hand
set rather than targets for individual Q: On the same day parliament we see less political appetite for regulation,
companies. This is equally true for main endorsed the third runway at Heathrow, this light-touch approach clearly needs to
contractors setting targets for their supply the government rejected plans to build be reviewed as suboptimal practices take
chain. Setting project targets this way the Swansea Bay tidal lagoon on the place on projects all over the country.
encourages collaboration and joined-up grounds of cost. What do you believe Organisations themselves are addressing
thinking, rather than the normal, siloed this says about the government’s issues such as climate change, despite the
approach to projects and suppliers. commitment to sustainability? political situation. We are now seeing
Long-term project outcome targets should AB: The two things are not directly science-based targets coming through
be set for, say, carbon emissions once the comparable. My view is that Heathrow’s for many companies and a stronger
asset is in use, and the whole supply chain third runway will help to ensure economic commitment to take steps now to
should then be tied into a pain–gain sustainability, and it should be possible to avoid catastrophic climate change.
mechanism based on its actual performance. build it without increasing environmental
SG: We need to define sustainability damage. I think that a better comparison Q: In the July 2013 report Construction
objectives for the project, determine the for Swansea would be the Hinkley Point C 2025, the UK construction industry and
scope of influence that can be managed nuclear plant, where the government has government alike committed to a
directly and what legacy a project such guaranteed the price it will pay in the future 50 per cent reduction in greenhouse
rics.org/journals 9
Construction Procurement
Procurement
on a sound
footing
If UK construction is to sustain itself it must adopt more
effective means of tendering and procurement
John Nielsen
Mark Farmer’s 2016 review of the UK construction is certainly not always the case. We must develop a
labour model was given the incredibly apt title standard, intelligent procurement system. Clients
Modernise or die. This root-and-branch review of the must look at what they actually want, and the industry
industry challenges all involved in construction to must be truthful about what it can actually provide.
ensure a sustainable future. One of the main issues in procurement is the
The construction industry is at a major juncture, overcomplicated tender process and repetitive
where old processes and practices are becoming more documentation we have to complete. For decades we
and more unsuitable for the modern world. Ridiculously have used various tender processes: single-stage,
low profit margins, a race towards cheaper and cheaper two-stage, design and build, traditional or competitive.
tenders, adversarial contracts and a disparate industry Each has its place but each also has its issues. The
are together finally taking a toll. We must act now. The money and time expended by the industry on tender
industry will not disappear, but to make it sustainable processes is not proportional to the work undertaken.
we must change it both internally and externally. For instance, we are often required to complete large
One key area is procurement: basic problems tender questionnaires when having a Constructionline
always arise with this, yet have never been addressed. membership with all of our details is meant to be
Poor procurement processes and a desperate lack of enough to confirm we are achieving acceptable
understanding as to what value means still cause the standards. Why? Questionnaires often differ just
sustainability of our industry to be questioned. The race enough so that standard replies cannot be used, and
to the bottom is inexorable and dangerous. This runs ask for in-depth responses that cover the quality
through the whole industry, from clients to consultants assurance and construction processes to be used.
to contractors to manufacturers. The industry is Invariably, these responses are never reviewed, and the
following a blueprint that seems to have pervaded all price is the only element that is considered. It’s not
sectors: equating a fair price with the cheapest, which hard to see why the usual tender processes are vilified.
rics.org/journals 11
Construction Social value
A valuable
contribution
to society
The industry could add greater social value to its projects if it
exercised a clearer understanding of what the concept entails
Rob Wolfe
One of the challenges facing built the current needs of the industry and the our stakeholders? Employees and partner
environment professionals is their lack of communities in which we work; improving colleagues should then ask: where do I have
understanding of what ‘social value’ means. the quality of life for generations to come’. enough influence to achieve such change?
Yet the concept is not new and has come in Adopting a balanced, collaborative and The answer to both questions should
many forms in the past, from community holistic approach is vital to making your include the eight key areas of social value
benefit to philanthropy, corporate social contribution to the total social value, both (see Figure 1).
responsibility (CSR) to social impact and negative and positive, of a development. ••Community: engaging and consulting
sustainability to socio-economics. Bear in mind that intentions may be with local communities should allow them
Defining social value is difficult because admirable but still have a negative effect on to influence the development’s outcomes.
it is, like sustainability, both an umbrella this value: by way of illustration, for every ••Design: this should ensure materials are
term describing social, environmental and £1 raised by charity parachutists, the NHS responsibly sourced, and green and blue
economic benefits to society and a spends an average of £13.75 patching them spaces are created.
stand-alone function concerning the health up afterwards (bit.ly/charityparachute). ••Supply chain: social value can be
and well-being benefits to individuals. created by contracting and upskilling
The UK government defined social value What is social value? suppliers. Support, training and contract
in the Public Services (Social Value) Act It is thus vital to embed a clear, practical opportunities can be provided for local
2012 (bit.ly/SocialValue2012), which requires business strategy for social value that: small and medium-sized businesses,
those buying public services to consider ••considers social value as part of physical voluntary and community organisations
how this can ‘improve the economic, assets’ total economic value and social enterprises. Payments should
social and environmental well-being of ••develops and implements a social value also be prompt, monitored and transparent.
