Report/CP/64
August Funders 1999
Adopting Foresight in construction
This document is confidential to Core Programme members and study participants
This Funders Report has been issued to project funders, members of the steering group and those who made contributions to the project. The report may be subject to amendments before open publication. On the appearance of such an open publication this Funders Report is superseded.
In the meantime, comments on the report are encouraged please address these to Owen Jenkins at CIRIA.
CIRIA has no objection to any Funders Report being photocopied by entitled recipients, providing that the contents are treated with the same confidentiality as the original.
Adopting Foresight in construction Construction Industry Research and Information Association Funders Report CP64 CIRIA 1999
Keywords Foresight, strategy, planning, construction futures, future trends: (social, technological, economic, environmental, political), markets, clients, competencies Reader interest Strategic planners, business development and marketing managers, HR and training managers, researchers Classification AVAILABILITY CONTENT STATUS USER Restricted Study report Committee guided Construction professionals
Published by CIRIA, 6 Storey's Gate, Westminster, London SW1P 3AU.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, without the written permission of the copyright-holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature.
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Contents
Executive summary................................................................................... 5
A brief summary of the study process, the issues it raised and the participants' views of the benefits
1
Foresight..................................................................................................... 9
An introduction to the government's Foresight process
2
The study process .................................................................................... 12
A description of how the study was undertaken, the people taking part and the stages involved
3
The present position ................................................................................ 15
Companies' current approach to long-term issues
4
Future issues ............................................................................................ 17
A commentary on the issues identified during the study, the participants' views of the future and their suggestions about the way forward
5
Participants' views of the study.............................................................. 35
What participants sought from the study and their views of its value to them and their company
References ................................................................................................ 37 Appendices A1 Study rationale......................................................................................... 38
A review of the process and suggestions as to how you might wish to adapt the process for your own use
A2 Questionnaire results .............................................................................. 42
A compilation of participants' views on some of the statements of the future used in the study
A3 Acknowledgements.................................................................................. 44
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Executive summary
At its simplest, Foresight is an early warning system, a way for people and businesses to visualise the future 10 or 20 years from now. This is a report of a Foresight study involving eight companies and more than 140 participants. It includes a brief introduction to Foresight and the study process, a commentary on the future issues identified, and a review of the benefits gained from undertaking the study. Also included is guidance and briefing material for organisations considering undertaking similar exercises.
Readership
The report will be of interest to those involved in strategic planning and marketing, those responsible for human resource functions as well as others across the industry who are interested in how the construction is changing.
The CIRIA study Adopting Foresight in Construction involved eight companies and more than 140 participants. Through a series of interviews and workshops, participants were able to consider future issues in a global, industry and company context. Most of the participants had not previously been involved in their companies' strategic planning. The study identified a number of future issues to which the companies would need to respond. Participants and their companies benefited in other ways from the study, particularly in terms of personal development and cross-company networking.
Background
All organisations work within an environment that is developing in many ways and, more significantly, where the rate of change is increasing. The world around us is changing in global and local terms. Globalisation, climate change, population growth and demographic shifts, corporate accountability and public awareness are affecting all organisations. The need for culture change, technology transfer, innovation, mergers and acquisitions are among the additional issues facing the construction industry. The aim of the UK Foresight Programme is to secure sustained competitive advantage and enhanced quality of life by:
establishing visions of the future and identifying action priorities to help the UK meet future needs developing a culture of forward-thinking about market and technology opportunities and threats creating enduring networks linking business, the science base, and government as a basis for generating action on the priorities identified.
Stage 1 of Foresight was successful in identifying strategic research requirements and shaping government expenditure, although its impact on industry in general and the construction industry in particular has been limited. This study was therefore developed to take the Foresight approach into a number of companies involved in construction.
