INFRASTRUCTURE OUTLOOK REPORT Opportunities and challenges for the UK
FOREWORD However, the UK’s infrastructure is in urgent need of renewal. The scale of the challenge and task is at once exciting and daunting. It is outlined in the National Infrastructure Plan, which sets out a £460 billion construction programme to the end of the decade and beyond. It requires bold, innovative and collaborative approaches to building infrastructure.
There is no doubt that the UK is at an infrastructure crossroads. Our ability to compete in the increasingly competitive global marketplace and our attractiveness to investors and the world at large depends on our approach to building Britain. As the Government acknowledges in the National Infrastructure Plan 2014: “High-quality infrastructure boosts productivity and competitiveness... has the capacity to unlock economic potential in individual regions... and deliver new housing and business development where it is most needed”. In short, infrastructure is a critical foundation to our way of life. 2
The significance of this critical juncture is recognised by the industry and government, and is further reinforced by the recent creation of the National Infrastructure Commission. While we may have a vision of the UK’s future infrastructure network, the reality is that achieving a better connected, integrated and efficient Britain is no small feat. That is why this report is so important. It provides a unique insight into how confident senior decision makers in the construction industry - who will deliver this ambition - are on the UK’s infrastructure outlook. It is the first time this has been done. What we are presented with is a snapshot of where we stand on UK infrastructure, where the opportunities and pitfalls lie and what we must do if we are to move forward.
Our report shows the industry is buoyant but concerned about the challenges ahead, with over two-thirds saying not enough is being done to meet the UK’s infrastructure requirements. While the industry looks to government for some of the answers, including more investment certainty and less red tape, it is clear there is some introspection too with some strong messages on the role of supply chain collaboration and private sector investment. Although major infrastructure projects dominate the airwaves, the industry shows strong support for local projects including local road and rail maintenance. The industry embraces the change in the political landscape, welcoming more local decision making, although there is more mixed opinion around the impact of devolution on infrastructure delivery. There are also significant regional variations on where infrastructure investment will be made, according to our report. Responses on questions about sustainability suggest we have more work to do in this regard. Just under two-thirds of the industry believe their customers
will not pay a premium to implement sustainable construction practices. As the National Infrastructure Plan says: “The choices that we make about infrastructure enable us to shape the type of economy and society that we want for the future”. This is an area where I believe everyone can and must make a contribution. Government must send clear and consistent investment signals and the industry must innovate to deliver new solutions to meet customer needs. I hope this report makes an interesting read, and contributes towards achieving the goal of delivering the UK’s infrastructure ambitions fit for the 21st century and beyond.
Cyrille Ragoucy CEO, Tarmac
TARMAC INFRASTRUCTURE OUTLOOK REPORT This report was commissioned by Tarmac to explore the UK construction industry’s views on infrastructure plans, growth and investment. With a new Government in place since May 2015 and momentum on infrastructure building, this report is an important snapshot of UK infrastructure. It provides an essential insight from industry decision makers on their confidence levels and what needs to be done in order to meet the country’s infrastructure requirements.
TOPICS OF RESEARCH The report assesses the sector’s outlook for infrastructure and its attitudes to government infrastructure spending plans and funding sources, including private sector investment. It canvasses respondents’ views on the measures that would help meet the UK’s infrastructure requirements. It also reviews the levels of support for various transport projects. The regional picture and differing attitudes by region are also covered
by the results, as are the levels of support for local devolution and attitudes to the Northern Powerhouse.
METHODOLOGY The research was conducted via telephone interview with 300 senior decision makers in construction companies and their clients between 8 July and 12 August 2015. The sample was drawn from the Dun & Bradstreet business database. Quotas were set to obtain 100 interviews with decision makers in civil engineering companies, organisations and clients, plus 200 in construction companies (for commercial and domestic buildings). All organisations had between 10 and 1,000+ UK employees. The study covered a wide range of company sizes but the data is not weighted by company size or sector type. The samples covered the whole of the UK and all types of engineering and building projects, including domestic and commercial buildings, and civil engineering. Respondents were
drawn from all regions of the UK, with a fifth reporting they are from companies that operate nationally. Regional comparisons (ie comparing results between companies that work predominantly in certain regions) are based on smaller numbers of interviews. See sample profile in the appendix for the base sizes for these results.