the relevant area’. As it stands, the Act plan from project inception to the assets’ ••Skills: developing the skills of the
only covers services commissioned by the legacy, RIBA Stages 0–7 existing, new and emerging workforce,
public sector, and its legislative impact ••monitors social value centrally and makes throughout the supply chain and project
on construction is limited. However, local it transparent, measurable and comparable. lifecycle, should be a consideration.
authorities and procurement frameworks Too often, responsibility lies with an ••Employment: current and new
have looked to our industry to meet the individual and is not the focus of project professionals should be employed
legislation’s requirements, predominantly teams or the whole business. The policy throughout the supply chain. There should
due to the steps taken by the social housing must come from and be endorsed by senior be targeted recruitment of local individuals,
sector, where contractual requirements for management, forming part of all employees’ and underrepresented, disadvantaged and
apprenticeships and local employment were roles and fostering a social value culture. vulnerable groups.
adopted before the Act. A project or business strategy should ••Environment: considerations include
Constructing Excellence recently defined answer one simple question: where does our waste management, responsible and ethical
social value specifically for the built business or project have enough influence sourcing, minimising carbon emissions,
environment, saying it means ‘meeting to achieve the most positive change for the embodied carbon of manufacturing
rics.org/journals 13
Construction Social value
Creating a
sustainable
community
The London Legacy Development Corporation is
guiding Queen Elizabeth Olympic Park through
its transition from sporting venue to community
space, exemplifying sustainability in all its forms
Rosanna Lawes
When the London 2012 Olympic and
Paralympic bid was won in 2005, the games
were less than a decade away and the site
of the future Queen Elizabeth Olympic
Park was a very different place. Today’s
parkland was wasteland, and part of the
site was a dumping ground for industrial
and domestic waste. Much of the land was
contaminated by oil, tar, arsenic and lead,
while the waterways in and around the
park were neglected and water quality was
poor. River walls were in bad condition and
shopping trolleys and car tyres had been
abandoned across the area. Potential wildlife
habitats were suffocated by invasive plant
species such as Japanese knotweed and
floating pennywort. The area also suffered
from the highest concentration of
socio-economic disadvantage in the UK,
with locals experiencing a much lower
quality of life than the average Londoner.
The challenge was to transform the area
into 14 permanent and temporary venues,
20km of new roads, 13km of tunnels,
26 bridges, 80ha of new parkland, and
The London Aquatics Centre (left) and the London Stadium (right) at the Queen Elizabeth Olympic
a transport hub for 17,000 athletes and
Park in July 2015 following their adaptation
officials. The bid committed to complete
this task while staging the most sustainable
games ever – one of the Olympic Delivery
Authority’s six priorities along with design ••smart park: using data and innovative part of ensuring its sustainability. Energy
and accessibility, employment and skills, technologies to enhance the park efficiency and carbon reduction targets
equality and inclusion, health, safety and ••future living: testing and showcasing new are considered at a national, city and
security, and legacy. approaches to living on the park and in the local level. The park’s heating and cooling
Project management before the games local communities system, for instance, is the UK’s largest
focused on the way the area and facilities ••garden district: creating a biodiverse and low-carbon, decentralised, combined heat,
could be used afterwards, with 75p in every sustainable part of London cooling and power network, incorporating
£1 spent going towards legacy benefit. ••neighbourhoods: designing and 18km of pipes and wires and serving all
This meant that venues and housing on developing the park’s communities to park venues as well as the East Village and
the site would be developed to respond to enable sustainable lifestyles. Westfield Stratford City, with plans to
and tackle the significant environmental extend into Hackney Wick and Fish Island.
challenges of a changing climate, the loss Adaptive re-use All non-residential buildings must be rated
of biodiversity and the overconsumption of Much work has been done to alter the ‘excellent’ by BREEAM and achieve a
vital resources. It also meant considering infrastructure and landscape created for the 35 per cent greater reduction in carbon
social equality, employment and economic games so they can be used in a completely emissions than that required by the
growth and prosperity. different way. These alterations resulted in Building Regulations 2013.