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Process
The study consisted of two main stages, and was carried out under the guidance of a project steering group including representatives from the eight participating companies. The first stage was common to all companies, and involved the production of a briefing document drawing together the findings of past Foresight and forward-looking studies. The briefing considered the changing world in terms of current and projected social, technological, economic, environmental and political trends. It also considered changes in markets, customers, projects and processes. Everyone taking part in subsequent stages of the study received a copy of this document in advance of their participation. The first stage also included an inter-company workshop where two young middle managers from each of the participating companies discussed their views of the future. The second stage was unique to each company. The first step was an interview with a representative of each company's senior management, often at chairman, chief executive or senior partner level. Issues discussed were: the company's current approach to longterm planning; the senior manager's thoughts on future issues; likely changes within the construction industry; and how such changes might affect their company. Two outputs were produced as a result of the meeting a note of the meeting and a set of statements about the future that reflected the senior manager's views. These were agreed with the senior management representative concerned. Each company nominated up to 20 middle managers to take part in the study and these were sent a questionnaire, which drew together the statements of the future derived from a number of sources:
a previous Construction Foresight Panel study (1) the inter-company workshop the interview with the senior manager of the company concerned.
Participants were requested to study the briefing document and to state whether they agreed with the 50 or so statements incorporated in the questionnaire. The final element of Stage 2 was a workshop. In this the participants considered the various future issues and developed proposals about ways in which their organisation could address them. The workshops concluded with the presentation of these proposals. Feedback was sought from workshop participants and from the senior managers.
Issues identified
The study spanned a range of issues at the macro and micro levels.
socio-economic/environmental issues technology, including IT global markets and competition the UK market
client relationships staff, skills, training and development knowledge management industry structure.
Each company selected some specific issues and developed recommendations to senior management about how it should address them. A selection of the issues is given below.
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Technological innovation
One group developed proposals as to how, through internal and external communication and liaison, its company could develop a culture of technological innovation. Recognising that companies would increasingly be judged not only on economic success, but also on their contributions to the environment and to society, one group suggested that its company should take a proactive stance to monitor and respond to these issues. Many groups acknowledged the need to shift from a product focus to one that would help their clients develop their businesses. A number of the proposals focused on the steps that needed to be taken by their companies in the short term so that they would be in a position to respond to future changes in the needs of clients. Recognising the application of knowledge as a future differentiator in terms of company performance, a number of groups suggested means of building on the skills base within their organisation.
Sustainable development
Improving clients' businesses Client relationships
Knowledge management
Benefits As a result of taking part in the study, benefits were identified at both the company and individual participant level. For the companies, benefits identified by the steering group members included:
an opportunity for staff development bringing people together from different locations introducing a way of seeking feedback on senior managers' views yielding information of use to a number of company departments eg personnel involving staff in considering issues outside their immediate responsibilities.
Middle managers participating in the study identified additional benefits, including: the opportunity to network within their organisations an insight into colleagues' views on a range of issues an understanding of other departments an opportunity to think more strategically the chance to consider interrelationship within a range of issues.
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Foresight
1.1
ABOUT FORESIGHT
At its simplest, Foresight is an early warning system, a way for people and businesses to visualise the future 10 or 20 years from now. More formally, the aim of the UK Foresight Programme is to secure sustained competitive advantage and enhanced quality of life by:
establishing visions of the future, and identifying priorities for action to help the UK meet its future needs developing a culture of forward-thinking about market and technology opportunities and threats creating enduring networks linking business, the science base and government as a basis for generating action on the priorities identified.
The Foresight Programme was launched in 1994 following publication in 1993 of the government's White Paper on Science, Engineering and Technology Our Potential (2). The programme is run by the Office of Science and Technology. The first round of the Foresight considered 15 sectors, including construction, and Foresight panels were formed for each sector, drawing together a range of individuals.
Agriculture, Natural Resources & Environment Chemicals Communication Construction Defence & Aerospace Energy Financial Services Food & Drink
Health & Life Sciences IT/Electronics Leisure & Learning Manufacturing, Production & Business Processes Materials Retail & Distribution Transport
The Construction Foresight Panel undertook a variety of consultation exercises and identified six related challenges of overriding future importance. These were: reducing costs; adding value and sharpening international competitiveness; paying greater heed to environmental and social consequences; strengthening our technological capability; improving education and training; upgrading existing buildings and infrastructure; and re-engineering the industry's basic business process. Further consultation and analysis led the Construction Foresight Panel to identify four "Engines of Change" and five "Key Opportunities". These are listed below and described in more detail in the Panel's report (3).