CONTENTS Key findings........................................................ 4 Construction industry in buoyant mood.............................................. 6 Industry concerns............................................ 8 Beyond the big ticket items....................... 10
Most respondents (89%) are senior or middle managers and the majority (69%) are in senior management positions, plus a small minority (4%) in specialist but non-managerial roles (eg engineering specialists). The sample profile is shown in the appendix, together with the specific questions they were asked.
The regional picture....................................... 11
Figures may not come to 100% in all cases due to rounding.
Sustainability................................................... 16
Support for localism and devolution................................................ 12 The Northern Powerhouse ........................ 13 Delivering the future collaboratively................................................. 14
Appendix: sample profile and questions.................................................. 18
3
KEY FINDINGS CONFIDENCE AND CONCERNS
66% of the construction industry is confident in the outlook for the UK’s infrastructure over the next 12 months.
83%
agree not enough is being done to meet UK infrastructure needs.
MEETING INFRASTRUCTURE CHALLENGES
want to cut red tape to help improve UK infrastructure.
THE REGIONAL PICTURE
There is more support for maintaining local roads and upgrading the strategic road network outside London than for HS2 or new runways at Heathrow or Gatwick.
4
71%
want greater certainty on government infrastructure spend.
72% first mention London or the South East as the regions that will see the most spent on infrastructure projects in 2016.
SUPPORT FOR LOCALISM AND DEVOLUTION
72%
agree with local government being able to decide about infrastructure projects locally.
61% are confident devolution will help in the delivery of local infrastructure projects.
DELIVERING THE FUTURE COLLABORATIVELY
78%
agree infrastructure projects would take less time if there was greater collaboration across supply chains.
77%
agree that suppliers are usually able to reduce project costs if they are engaged early enough.
5
CONSTRUCTION INDUSTRY BUOYANT ABOUT UK’S INFRASTRUCTURE OUTLOOK With the upturn in the economy, the construction industry has witnessed a renewal in optimism. In the last year, there has been steady news flow of major infrastructure initiatives, plans and investments. With the National Infrastructure Plan 2014 setting out the infrastructure pipeline at over £460 billion of planned public and private investment to the end of the decade and beyond, the larger UK firms may be feeling particularly optimistic at the prospect of the anticipated uptick in infrastructure projects.
Overall, two-thirds of the construction industry is confident in the outlook for the UK’s infrastructure over the next 12 months (see Fig 1). Regionally, the confidence level is broadly the same. 68% of respondents working predominantly in London and the South East are confident about the UK’s overall infrastructure outlook over the next 12 months - in line with the national level.
This compares with two-thirds (66%) of respondents from companies working predominantly in the North East, North West and Yorkshire and Humberside. 71% of respondents are confident in East Anglia, and the East and West Midlands, making these the most confident regions on the UK’s overall infrastructure outlook.
66% of the construction industry is confident in the outlook for the UK’s overall infrastructure over the next 12 months.
6
This sentiment is mirrored in the outlook for the UK’s economic infrastructure (transport, energy, communications and utilities) - as seen in Fig 2 - where over two thirds (69%) of the industry is confident. This suggests that the reported and confirmed pipeline of projects in this area - such as the £15 billion investment in the Strategic Road Network as part of the Road Investment Strategy, Crossrail, HS2 and a potential new nuclear power station, Hinkley Point C - is having a positive effect.
agree not enough is being done to meet UK infrastructure needs.
Confidence in economic infrastructure is a little stronger among firms operating predominantly in London and the South East (73% confident) than outside this region (65%). It is also stronger among larger firms operating nationally (73% confident), who may be better placed to work on major infrastructure projects across the UK. When comparing levels of confidence over the next 12 months, the outlook for the UK’s social infrastructure (housing, schools, hospitals and
communities) is lower than the economic infrastructure outlook, with just over half (54%) confident (compared to 69% confident for the UK’s economic infrastructure).
Fig 1: Confidence about the outlook for UK’s overall infrastructure over the next 12 months.
The strength of outlook for social infrastructure is very similar regardless of the regional focus of the business. 53% are confident for businesses predominantly operating in London and the South East compared with 54% for those outside those two regions.
8%
60%
24%
4%
VERY CONFIDENT
FAIRLY CONFIDENT
NOT VERY CONFIDENT
NOT AT ALL CONFIDENT
4% DON’T KNOW Base = All respondents – decision makers in civil engineering and construction companies (300).
Fig 2: Confidence about outlook for UK’s social and economic infrastructure over the next 12 months.
