RESETTING OUR SITES

WHAT BUILDINGS COST
Professor Bernard Williams’ EC study into the relative efficiency of construction systems across the EU found that off-site construction, particularly its effect on reducing on-site labour costs, has a major impact on lowering costs, as he told a recent RIBA conference

I HAVE BAD NEWS – for everybody, I think. The European Commission wanted to find out about the construction industry in Europe and particularly how competitive it was. Our research found that if everybody was as efficient as the best performers, the gross domestic product (not just the construction product) would be up by 2% in the European Union and 3% in the UK.  There are big stakes here and we have to take them seriously.
This was a benchmarking study. We were trying to find the best performers, find out how they do it and then follow them. In fact, even the best, Norway and Belgium, only achieve 75% efficiency, with the UK reaching about 55%. 

We realised early on that there was much less on-site labour in the industrialised processes and some of the best performers we found were majoring on build off-site type of construction.  The breakdown showed that on-site labour in the industrialised process was typically 30% as opposed to 55% in traditional on-site assembly. 

Then there’s the cost of materials and components. Although these are higher in build-off-site processes, taken as a whole the efficiency of the use of resources is greater, resulting in more cost-efficient construction. The high proportion of materials involved in on-site assembly in traditional processes (up to 40%) produces a vast amount of waste – as much as 10-15% of the cost of a building – which is avoided in the build off-site methods of Belgium, Norway, Finland and Holland. 

We produced a schedule of project costs per square metre gross internal area, using hourly labour rates, both on- and off-site. During the period of our study in Belgium the hourly rate was relatively high at E27/hour while build cost was relatively modest at E700/m2. In the UK labour was E17/hour and building E1000/m2.

Belgium has one of the lowest building costs but almost the highest labour rate including on-costs, for on-site construction workers within the EU benchmarking set.  Conversely the UK has almost the highest building costs but one of the lower labour rates.  We spend a lot but don’t use high paid labour – on or off-site. 

So what do we learn from the people who were apparently the best in class?  They all had highly mechanised, just in time delivery, very low levels of waste, low transport costs and a lot of investment in research and development.  All paid their labour well; and were generally very skilled in managing the more complex interfaces necessary to off-site construction.  Pay rates in the UK are low and training is poor. In boom times rates rise but the standard of labour remains low, so one way or the other we have a problem;  we do not get efficiency. 

Procurement is where it gets interesting.  In most cases of high efficiency there was a very cosy relationship between designer, client and the contracting industry;  their extensive use of innovation and off-site production necessitate it. A single point of responsibility is common and there is a big push in Europe now to move further in that direction.  I’m not sure the UK has to go that way even though we’re much more prescriptive; we should be developing high quality professional building economists who can work with designers from an early stage as part of the independent design team. This way we can avoid the contractor dictating the process to us and keep competitive bidding in place. 

Investment in research and development varies hugely: with only three or four months in the year to build, the Finns have very high levels.  They have to work very fast and invest huge sums in producing very efficient systems.  The Belgians are big investors too.  But the UK, investing just 10% of Finnish levels, either has no money or we are so good we do not need it. Which of these is true… or are neither?

So what do we conclude from this?  First, that a procurement method that can facilitate off-site fabrication or mechanisation, is essential to deliver projects with a high degree of efficiency. 

Off-site fabrication reduces waste, notably the proliferation of material or catalogues.  The UK has as many catalogues as the entire US, which is five times bigger than us.  Do we need that much choice?  If we did not have it, would we procure more efficiently? Components built under factory conditions offer a higher level of quality assurance, so the more we can use in our projects the better. Factory control of material components is much higher. People in the design team who could help us along this build off-site path would be an enormous asset for quality control as well as cost efficiency and avoid the contractor taking over the whole process.

So where are we now?  Offsite fabrication is slow to take hold in the UK, where design is still based on traditional or rationalised traditional systems.  It is developed mainly by contractors, not professionals.  Off-site construction is often inappropriate and people sometimes design a building and then ask the contractor to put a build off-site solution around it. That doesn’t work; this process must start at the beginning.

I believe we need some form of construction economist working within the design team, as a consultant employed by the developer or owner.  As part of the construction management team, their role would be to advise the design team on the economics of their design options in terms of buildability and product manufacturing efficiency, and to provide traditional quantity surveying specification and cost estimation.  Measure and value is an essential part of this.

Our construction economist would require the traditional or nouveau traditional building economics skills.  They would understand the economic design of structures, M&E services; product manufacturing economics and buildability, whole life economics and purchasing and procurement.  They wouldn’t necessarily have to be able to design buildings, but they must understand how they are designed and best put together, because I think no-one in our design process now properly knows that.  This person is like a good contractor and a good quantity surveyor with knobs on.  I don’t care where that skill is applied as long as we get people who can build efficiently to the best benchmarks and that we make those 30-35% savings. Those spoils have to be shared between the client, contractor and professionals. 

Professor Bernard Williams, founder of Bernard Williams Associates chartered surveyors, was speaking at What Do Buildings Cost? at the RIBA on 13 May. His 2006 study ‘Benchmarking Efficiency of the Best Resources in the EU Construction Industries’ is on www.bwa.uk.net

COST CONSIDERATIONS
CONFERENCE QUOTES
Some of the problems posed and solutions offered at the RIBA’s What Do Buildings Cost? conference

The problem: affordability
All of us have to do better than just expecting all the time that the answer to the problem is ‘give me more’.  I don’t know how many times I’ve heard a designer say, ‘The client will just have to increase the budget because that’s all we have left as an idea’.  Trust me, we have a growing affordability problem that, because of the change to the structure of the world, we cannot let run for much longer.
Paul Morrell, QS and independent consultant

Two solutions?
Honesty in forcing down fees
We have construction; hidden components of design and, yes, temporary works is part of design in a way, but in the subcontract packages some information is missing. We’ve driven down design costs and hidden them somewhere else. That’s the message. We need to be honest and open and think again about this driving down of design fees.

Black boxes for buildings
You can put a black box in an aircraft; why can’t you put one in an infrastructure or a building? If you look at project intelligence, BIM models will be in the black box.  As-built buildings are very rarely right, and the black box will contain that information.  That will eventually drive down costs.
Roger Flanagan, University of Reading