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Engines of change
Key opportunities
Promote learning networks through improved, and more appropriate, education and training Setting up mechanisms to ensure that all players in the construction process are kept well informed and their activities fully co-ordinated by means of advanced information and communications technology Introducing a national fiscal policy that encourages and fosters long-term investment and economic growth Creating a culture of innovation through the joint efforts of government, education, industry and institutions
Customised solutions from standard components Applying advanced business processes to construction (working together efficiently) Adopting a "constructing for life" approach Benefiting society and the environment through construction developments Creating nationally competitive infrastructures
The first stage of Foresight concluded in 1997. A consultation paper on the second (current) stage was circulated in 1998 (4) and this started in October 1998, the plans being confirmed in December 1998 with the issue of the government's "Blueprint" (5) The second round of Foresight will involve thematic panels, sectoral panels and underpinning themes: Thematic panels Sectoral panels Ageing Population, Crime Prevention, Manufacturing 2020 Built Environment & Transport; Chemicals; Defence, Aerospace & Systems; Energy & Natural Environment; Financial Services; Food Chain & Crops for Industry; Healthcare; Information, Communications and Media; Materials; Retail and Consumer Services Education, Skills & Training ; Sustainable Development
Underpinning themes
Thematic panels are to produce visions of the future. Sectoral panels will be asked to develop these visions in a sectoral context. The important underpinning themes that have been identified will affect the work of many panels. There will also be a number of Associate Programmes; one of these, run through the Construction Research and Innovation Strategy Panel (CRISP), will relate to construction. A feature of the current round of Foresight is a Knowledge Pool, which will be a professionally managed library of strategic visions, views and information about the future (see References).
1.2
INFLUENCE OF FORESIGHT TO DATE
Foresight has been influential in shaping government funding of research, but it has had limited impact on industry. One of the few initiatives conducted with industry was led by the Construction Foresight Panel. Two Foresight studies were carried out in Tarmac and Taylor Woodrow (1), the objectives of which were to:
pilot an in-company Foresight procedure demonstrate to senior managers that Foresight has value in a commercial context test the findings of the Construction Panel in a critical setting.
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1.3
BACKGROUND TO THE CIRIA STUDY
The premise of this study was that while Foresight had been successful at a strategic level, its impact on industry in general, and on construction in particular, had been limited. However, the two construction companies that had undertaken Foresight studies had found them rewarding both in terms of identifying business opportunities and in helping to enhance a forward-thinking approach within their companies. CIRIA developed a study with eight of its Core Programme member companies in order to:
promote practical implementation of a Foresight/forward-looking approach within the construction industry disseminate the findings to a range of companies.
The study process built on and extended that used for the Tarmac and Taylor Woodrow studies.
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2
The study process
This study involved eight companies. Each was represented on a project steering group, which also included representatives from government, including the OST Foresight Panel. The steering group advised on the development of the study. Each of the eight companies also nominated a senior management representative who was interviewed as part of the process, and up to 20 young managers who took part in the a series of separate in-house workshops held within each participating company. The nominated managers were generally younger staff in middle management positions.
The following terms are used in this report
STEERING GROUP
Company representatives government representatives CIRIA staff
Steering group members The representatives from the eight participating companies who guided the study, which was undertaken using CIRIA's steering group process. Senior managers/senior management representative The representative from the participating companies' senior management structure, which included chairman, chief executive, managing director and senior partners. Middle managers All other staff who were nominated to take part in the study.
COMPANIES
Senior management representative Group of nominated middle managers
A full list of participants is given in Annex 3
The CIRIA study involved two main stages. The first, common to all companies, involved producing a briefing document for all study participants (6) drawing together the findings of past Foresight and forward-looking studies, and an inter-company workshop where two managers from each of the participating companies discussed their own views of the future. The second stage was unique to each company. CIRIA first interviewed the senior management representative and then conducted a questionnaire survey followed by an in-house workshop for the middle managers. Each of the steps contributed information towards the set of eight in-house workshops. A description of each of the steps involved follows. 1 Briefing stage The briefing document (6) considered the changing world in terms of current and projected social, technological, economic, environmental and political trends. It also considered changes in markets, customers, projects and processes. The document included a set of 29 statements of the future derived from the earlier study led by the Construction Foresight Panel (1). Everyone taking part in subsequent stages of the study received a copy of the briefing document in advance of their participation. The purpose of this document was to stimulate all participants in the study to consider the issues and trends that will shape the long-term future of the construction industry.