NOT AT ALL CONFIDENT
DON'T KNOW
8%
VERY CONFIDENT
NOT AT ALL CONFIDENT
4%3%
4% 6% NOT VERY CONFIDENT
Social NOT VERY CONFIDENT
34%
DON'T KNOW
VERY CONFIDENT
12%
24%
Economic 48%
FAIRLY CONFIDENT
57% FAIRLY CONFIDENT
Base = All respondents – decision makers in civil engineering and construction companies (300).
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INDUSTRY CONCERN ABOUT MEETING INFRASTRUCTURE CHALLENGES
13%
73%
STRONGLY AGREE
2% 27%
NEITHER AGREE NOR DISAGREE
19%
39% TEND TO AGREE
Base = All respondents – decision makers in civil engineering and construction companies (300). Fig 3a: Actions to meet the UK’s infrastructure requirements. 83%
TEND TO DISAGREE
STRONGLY DISAGREE
13%
73%
71%
70%
68%
64%
STRONGLY AGREE
2%
53%
53%
27%
19%
DON’T KNOW
ATTRACT PENSION FUNDS TO INVEST
TEND TO AGREE
ATTRACT OVERSEAS INVESTMENT
39%
REDUCE COSTS
1%
BUILD MORE PARTNERSHIPS
NEITHER AGREE NOR DISAGREE
UNLOCK PRIVATE INVESTMENT
So, what does the construction industry believe must be done in order to help meet the UK’s infrastructure requirements (Fig 3a)? Views include cutting red tape (83%), increasing government investment (73%), giving more certainty about government spending (71%) and unlocking private investment (70%).
TEND TO DISAGREE
Base = All respondents – decision makers in civil engineering and construction companies (300).
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INCREASE GOVERNMENT
In addition, a clear majority (76%) of respondents (Fig 4) think the current Government should spend more on economic infrastructure (transport, energy, communications and utilities) over the next five years than the last Government did between 2010 and 2015. Opinions about this are very similar regardless of where respondents predominantly operate.
83%
STRONGLY DISAGREE
REDUCED RED TAPE
There is some concern that the UK is lagging behind some competitor countries. Nearly half (48%) agree that most other European countries (particularly Germany and France) are ahead of the UK in terms of investment and development in economic and social infrastructure. But the majority (64%) agree that some leading global markets (particularly China and the USA) are ahead of the UK in these areas.
Fig 3: Level of agreement on whether enough is being done to meet UK infrastructure requirements and what should be done to help with this.
GREATER CERTAINTY ON GOVERNMENT SPEND
want to cut red tape to help improve UK infrastructure.
Over half also think reducing costs, building partnerships, attracting overseas investments and pension fund investment can play a role. Clearly, the construction industry thinks that there is no single solution, but that multiple approaches should be used to help meet the UK’s infrastructure requirements.
INCREASE GOVERNMENT INVESTMENT
83%
There are various concerns about how much effort is being made to improve infrastructure. Two-thirds (66%) agree that “not enough is being done to meet the UK’s infrastructure requirements” (Fig 3) with slightly higher agreement levels among building contractors (69%) than civil engineering firms (61%).
REDUCED RED TAPE
Despite the confidence in the construction industry, the report identifies a number of challenges which need to be addressed to meet the UK’s infrastructure ambitions. Among these are funding and investment certainty. Of the current UK infrastructure pipeline to 2020-21 in the National Infrastructure Plan 2014, 65.6% (£214.4 billion) of investment required to deliver the projects in the pipeline will need to come from the private sector.
71% Although those surveyed feel that government investment should increase, the construction industry recognises that the public purse can only provide a limited amount of new funding. When asked how much more the current Government should spend on economic infrastructure over the next five years than the last Government, three in five (62%) suggest up to £50 billion, with a further 17% indicating between £50-99.9 billion.
This is mirrored in the report with regards to views on the sources of this funding. 77% of those respondents who think the Government should spend more on new economic infrastructure projects in the next five years believe that the private sector should lead funding for new economic infrastructure projects (Fig 5), more than double the levels thinking other sources should be involved, such as government borrowing (37%), sovereign wealth funds (32%) or increased taxation (31%).
Fig 4: Attitude to level of government expenditure on economic infrastructure over the next five years.