Responsibility for achieving these wider more than 35km of pathways and cycleways, The Copper Box Arena, which was
aims was assumed by the London Legacy 6.5km of waterways, more than 100ha that home to handball, modern pentathlon,
Development Corporation, which was could be designated as Metropolitan Open fencing and goalball during the games, was
formed in April 2012 with the goal of using Land, 45ha of Biodiversity Action Plan adapted so that it can now host an even
the games and the park to change the lives Habitat, 4,000 trees, playgrounds and of larger number of sports, and houses many
of people in East London and encourage course a park suitable for year-round events local clubs. It provides a daytime base for
growth and investment. The corporation’s and sporting activities. fitness activities and a night-time venue
sustainability work focuses on the following Thinking about the source of the park’s for concerts and other entertainment
four main themes: energy and how it is used is an important events. The arena is also environmentally
rics.org/journals 17
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sustainable, the top half covered in 3,000m2
of copper with a high recycled content that
gives the venue its name. The design also
incorporates 88 light pipes, which draw Project management before the
natural light into the interior, as well as
collectors of rainwater. The cost of these is games focused on the way the area
offset by their long-term benefit, reducing
both energy and water use by 40 per cent. and facilities could be used afterwards,
Overall, 47 per cent of the park’s water
demand is met by reclaimed or recycled
with 75p in every £1 spent going
water, a significant contribution being made towards legacy benefit
by the London Aquatics Centre, which uses
as little water – the three pools hold about
10m litres – and energy as possible. This
has resulted in 601 tonnes of carbon dioxide
equivalent being saved since 2014, and This keeps the water crystal clear, while soil, most of which was then cleaned and
emissions continue to decline. Measures saving £35,000 of energy a year. re-used across the site. Converting the
taken include the following. ••Upgrading the heating and cooling track-and-field venue into a multipurpose
••Turning down all pool pumps: the systems: the air conditioning in the stadium for football, athletics and
training and competition pool pumps are building has been given new controls entertainment involved removing 25,000
turned down to 85 per cent of their power that allow cooling by outside air when seats, covering the athletics track with a
during the day, and 70 per cent during the temperatures are low enough, and ensures 75cm layer of recycled concrete to protect
night, while the diving pool remains at a cooling and heating systems are only used it during the heavy lifting, removing 14
constant temperature, in line with its use. when necessary. floodlight panels, constructing a steel
••Recycling hot air: the main competition halo to encircle the stadium and replacing
pool hall is now kept at 27°C using the seating design. The initial cost of the
destratification fans. These blow the stadium was £450m, and £323m was then
rising warm air back down to pool level, spent to repurpose it.
protecting expensive equipment in the
roof while ensuring swimmers are the Neighbourhood developments
perfect temperature when on the pool side. Naturally, there are rigorous environmental
••Reusing pool water for toilets: our sustainability requirements for new
backwash recovery system collects pool developments on the park, and any
water to flush all toilets in the building, residential properties must be zero-carbon
saving nearly two Olympic-sized pools’ to be granted planning permission. The
worth of water every year. first of the new neighbourhoods on the
We are currently working on developing park site was Chobham Manor, which
the following as well. was built to the Lifetime Homes Standard
••A variable flow rate chiller: this will and level 4 of the Code for Sustainable
use less energy to cool the building while Homes – one of the standards used by local
enabling heat generated by the chilling planning authorities until the government
process to warm the 50m training pool. streamlined standards under the Building
••A reverse osmosis system: this will allow Regulations – with 25 exemplar sustainable
us to recycle most of the pool’s water while homes exceeding these requirements.
still keeping it clean. All new homes are connected to the
In the transitional period, the temporary district energy network, with some also
seating removed from the wings of the incorporating solar photovoltaic panels to
centre was gifted to community groups generate their own electricity. Properties
across the country, allowing the benefit of connect to a low-carbon heat network while
the games to continue to be felt elsewhere. using efficient appliances and lighting,
During the transition stage, the roof is lifted Adapting the Olympic Stadium – now and selected plots benefit from brown
from the former Olympic Stadium (top) and known as the London Stadium – was a roofs and green walls. Overall residential
the temporary side stands are removed from complicated process. The bowl was initially carbon dioxide emissions are predicted to
the London Aquatics Centre (above) made by excavating 800,000 tonnes of be at least 50 per cent lower than the 2010
rics.org/journals 19
Construction Sustainability
Building Regulations target, with exemplar by considering the widest possible range ••Matting and carpets should have a
houses achieving a 100 per cent reduction of possible residents and visitors and shallow, dense, non-directional pile.
– that is, they have zero emissions – on addressing the needs of people who have ••At entrance points a floor surface that
fuel for heating, hot water and lighting been traditionally excluded or marginalised removes water is to be provided, ensuring
through on-site measures alone. Exacting by mainstream design due to disability, age, that floors remain dry and slip-resistant.
levels of fabric efficiency have been gender, sexual orientation, race or faith. ••Entrance matting systems deeper than the
carefully balanced with considerations of a This is key to work on the park: design minimum 1,500mm are likely to be required
future climate. Most of the fabrication of should meet the needs of the diverse at entrances with heavy pedestrian traffic.
the neighbourhood was done on site. The population and remove the physical ••In areas that may become wet, such as
materials used for all building elements barriers that can segregate and exclude. the building entrance, changing and shower
helped achieve the required standards, and To help us achieve this, we have areas or pool side, anti-slip surfaces or
were chosen to reduce the amount of energy developed our own Inclusive Design safety flooring should accord with Health
needed to heat and maintain each home. Standards (bit.ly/LLDCIDS), providing a and Safety Executive guidance.