Those suggesting multiple funding sources are most likely to think private sector investment should provide the most funding (48%) rather than government borrowing (18%) or increased taxation (13%). In order to help deliver the UK’s infrastructure needs in the years ahead, one of the areas that requires urgent attention is the UK’s skills shortage. While the majority of respondents are confident about the UK’s overall infrastructure outlook (Fig 1), only 21% agree that the UK has enough skilled workers to deliver
Fig 5: Potential sources of funding for new economic infrastructure projects.
want greater certainty on infrastructure spend.
these infrastructure needs in 2016 (Fig 6). The majority (72%) disagree that the UK has enough skilled and trained workers in the short term to fulfil the UK’s infrastructure needs. The level of disagreement is even higher among businesses centred in London and the South East (77%) compared with firms in other regions (69%).
Fig 6: Attitude to whether the UK has enough skilled workers to help deliver the infrastructure the UK requires.
77
SPEND LESS
4%
Provide the 48 most funding
48 32
37 32
4%
Base = All respondents – decision makers in civil engineering and construction companies (300).
TEND TO AGREE
6 1 2
6 3
36% 6%
1 2
5
OTHER SOVEREIGN WEALTH FUNDS DON’T KNOW PENSION FUNDS
INCREASED TAXATION GOVERNMENT BORROWING
SPEND MORE
6
PRIVATE SECTOR INVESTMENT
76%
13%
13
PENSION FUNDS
SOVEREIGN WEALTH FUNDS
GOVERNMENT BORROWING
6
STRONGLY DISAGREE
22
18 13
SPEND MORE
1% 8%
31
31 22
18
76%
STRONGLY AGREE
37
3
5
DON’T KNOW
17% SPEND LESS
2% 17%
DON’T KNOW
Provide the most funding
OTHER
2%
Funding new economic infrastructure projects
INCREASED TAXATION
SPEND THE SAME AMOUNT
SPEND THE SAME AMOUNT
Funding new economic infrastructure projects
77
DON’T KNOW
PRIVATE SECTOR INVESTMENT
DON’T KNOW
Base = All who think funding should come from more than one source (141).
NEITHER AGREE NOR DISAGREE
36% TEND TO DISAGREE
Base = All respondents – decision makers in civil engineering and construction companies (300).
9
BEYOND THE BIG TICKET ITEMS: INDUSTRY SHOWS GREATER SUPPORT FOR LOCAL ROADS AND RAIL The debate on major infrastructure projects, such as HS2 and expanding airport capacity, has taken the news headlines. Yet the industry signals that local projects should not be forgotten.
Although major economic infrastructure projects help to build confidence in infrastructure, there is only lukewarm support for these initiatives, according to the report. Where 10 is strongly in support and 1 is strongly opposed, opinions are divided over the strength of support for the potential developments of HS2, and adding runways at Heathrow and at Gatwick with overall mean scores of just 5.5, 5.2 and 5.0 out of 10 respectively. Instead, construction professionals show strong support for maintaining the existing local road network which accounts for 98% of the UK’s highways network - and upgrading the strategic road network outside of London with mean scores of 8.4 and 7.9 respectively. Updating regional rail connections (excluding HS2 and HS3) received a mean score of 7.4.
Fig 7: Level of support for transport infrastructure projects in the UK where 1 is strongly opposed and 10 is strongly in support.
HS2 HIGH SPEED RAIL LINK FROM LONDON TO BIRMINGHAM AND THE NORTH
0
1
2
3
4
5
6
7
8
9
10
HS3 HIGH SPEED RAIL LINK BETWEEN MANCHESTER AND LEEDS
0
1
2
3
4
5
6
7
8
9
10
UPDATING REGIONAL RAIL CONNECTIONS (EXCLUDING HS2 AND HS3)
0
1
2
3
4
5
6
7
8
9
10
0
1
2
3
4
5
6
7
8
9
10
UPGRADING THE STRATEGIC ROAD NETWORK (MOTORWAYS AND A-ROADS) OUTSIDE LONDON
0
1
2
3
4
5
6
7
8
9
10
MAINTAINING LOCAL ROAD NETWORKS
0
1
2
3
4
5
6
7
8
9
10
ADDING A RUNWAY AT LONDON HEATHROW AIRPORT
0
1
2
3
4
5
6
7
8
9
10
ADDING A RUNWAY AT LONDON GATWICK AIRPORT
0
1
2
3
4
5
6
7
8
9
10
CROSSRAIL 2 NEW RAIL CAPACITY FOR LONDON AND THE SOUTH EAST, LINKING SURREY AND HERTFORDSHIRE
Base = All respondents – decision makers in civil engineering and construction companies (300).
Support for maintaining local road networks was rated
10
8.4
out of 10 by construction professionals.
THE REGIONAL PICTURE: INFRASTRUCTURE SPEND FOCUSES ON LONDON AND THE SOUTH EAST, WITH OTHER REGIONS LAGGING BEHIND
Fig 8: Perceptions of distribution of spend on infrastructure projects by region. 51 50
of report participants first mention London (51%) or the South East (21%) as the regions that will see the most being spent on infrastructure projects in 2016.
First mention Benefits most
21
4 3
0 1
0 0
NORTHERN IRELAND
1 0
WALES
3 2
SCOTLAND
2 3
YORKSHIRE / HUMBERSIDE
5 4
3 2
SOUTH WEST
1
LONDON
0
WEST MIDLANDS
0
EAST MIDLANDS
1
NORTH EAST
16
NORTH WEST
72%
After London and the South East, the construction industry thinks the North West is the region most likely to attract infrastructure spend in 2016.
SOUTH EAST
London and the South East are seen as the main focus of current and confirmed Government infrastructure spending for 2016. Overall, London is clearly seen as attracting the most spend on infrastructure projects in 2016 – half (51%) mention London first as the region where the most will be spent with 21% noting the South East. London and the South East are clearly seen to dominate spending compared to other UK regions (Fig 8).
EAST ANGLIA
A regional infrastructure divide exists, according to the industry, with London and the South East expecting to benefit the most from infrastructure spend and other parts of the UK far behind.
Base = All respondents – decision makers in civil engineering and construction companies (300).
11
SUPPORT FOR LOCALISM AND DEVOLUTION: GIVE INFRASTRUCTURE POWERS TO THE REGIONS Since the General Election in May 2015, the debate around local decision making on infrastructure projects and greater devolution of power to UK cities has intensified. There is strong support within the industry for greater devolved powers for infrastructure delivery to help rebalance the UK economy. This is welcome, but recent commentary by the industry has warned that devolution of powers must be carefully managed to avoid creating additional layers of bureaucracy and ensure that devolution does not lead to fragmentation.
Fig 9: Attitudes to devolution of decision making on infrastructure projects to local government.
The construction industry would generally like to see more local decision making when it comes to infrastructure. There is strong support for local government making decisions about infrastructure projects with 72% agreeing that this should be the case and only 17% disagreeing (Fig 9). The level of agreement about devolving these decisions is more likely to be strong (44%) rather than just ‘tend to agree’, suggesting that devolution is a popular solution in the construction industry.
Agreement levels are even stronger among businesses operating predominantly outside London and the South East (78% agree, 49% strongly with only 21% neutral or disagreeing) rather than inside London and the South East (67% agree, 41% strongly). According to this report, over half (61%) of respondents have confidence that devolution of local government will help in the delivery of local infrastructure projects (Fig 10).
Fig 10: Confidence levels that devolution of local government will help in delivery of local infrastructure projects.
DON'TDON'T STRONGLY STRONGLY KNOWKNOW DISAGREE DISAGREE TEND TO TEND TO DISAGREE DISAGREE
11%
NEITHER AGREEAGREE NEITHER 9% NOR DISAGREE NOR DISAGREE
6% 1%6% 1% 11%
9%
STRONGLY STRONGLY AGREEAGREE
44% 44%
12% 12%
49%49%
VERY CONFIDENT VERY CONFIDENT
FAIRLY CONFIDENT FAIRLY CONFIDENT
25%25%
10%10%
NOT VERY ALL CONFIDENT NOT CONFIDENT VERY CONFIDENTNOT AT NOT AT ALL CONFIDENT
28% 28% TEND TO TEND TO AGREEAGREE
12
Base = All respondents – decision makers in civil engineering and construction companies (300).
3% DON’T KNOWKNOW 3% DON’T Base = All respondents – decision makers in civil engineering and construction companies (300).
But, most respondents are only ‘fairly’ rather than ‘very’ confident that infrastructure delivery will be improved by broader levels of devolution and the creation of new bodies. 35% lack confidence that broader devolution will help, so opinions are more divided over the potential results of greater devolution than attitudes to the principle of it.
THE NORTHERN POWERHOUSE? LACKS POWER OF AWARENESS In 2015, the Northern Powerhouse became the Government’s flagship devolution initiative. It has made a number of key appointments and the north of England is pushing the initiative hard. Despite this, construction industry awareness levels are low, with two in five respondents having never heard of the concept. The Northern Powerhouse is encouraging, says the industry, but flesh must be put on the bones.