The aim of Chobham Manor and benchmark against which we can measure In addition, the corporation established
other neighbourhoods in the park is to the realisation of inclusive design across the a dedicated Built Environment Access
create a settled community. A number park. These are set out in four key parts: Panel (BEAP) – comprising members of the
of homes in Chobham Manor have been ••public realm original Olympic Delivery Authority BEAP,
designed specifically to appeal to multiple ••residential developments members of the Stratford City Consultative
generations of the same family, while 28 ••public buildings, including venues Access Group and local diverse community
per cent of units will be affordable housing. ••spectator and participant needs at venues. members – that provides advice, technical
The properties have provision for home Each part is in turn split into two help and feedback.
working, secure on-plot cycle storage and sections: design intent, which gives some
electric vehicle charging. Additionally, no background and context, and inclusive Urban exemplar
home is more than 350m away from a bus design guidelines, which set out good Initially, the London Legacy Development
stop, to encourage use of public transport. practice to achieve accessible and inclusive Corporation undertook an ambitious
At the East Wick and Sweetwater environments. These guidelines are then 18-month transformation programme
developments, the LLDC’s development applied to all areas and aspects of the park. costing £285m, which resulted in the north
partner is working on strategic For example, floor surfaces in public of the park reopening in July 2013 and the
infrastructure, including two new bridges buildings including venues need to ensure south side the following April. We continue
between Queen Elizabeth Olympic Park and that all people can travel horizontally to work develop a dynamic new heart for
communities to its west, and on removing in a safe and convenient way without East London, creating opportunities for
an existing footbridge that will be set aside discomfort. In order to achieve this, the local people; there will be 40,000 jobs
for potential re-use. following principles should be observed. on the park site by 2025 and 24,000 new
••Glossy or highly polished materials are homes by 2031. The creation of a Smart
Inclusive environments not to be used because they can appear wet Mobility Living Lab, which will provide
Inclusive design means creating sustainable and thus slippery, even if they are not. They an urban test bed for a complex public
neighbourhoods and communities that can also cause reflective glare and confuse environment capable of demonstrating
meet the needs of 21st-century society some people with visual impairments. and evaluating the use, performance and
benefits of connected and automated
vehicle technology, is also under way.
While data and commentary is
currently available, the real test will be in
ten to 15 years. Only then will we know
whether we’ve succeeded in creating an
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Construction Data
Better data
While the construction and infrastructure industries
generate huge amounts of data, its full value has
yet to be realised
Dr Jennifer Schooling
The increasing ubiquity of infrastructure and if we used the data more fully – not data will unlock huge value. We need a shift
data sources, from installed sensors to just to establish proximity to a threshold in mindset from treating data as disposable
serendipitous data from social media, gives but to identify trends in that data over a to seeing it as an asset of value in itself,
us an opportunity to gain unparalleled period of time – it would offer us a better and as an important tool in maintaining a
insights into the way our infrastructure is understanding of an asset’s behaviour in physical asset.
performing, how we are using it, whether terms of any rate of change and the speed There are other issues to consider:
it is fit for the future, and what new at which a potential problem is developing. being able to gain more from existing
infrastructure we may need to invest in. Richer information enables better assets through digital enhancement of
The infrastructure and construction decision-making. If we have a fuller mature infrastructure is crucial because
industries generate a lot of data, but picture of the behaviour of an asset, we can we cannot simply build our way out of a
do not often extract or exploit its full understand how urgently an issue needs to capacity constraint. Taking major pieces of
value. The cost of storing, processing and be addressed and plan accordingly. infrastructure out of commission because
transmitting data has fallen significantly in Analysing data in this way allows action they have degraded beyond the point of
recent years, driving digital transformation to be taken before a critical threshold is useability causes huge disruptions and
across all industries and also presenting reached. Crucially, it enables the sector to potential safety implications. Increasing
a timely opportunity for infrastructure progress from the reactive maintenance urbanisation puts greater pressure on
and construction to work more efficiently, and management of our assets to a more resources and, in the face of climate change,
sustainably and profitably. cost-effective, risk-based maintenance we have a responsibility to manage our use
However, in order to realise the full and management approach. If we treat of carbon-intensive materials effectively
benefits of this, we must change the way or repair an asset before maintenance is and efficiently.
we perceive, manage and value the data required, money is wasted because there is
we generate. We need to make the most of additional capacity remaining; if we act too Whole-life value
our data, and this requires us to identify late, costs can rise due to the greater level of We must use the tools and technologies
what information we want from the data damage and the associated disruption to the at our disposal to ensure that new
we collect, process it accordingly and make network the asset serves. Using the data, we infrastructure is designed and built with
it accessible for future reference. can identify the best time to take action. consideration for the value it provides
Currently, we often use monitoring data Fundamentally, our industry needs throughout the whole life of the asset,
to assess whether a particular quantity to get much better at identifying the not just for the lowest capital cost. This
or property falls above or below a certain potential value of data and processing and means considering the operational and
threshold, which then highlights whether maintaining it in such a way that allows us maintenance costs at the design phase,
there is an issue with the asset. After doing to retrieve it and use it again. That means and optimising for these costs as well as
so, we typically dispose of the data or establishing structured approaches to both the cost of construction. Making better
archive it in such a way that it is not easy collecting and storing data and having use of data throughout the infrastructure
to retrieve. We are not looking beyond the reliable metadata – knowledge of when the cycle is essential because it enables better
task in hand. data was captured, and why and how, so that decisions, which lead to better outcomes for
This approach does not provide value we can reliably assess its quality. Changing those who will ultimately be using the asset
for money; collecting data incurs cost, the way that we perceive, collect and curate (see Figure 1).
rics.org/journals 23
Copenhagen: the City & Port
Development Corporation takes
a unified approach to exploiting
the value of public assets such
as land and buildings
Self-help
for cities
Rigid public organisations and outdated financial structures are holding back the
development of modern cities. Self-governing and financing arrangements could
be the answer, as examples from Scandinavia show
Luise Noring
In most societies, cities struggle to implement positive initiatives we can have a direct impact on people’s lives. Currently, there are
due to the rigid institutional structures of public organisations. three dominant ways of raising investment capital in cities: taxes,
There are many legitimate reasons for such structures, including land-value capture, and tax increment financing (TIF).
ensuring accountability and transparency and preventing However, taxes are scarce in spite of population growth because
malpractice and corruption. Yet the rigidity seems to hamper this prompts increased demand for public services and goods. First,
societies that must more and more often respond to the faster pace as more people move into cities the price of housing increases, in
of change – including the abrupt collapse of the housing market, turn meaning more people need housing subsidies and demand for
unforeseen climate disasters, mass refugee migration and violent affordable and social housing also rises. Both are the responsibility
protests. In many circumstances, life simply moves more quickly of the public sector. Second, as more people move into cities and
than the institutions responsible for tackling these challenges. housing prices rise, those on lower and middle incomes are pushed
By the same token, our financial structures seem outdated. Banks further out to access affordable housing. This increases demands
and other institutions eagerly provide cheap finance for the wealthy, on roads and public transport – also a public-sector responsibility.
yet are unwilling to do so for the poor. Many financial institutions Third, energy distribution must respond to increased pressures.
tend to be highly compartmentalised, focusing on separate products At the same time, we know that if we do not create liveable cities
rather than holistic places, and are guided by short-term concerns with lower air pollution, more green space, good road infrastructure,
such as electoral politics and shifts in popular opinion. investment in renewable energy and so on the challenges of
Addressing the role of such structures and institutions in urbanisation will become either extremely costly to reverse or
cementing socio-economic immobility and enhancing inequality irreversible. This is without factoring in the extra public spending
is thus an unpopular topic and seemingly the only option this needed to provide an ageing population with better medical care.
leaves for improving the livelihood of the poor is raising taxes. As a So while tax revenue per capita tends to stay more or less
result, governments are left strapped for cash for decent healthcare, the same, expanding public housing, transport and energy
housing, education and other services. Those less fortunate must infrastructure lead to a steeper rise in the curve of public
concentrate on surviving, making it harder to get out of poverty. spending. Most societies are confronted with population growth,
The arguments presented here are, of course, oversimplified. But urbanisation, infrastructure that is outdated or in short supply,
in essence, if we do not see beyond the constraints of our public and climate disruption. To provide services such as healthcare,
and financial institutions we are left without hope for a better schools, housing, sanitation and energy for these diverse, growing
future. This is the motivation behind the search for self-governing populations with scarce taxes is therefore impossible.
and self-financing arrangements for cities. Cities are the closest Land-value capture is a solid alternative, but it requires local
governance level to citizens, and by enabling such arrangements, governments to own and manage the land assets. It also needs to
rics.org/journals 25
Construction Development and finance
be done smartly to reap the benefits of the value thus captured. Local Government Denmark
TIF, meanwhile, is available for local government that does not own Local Government Denmark (KL) is a private membership
and manage land assets but is able to spend future tax revenue to organisation that represents all Danish municipalities. The
service and repay bonds. Yet if future taxes are spent on repaying founding principle is that by bringing them together, KL is able to
these bonds, that revenue cannot be spent on services. In short, we gain political and fiscal competencies that each municipality would
need better ways of governing and financing our cities. not have if it were working by itself. KL is the permanent partner
It will probably come as a surprise to most readers that there are in the annual negotiations with the finance ministry that settle the
many kinds of self-governance and self-financing in use. Most are, municipal budgets.
unfortunately, ignored; but a few examples are proving successful. Danish municipalities allocate 50 per cent of the entire public
budget, compared with the 30 per cent that are allocated by national
Copenhagen government and 20 per cent by the regions. Every three years, KL
The Copenhagen City & Port Development Corporation is a meets with trade unions, regional authorities and the national
vehicle for leveraging the value of public assets such as land and government to determine the salaries, terms and conditions for the
buildings. It is important to note that this needs a unified approach, half a million municipal employees.
because if several public entities are trying to leverage their assets
simultaneously then the price is lowered and it does not work. KommuneInvest
When landownership is fragmented, each public authority sells The Swedish Local Debt Office KommuneInvest is another
its land assets as it needs; but in times of recession when the public private membership organisation, which represents 272 of the 290
sector is strapped for cash, this may flood the market with supply. Swedish municipalities in the financial markets. With a lending
That was the case in Copenhagen during the 1970s, when the port portfolio of around €30bn, it is a powerful player in the domestic
authority had to sell land in prime locations at lower prices. and international financial markets. In the global market, scale is
When a city does not have a dedicated, holistic strategy for essential and by bundling all municipal loans KommuneInvest is
optimising land assets and public entities sell land to close able to negotiate these on similar terms to its peers.
budgetary holes, such assets are often sold below market value. KommuneInvest aims to provide cost-efficient, stable funding
City & Port was however able to manage the market by sequencing for all its members. It holds a triple-A credit rating due to its
the supply of land on sale and was also able to wait out the global conservative investment tactics and loan guarantees provided by
recession rather than reduce the price of the land. its members. The office also helps fund investments for Swedish
So that it can operate efficiently and respond effectively to the municipalities in energy, housing and infrastructure. It will invest
market, it is allowed ample freedom of operation from the public directly in local housing and transport corporations and, on behalf
institutions that own and oversee it. With too much public-sector of its county members, it also invests directly in healthcare. In
interference, it would be unable to maximise revenue that is being Sweden, municipalities allocate 70 per cent of the public budget.
funnelled into the construction of a city-wide metro system.