Only 13% know a fair amount or great deal about the Northern Powerhouse (Fig 11), half know the name or just a little about it (48%) and over a third (38%) have never heard of it.
of the northern region in the next five years, only 16% that it will have no effect and 2% that it may even have a negative effect.
Fig 11: Familiarity with the Northern Powerhouse concept. GREAT DEAL
2% NEVER HEARD OF
There is some encouraging news, however. For those who do know at least a little about the Northern Powerhouse, attitudes are clearly positive (Fig 11a). 75% of this group think it will make a positive difference to the economy
FAIR AMOUNT
11%
38% 24%
KNOW JUST A LITTLE
24% HEARD OF BUT KNOW NOTHING ABOUT
Base = All respondents – decision makers in civil engineering and construction companies (300). Fig 11a: Attitudes to the Northern Powerhouse. GREAT DEAL
2% NEVER HEARD OF
FAIR AMOUNT
Very positive difference
11% Positive difference
38% 24%
75%
18%
KNOW JUST A LITTLE
57% No difference
24%
of those who have at least a little awareness of the HEARD OF BUT KNOW initiative think the Northern Powerhouse will make a NOTHING ABOUT positive difference to the economy of the region in the next five years.
Negative difference
16% 2% 7%
Don't know
Base = All who know at least a little about the Northern Powerhouse concept (112).
13
DELIVERING THE FUTURE COLLABORATIVELY In ‘Construction 2025: Industrial Strategy: government and industry in partnership’, the UK Government identified that a lack of collaboration and limited knowledge sharing was a key weakness which could stall growth. Our research clearly highlights that the industry understands the importance of collaboration in order to successfully deliver infrastructure projects more efficiently.
The majority of construction managers agree that greater collaboration between suppliers in building/construction supply chains would be helpful (Fig 12) and could save time and money. Nearly two-thirds (63%) agree that clients need to adopt new procurement models that will help drive greater collaboration between all suppliers. Even more (78%) agree that the time taken for infrastructure projects (building or maintenance) could be reduced if there was greater collaboration across supply chains,
78% agree infrastructure projects would take less time if there was greater collaboration across supply chains.
and nearly half (48%) strongly agree about the potential for this. Over three-quarters (77%) also agree that suppliers are usually able to reduce project costs if they are engaged early enough. According to the industry, collaboration across the supply chain and sectors - both public and private - could be facilitated via a Department for Infrastructure, an idea first proposed by the former transport minister, Stephen Hammond, in early 2015. It appears that the
Government has acted on this sentiment by creating the National Infrastructure Commission. A clear majority in the report (72%) support the creation of such a department, with just under half of supporters (46%) saying that it would help to join up decision making across government and a fifth (21%) reporting that it would provide a better understanding of the interdependency of infrastructure (Fig 13).
77% agree that suppliers are usually able to reduce project costs if they are engaged early enough.
14
46%
Fig 12: Attitudes to collaboration and early engagement on infrastructure projects.
Fig 13: Attitude to the creation of a Department for Infrastructure. 46%
3%
CLIENTS NEED TO ADOPT NEW PROCUREMENT MODELS THAT WILL DRIVE GREATER COLLABORATION BETWEEN ALL SUPPLIERS
33%
30%
27%
7%
72%
22%
6%
SUPPORT
OPPOSE
NO OPINION
21% 18% 13%
22%
6%
SUPPORT
OPPOSE
NO OPINION
21% 18% 13%
1%
Strongly agree
Agree
48%
Neither
Disagree
30%
Strongly disagree
16%
5%
Don't know
Base = All respondents – decision makers in civil engineering and construction companies (300).
Base = All who support creation of department (215).