What’s stopping us?
Affordable housing We may ask ourselves: why not all implement these and other
The Danish model for affordable social housing is another example self-governing and self-financing measures? What are the barriers?
of self-governance and financing. The industry consists of private, The short answer is an unimaginative reliance on existing
non-profit housing cooperatives that are owned, governed and institutions and financial tools. Cities are unable to see beyond
financed by their members. The tenants select and prepare leaders limited, short-term ambitions and capabilities. Bundling assets or
from among their own number and also pay their rent back into competencies under the management of one entity, municipalities
the savings scheme. One-third of it goes towards the improvement in KL and KommuneInvest relinquish individual political power
and maintenance of their housing estate, while another third goes to join collective negotiations instead. In the process, each must
towards the savings of the housing cooperative, which owns and accept the opinion of the majority of member municipalities.
oversees multiple estates; the final third is put into the National A long-term strategy for affordable social housing requires cities
Building Fund to finance the construction of new affordable and to maintain a vision and the ability to realise it over many election
social housing. This arrangement prompted the CEO of housing cycles. Accruing massive savings takes years: but if cities are open
cooperative KAB Jens Elmelund to say: ‘If you think about it, it to new kinds of thinking and organisation, we can go a long way
is quite remarkable that this segment of society is making such towards ameliorating these seemingly intractable urban problems.
enormous savings for collective use.’
Although the national government made huge withdrawals from Luise Noring is assistant professor at the Copenhagen Business
the National Building Fund in 2016, leaving it with a deficit of School’s Department of Management, Society and Communication
€134m, board chair Christian Høgsbro estimates that the fund will lno.msc@cbs..dk
hold €805m by 2030. Between the housing cooperatives and the
fund, the industry is well consolidated, providing affordable social Related competencies include: Development appraisals,
housing for every fifth citizen in Denmark. Project finance
rics.org/journals 27
Construction SMEs
Bigging
up small
business
The role of small to medium-sized enterprises in UK construction
is more important than ever in supporting local communities and
ensuring skills are retained
Luke Turner
According to the Business population creation of jobs. Their strengths include There is still a need for national and
estimates for the UK and regions 2018 from the ability to do the following. local government to invest in projects that
the Department for Business, Energy & ••Adapt quickly to change: decisions can develop our communities’ core services and
Industrial Strategy, more than 99 per cent be taken by managers and implemented meet the ever-growing demand for housing.
of the 5.7m businesses in the UK are small throughout the company expediently. But market uncertainty over Brexit and
or medium-sized enterprises (SMEs), ••Quickly respond to new and developing sustained cuts to local authority funding
defined as those employing no more markets, analysing areas for growth and mean the procurement of such work will
than 249 people (bit.ly/DBEISsmallbus18). quickly targeting new opportunities. need to be done in a more cost-effective,
Overall, SMEs account for 60 per cent of ••Innovate in working practices and use of sustainable manner. SMEs play a key role
employment, or 16.3m people, and 52 per technology: the cost of training is reduced in ensuring that the construction industry
cent of turnover, totalling £2tr. Nearly a due to smaller numbers of staff, so new remains sustainable, diverse and protected
fifth of all SMEs are in the construction technology or working methods can be against these difficult economic conditions.
industry, with slightly fewer than 1m applied on schemes far more quickly. It is because of this that, in 2015, the
companies employing 1.835m people, and a ••Create agile working environments and Minister for the Cabinet Office at the time,
further 815,000, employing 1.98m people, allow flexible working hours: SMEs are Matt Hancock MP, set the ambitious target
operating in professional, scientific and often employee-focused, a major benefit for for government to spend £1 in every £3 with
technical activities. those who cannot fit the 9–5 working day. small businesses, promising improvements
SMEs have been described by Theresa ••Benefit from greater buy-in: staff to the way it procures goods and services.
May as the ‘backbone’ of the economy: they members adopt company vision and goals The National Federation of Self-Employed
are key to its overall success and vital to the through a one-team ethos. & Small Businesses found that, for every
1 in 5
SME will, in most cases, appoint a qualified in achieving my degree, my memberships
member of staff to the scheme. This is a of RICS and the Association for Project
major benefit on small and medium-sized Management, and my becoming a partner.
projects, which can often be complex SMEs can provide training and SMEs are in
and need an experienced hand. Whether development across a varied portfolio of construction
providing early cost advice, producing work, and junior staff will be trusted to
detailed tender documentation, regularly perform key tasks. At an SME there are no
assessing overall project spend or having passengers: everyone plays a crucial part in Construction
the expertise to negotiate a final account the overall performance of the team. accounts for
12%
assessment, an experienced quantity Upskilling will continue to grow in
surveyor dedicated to the scheme is often importance in the coming decade as the
of a source of great comfort to the client. use of technology and automation becomes
Crucially, the competitive performance more prevalent. Measurement take-offs of all SME turnover
of SMEs pushes larger firms to improve. were once completed by teams of surveyors
For example, Playle & Partners has been over many days or weeks, but this task can
appointed on a number of key public-sector now be done in a fraction of the time with
Source: bit.ly
framework contracts in the South East of measurement software on projects using /DBEISsmallbus18
England, competing against much bigger BIM. The industry needs surveyors to
organisations. The reputation of an SME embrace this change and learn the required
is a critical part of its continued success. skills, especially those who have built up
Being employed by an SME often gives their technical knowledge over many years
opportunities to work on projects that will of practice and want to pass this on.
affect the communities in which employees SMEs in construction and professional
live, and this can be hugely rewarding. The services are well placed to support the UK
most satisfying projects in my career have economy after Brexit. There will be tough
been those that benefited people who live times ahead, but the strengths of such
and work locally, such as the Marcus Garvey enterprises and their employees will help
Library in Tottenham, a £3m rejuvenation them adapt, change and – I hope – thrive.
of a building that is an integral, much-loved
part of the local community. Luke Turner is a partner at Playle & Partners
An SME is more than just a workplace, LLP lturner@playleandpartners.co.uk
it is a second family: one where colleagues playleandpartners.co.uk
may have worked together for many years
and an environment that, if well managed, Related competencies include:
can lead to a one-team ethos. Business planning
rics.org/journals 29
Construction Contracts
The more
things
change …
The fourth NBS National Construction Contracts and Law
Report reaffirms what the construction industry has known
for some time: better communication and collaboration are
required to prevent disputes arising
Roland Finch
In 1998, France won the FIFA World Cup; the UK government Each topic can be considered in isolation, but looked at together
was wrangling over the Treaty of Amsterdam, which redefined they offer an overview of current feeling on construction
its relationship with the EU; and the UK Construction Industry contracting practice in the UK.
Task Force chaired by Sir John Egan published its report Rethinking Respondents were asked to give details of their experiences
Construction, which recommended that the industry look at new during the 12-month period immediately before completing the
methods of improving efficiency and reducing waste and disputes. survey; the survey itself ran between August and November
Twenty years later it may seem some things haven’t changed, 2017, so the figures relate to the greater part of 2017 and the last
as the NBS introduces National Construction Contracts and Law quarter of 2016.
Report 2018, the fourth such major report (bit.ly/NBSclrep18). The To consider the first of the categories, the two most popular
report suggests that despite great efforts over the years, our sector procurement methods by a substantial margin are traditional, at
remains an adversarial one, with one-third of respondents having 46 per cent, and design and build at 41 per cent. Partnering comes
been involved in a dispute in the previous 12 months, and nearly in a distant third at three per cent despite calls for improved
40 per cent feeling that the number of disputes is on the increase. collaboration, particularly from the government. Single-stage
The purpose of the survey is to identify trends under four main competitive tendering is still the most popular tender method,
headings. These are: although two-stage or some form of negotiation are not far behind.
••procurement methods and tendering Around 70 per cent of consultants and a similar proportion of
••collaboration, including building information modelling (BIM) contractors say they always or sometimes use electronic tendering,
••contracts and forms of appointment representing a steady increase on previous surveys, and the vast
••legal issues, disputes, and dispute resolution. majority are still relying on fixed-price lump-sum contracts.
rics.org/journals 31
Supporting you through
your career journey
At RICS Recruit we offer a range of opportunities from junior to senior positions.
Whether you are starting out your career or looking to take your career to the next
level, RICS Recruit connects you to the latest surveying vacancies in your sector.
How RICS Recruit can support you:
• Develop your career – RICS Recruit gives you access to a wide range
of the best surveying jobs.
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giving you the opportunity to access and apply to the top jobs.
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how to improve your job hunting experience. Advice on improving your
CV, as well as interview techniques, to ensure you get the job you want.
Find your future job today. Get the RICS Recruit App. Ricsrecruit.com
assess the situation’ ••Can your client quickly build out the
works? Is a replacement contractor available
and can you keep trusted and reliable
subcontractors by using step-in rights?