IT WOULD PROVIDE LEADERSHIP
THE TIME IT TAKES TO BUILD OR MAINTAIN INFRASTRUCTURE COULD BE REDUCED IF THERE WAS GREATER COLLABORATION ACROSS SUPPLY CHAINS
1%
1%
1%
DON’T KNOW
72%
1%
DON’T KNOW
4%
DELIVER COST SAVINGS
16%
OTHER
31%
IT WOULD PROVIDE HELP TO JOIN UP DECISION LEADERSHIP MAKING ACROSS CENTRAL & LOCAL GOVERNMENT HELP TO JOIN UP DECISION PROVIDE A BETTER MAKING ACROSS CENTRAL UNDERSTANDING OF THE & LOCAL GOVERNMENT INTERDEPENDENCIES PROVIDE OF OUR INFRASTRUCTURE A BETTER UNDERSTANDING OF THE INTERDEPENDENCIES DELIVER COST OF OUR INFRASTRUCTURE SAVINGS
46%
OTHER
4%
IF SUPPLIERS ARE ENGAGED EARLY ENOUGH IN A PROJECT THEY ARE USUALLY ABLE TO REDUCE PROJECT COSTS
15
MORE TO BE DONE TO MEET SUSTAINABILITY AMBITIONS In ‘Construction 2025: Industrial Strategy: government and industry in partnership’, the UK Government set a vision for construction to be “An industry that leads the world in low-carbon and green construction exports” and to deliver a 50% reduction in emissions in the built environment. Our report highlights that the industry and its customers still have a long way to go to meet this vision.
48% 16
When asked to describe the attitude of their customers to sustainable construction practices (eg those that lower the carbon footprint, reduce environmental impacts or help achieve social or economic benefits) three out of five (60%) respondents think that their customers did not consider them important enough to pay a premium to implement. Just under a fifth (18%) say it would depend on the client and 17% think their customers would be willing to pay (Fig 14).
believe that the industry is not doing enough to recycle construction materials.
These findings highlight an important debate that the industry and its customers need to engage in; balancing the one-off upfront cost of construction versus cost and performance in use over the lifetime of infrastructure1. On whether the industry is doing enough to recover and recycle construction materials, just under half (48%) believe that the industry is not doing enough against a third (33%) who think that enough is being done.
1. The Infrastructure Carbon Review states that reductions in carbon and resource efficiency deliver reductions in cost. It states that if current low carbon best practices were adopted across the infrastructure sector, they would deliver a £1.5bn benefit.
Of those who feel not enough is being done, the main barriers to recycling are cost and awareness (Fig 16). Just over a quarter (27%) first mention the approach is too expensive and not commercially justified, and a quarter (25%) first mention that a lack of understanding of what recycling means prevents action by the industry. Other first mentions include 17% who say there is too much red tape, 11% who feel recycled material suffers from quality issues, 11% who cite the absence of an industry strategy and 8% who feel there is a lack of expertise.
17%
Fig 14: Attitudes to
17%
60%
SUSTAINABLE CONSTRUCTION PRACTICES ARE IMPORTANT AND CUSTOMERS ARE WILLING TO PAY A PREMIUM TO IMPLEMENT THEM
60%
SUSTAINABLE CONSTRUCTION PRACTICES ARE IMPORTANT AND sustainableCUSTOMERS construction AREpractices. WILLING TO PAY A PREMIUM TO IMPLEMENT THEM
SUSTAINABLE CONSTRUCTION PRACTICES ARE NOT IMPORTANT ENOUGH FOR CUSTOMERS TO PAY A PREMIUM TO IMPLEMENT
SUSTAINABLE CONSTRUCTION PRACTICES ARE NOT IMPORTANT ENOUGH FOR CUSTOMERS TO PAY A PREMIUM TO IMPLEMENT
2%
18%
3%
NEITHER OPTION BEST APPLIES
IT DEPENDS ON THE CLIENT
DON’T KNOW / NOT CERTAIN
Most important
Base = All respondents – decision makers in civil engineering and construction companies (300).
2%
18%
3%
Fig 15: Sentiment on whether enough is being done to recover and recycle construction materials.
Fig 16: Barriers to recycling (answer ranked first by respondents). 27
NEITHER OPTION BEST APPLIES
IT DEPENDS ON THE CLIENT
DON’T KNOW / NOT CERTAIN
25
17
11
11 8
Base = All respondents – decision makers in civil engineering and construction companies (300).
DON’T KNOW
THERE IS TOO MUCH RED TAPE
THERE IS A LACK OF AVAILABLE EXPERTISE
3% DON’T KNOW
1
WE DON’T HAVE A STRATEGY FOR THIS
15% IT DEPENDS ON THE PROJECT
1
THERE IS A LACK OF UNDERSTANDING OF WHAT THIS TERM MEANS
16% NO, NOT DOING ENOUGH / SHOULD DO A LOT MORE
IT DOESN’T SAVE ENOUGH CARBON
32% NO, DOING SOME BUT NOT ENOUGH
RECYCLED MATERIAL STILL SUFFERS FROM QUALITY ISSUES
33% YES, DOING ENOUGH
TAKING THIS APPROACH IS TOO EXPENSIVE
1% YES, DOING TOO MUCH
Base = All decision makers in civil engineering and construction companies (who do not think construction industry is doing enough to recover and recycle construction materials in the UK) (142).
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APPENDIX: SAMPLE PROFILE AND QUESTIONS 300 telephone interviews conducted between 8 July and 12 August 2015.
Regions they predominantly operate in
%
Number of UK employees
%
Regions they predominantly Number of operate in – sub groups interviews
East Anglia
5
11-25
43
London and the South East
78
East Midlands
6
26-50
29
42
London and the South East
26
51-100
10
East & West Midlands/ East Anglia
North East
6
101-250
8
North East/North West/ Yorks & Humber
47
North West
9
251-500
3
Outside London/South East
134
Northern Ireland
3
501-1000
2
Nationally
63
Scotland
11
1001+
5
South West
15
Wales
7
West Midlands
7
Yorkshire & Humber
5
Nationally Internationally
Job function
%
21
Non managerial but in a specialist role (eg engineering specialist)
4
3
Junior management
6
Middle management
20
Senior management
69
Some respondents stated that their business operates predominantly in more than one specific UK region.
18
Company type
Number of interviews
Civil engineers – complete constructions
13
CE – general CE works
67
CE – transport & sports
18
CE – other/local authorities
5
Building contractor – commercial buildings
32
BC – domestic buildings
113
BC - water projects
10
BC - other
42
The margin of error is larger for those results based on subsamples (eg companies operating predominantly in certain regions) compared with the results based on all 300 interviews. Figures used in this report and corresponding questions asked of the sample: Figure 1: How confident, or not, are you about the UK’s overall infrastructure outlook over the next 12 months? By infrastructure we mean both social and economic infrastructure (transport, housing, schools, hospitals, communities, energy and utilities)? Are you very confident, fairly confident, not very confident or not at all confident? Figure 2: How confident, or not, are you about the outlook for the UK’s SOCIAL infrastructure over the next 12 months? By social infrastructure we mean things like housing, schools, hospitals and communities. How confident, or not, are you about the outlook for the UK’s ECONOMIC infrastructure over the next 12 months? By economic infrastructure we mean transport, energy, communications and utilities. Figure 3: How much do you agree or
disagree with the following statement? Not enough is being done to meet the UK’s infrastructure requirements. Figure 3a: Which, if any, of the following do you think should be done to meet the UK’s infrastructure requirements? Figure 4: Thinking about the next five years, do you think that the current Government should spend more or less on economic infrastructure (transport, energy and utilities) than the last Government did between 2010 - 2015? Figure 5: And from which, if any, of these sources do you think new economic infrastructure projects should be funded from? Which of these funding sources do you think should provide the MOST funding? Figure 6: How much do you agree or disagree that the UK has enough workers with the right skills and training to deliver the infrastructure the UK requires in the period up to the end of 2016? Figure 7: How strongly do you support or oppose each of the following transport infrastructure projects in the UK?
Please give your answer on a scale of 1 to 10 where 1 means you are strongly opposed to it and 10 means you are strongly in support of it. Figure 8: In terms of volume of total spend in a particular region, where do you see the most being spent on infrastructure projects in 2016? Please indicate the top three only. In your view, which region benefits the most from current and confirmed future government infrastructure spend? Figure 9: To what extent do you agree, or disagree, that local government should be able to decide about infrastructure projects in its own region? Figure 10: How confident, if at all, are you that devolution of local government (that is more decisions being made locally rather than by central government) will help in the delivery of local infrastructure projects? Figure 11: How much, if anything, do you know about the concept of the Northern Powerhouse? Figure 11a: How much of a positive or negative difference do you think the Northern Powerhouse will make to the economy of the northern region in the next five years?
Figure 12: To what extent do you agree, or disagree, with the following statements? Please give your answer on a scale of one to five where one means you strongly disagree and five means you strongly agree. Figure 13: Would you support or oppose the Government creating a new Department for Infrastructure to drive infrastructure projects forward? Which, if any, of the following do you consider to be the most important potential benefit of creating a Department for Infrastructure? Figure 14: Which of the following best describes what you think the attitude of your customers would be to sustainable construction practices, eg practices that lower the carbon footprint; reduce the environmental impact of a project; and help achieve social and economic benefits? Figure 15: Do you think the construction industry is or is not doing enough to recover and recycle construction materials in the UK? Figure 16: Why do you think the industry is not doing enough?
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