If you have immediate concerns, you will
need to:
••monitor the contractor’s performance
closely, both on site and financially
Daniel Hutchings ••consider regular site visits
Taylor Wessing ••keep detailed records
••ensure any payments are in line with the
work completed and any ‘pay less’ notices
are served in time to the correct address
••consider issuing formal instruction to
In a post-Carillion world, the spectre of concerns are correct, as mistaken allegations open up or test materials or goods, or
insolvency can haunt a project. Research by will erode trust. Gather all relevant remove defective work
the Insolvency Service immediately after information, particularly about payment ••check the construction contracts and ask
the contractor’s collapse indicated that the and value of works – if the contractor is your client about funding arrangements.
rate of UK construction insolvencies rose teetering on the edge, denial of cash flow Where there are defects, analyse whether
by eight per cent in 2016/17, with more than may result in the unwanted distraction of your contract allows your client to engage
2,600 such companies becoming insolvent. adjudication or push it into insolvency. others, should your instructions about
But steps can be taken to avoid an If you suspect insolvency is impending, the same be ignored. Ensure you meet any
unfinished project, a building riddled with your client will be looking to you to help deadlines in such a scenario. This can be an
defects, no security for the developer’s assess the situation. Do you advise it to effective strategy, especially if the contract
cross-claims, and an unhappy client looking terminate the contract, or think about provides that the contractor will be liable
to blame the contract administrator. ways it can encourage and help its ailing for all extra costs incurred by the client in
Any of the following may indicate that contractor finish the project? The following connection with any such engagement.
your client’s contractor is in difficulty: factors ought to be taken into account. A composed approach, taking into
••contractor demanding swift payment ••How close are you to the project’s end? account the steps above, may not wholly
or early release of retention or any other Could there be an issue with the transfer avoid a tricky period for the project. But
changes in payment patterns of design liability to any new contractor? protecting your client’s position and
••subcontractors contacting your client ••Is there a performance bond? Will your offering practical advice during this time is
directly, seeking payment client have access to funds to complete unlikely to go unnoticed. You’ll be rewarded,
••withdrawal of labour, including changes the work? This will usually depend on the as calm heads are welcome in any team.
to key individuals on site nature of the event and the bond’s wording.
••less frequent deliveries or removal of Even when an insolvency event occurs, it Daniel Hutchings is a senior associate, Taylor
various goods and materials from site may not be possible to make a call without Wessing dhutchings@taylorwessing.com
••a general slowdown in progress of works obtaining the decision of an adjudicator. If
••increased number of defects. so, proceedings may need to be instigated Related competencies include:
At this early warning stage you should before the date of the event to avoid being Contract administration, Works progress
exercise caution and establish whether your stayed pursuant to insolvency laws. and quality management
rics.org/journals 33
Construction Comment
Legal
‘In the wake of the Carillion not have jurisdiction to determine a dispute
referred to it by a company in liquidation
because the claim included a determination
position of parties’
individual voluntary arrangement was
pending approval.
Caps on liability
Caps on liability are a useful way to
Shy Jackson manage risk, but a couple of decisions have
Pinsent Masons highlighted the importance of getting them
right. In Cleveland Bridge UK Ltd v Sarens
(UK) Ltd [2018] EWHC 751 (TCC), the court
had to examine the facts in great detail
before deciding that the subcontractor
Adjudication, expertise, insolvency and instructing solicitors and made changes to had failed to prove that a cap had been
liability were among the issues pertinent to the second draft following their comments. agreed, which meant the difference between
construction to come before the courts last The court pointed out the limited role exposure to damages of less than £100,000
year, as the following cases demonstrate. solicitors should have in the preparation and exposure to £1m. In Arcadis Consulting
of joint statements, referring to paragraph (UK) Ltd v AMEC (BCS) Ltd [2018] EWCA
‘Smash and grab’ adjudication 13.6.3 of The Technology and Construction 2222, the Court of Appeal reversed the
In S&T (UK) Ltd v Grove Developments Court guide and paragraph 9 of the Practice decision of the High Court, and held that
Ltd [2018] EWCA Civ 2448, the Court Direction to Part 35 of the Civil Procedure although the final agreement was never
of Appeal upheld the first-instance Rules, which govern such matters. reached, the interim agreement in a letter
decision: that a failure to issue a ‘pay less’ The role of independent experts was of instruction contained a binding cap on
notice did not prevent an adjudication on also discussed in In Imperial Chemical liability that protected the consultant.
the true value of the interim payment, Industries Ltd v Merit Merrell Technology
although payment had to be made first. Ltd [2018] EWHC 1577 (TCC), where the Conclusions
It has been suggested that this will bring court highlighted the importance of experts No doubt the law will continue to change
an end to ‘smash and grab’ adjudications, remaining impartial and not straying into in 2019, and RICS members should keep
but questions remain about the timing of issues of fact and law. abreast of any new legal developments. The
adjudications and how this would operate cases that come before the courts provide
in practice. Adjudication and insolvency both useful lessons on the steps that can
As is to be expected, a number of cases sometimes be taken to reduce commercial
The role of experts concerning adjudication came before the and legal risks, as well as an indication of
Many RICS members act as expert courts and, perhaps in the wake of the the issues affecting the industry.
witnesses, and the role of experts also Carillion insolvency, there have been a
came before the courts in 2018. In BDW number of decisions looking at parties’ Shy Jackson is partner at Pinsent Masons
Trading Ltd v Integral Geotechnique (Wales) financial position. In Michael J Lonsdale shy.jackson@pinsentmasons.com
Ltd [2018] EWHC 1915 (TCC), the court (Electrical) Ltd v Bresco Electrical Services Ltd
considered a situation where an expert [2018] EWHC 2043 (TCC) (31 July 2018), Related competencies include:
had sent a draft joint statement to the the TCC determined that an adjudicator did Contract practice