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2 Inter-company workshop This half-day workshop involved two middle managers from each of the eight participating companies. Through brainstorming sessions and group studies, the managers developed views on client and market issues, industry and technology issues and public/societal issues. These were recorded in the form of statements, which were used later in the study (see Annex 2). 3 Senior management interviews The interviews, which were conducted by CIRIA's director-general, lasted about one hour. They discussed the following aspects: the company's current approach to longterm planning; the executive's thoughts on future issues, particularly changes in global and home markets; likely changes within the construction industry and how these might affect their company. A record of the interview was provided for each interviewee and a separate set of statements of the future, based on the interview, was prepared and agreed with each senior manager.
Previous Foresight activities
Statements from previous Construction Foresight 1 Panel study ( ).
1 BRIEFING DOCUMENT
2 INTER-COMPANY WORKSHOP
Statements 3 SENIOR MANAGEMENT INTERVIEWS
INTRODUCTION AND AIMS
Statements 4 QUESTIONNAIRE SURVEYS
IDENTIFY THEMES FROM QUESTIONNAIRE STATEMENTS CONSIDER COMPANY STRENGTHS AND WEAKNESSES
5 IN-COMPANY WORKSHOPS
SELECT THEMES FOR FURTHER DEVELOPMENT
6 FEEDBACK
DEVELOP PROPOSALS ON WAYS COMPANY COULD ADDRESS THESE ISSUES
The study process
The in-house workshop process
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4 Questionnaire survey Before they attended the in-house workshop, the nominated middle managers completed a questionnaire (see Annex 2). A separate variant of the form was developed for each company. The questionnaires drew together the statements derived from earlier steps of the study:
from a previous Foresight Construction Panel study (1) from the inter-company workshop from the interview with the senior management representative of the company concerned.
Participants were requested to study the briefing document and to state whether they agreed with the 50 or so statements compiled in the questionnaire. Space was included for participants to add any further issues that they considered to be important. 5 In-company workshops At these workshops, which lasted about five hours, participants received the results of the questionnaire survey. They subsequently identified themes arising from the statements on the questionnaire. They then analysed the strengths and weaknesses of their organisation. Working in groups, participants selected the most important themes and considered what their organisation could do to address them. The workshop concluded with the presentation of these proposals. 6 Feedback All workshop participants were requested to complete a feedback form where they could express their views on the value of the study and suggest aspects that could be improved. Feedback was also sought from each of the steering group representatives.
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The present position
One of the first things to be considered was the appropriate time horizon for the study. This was influenced by the current planning horizons employed by the construction industry, the nature of the work undertaken, the duration over which construction schemes are delivered and, increasingly, the involvement of construction companies with schemes post-construction. The briefing document circulated to participants (6) had been entitled Construction 2010, suggesting a horizon nearer to ten years than 20. However, participants' own views were sought on this. Most participants could relate to a five- to ten-year horizon, although it was suggested that this should not become a constraint, particularly since partnering, PFI and similar schemes involving the operation and maintenance of facilities could involve agreements and commitments of 30 years or more.
Participants' views of appropriate Foresight horizons
Consider medium and long term Greater than 10 years Five years Anticipate changes irrespective of time horizons Build on (extrapolate) trends Interpolate projected trends Look from clients' perspective Look beyond current strategic planning horizon Anticipate clients needs Partnering activities and repeat projects would require longer-term horizons Some issues will go beyond five years eg environment, resources etc PFI schemes can involve 30-year contractual arrangements Take account of longevity of buildings.
The five-to-ten-year horizon band influenced how some of the statements of the future were viewed by participants. This can be illustrated in particular by considering the following statement. "There will be increasing use of space which has hitherto been considered too expensive or too technically difficult to develop. This might include on and under the sea, and in desert zones." Only one-third of the participants agreed with this statement. Many qualified their disagreement by stating that this was a distant future issue and not one that would become reality in five to 10 years.
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Current planning horizons Most of the companies taking part in the study followed a similar pattern in terms of their budgeting and planning.
a detailed budget was prepared for one or two years usually as part of a two- or three-year rolling programme or five-year framework business planning was usually undertaken within a horizon of five years or less companies employed a variety of means to speculate beyond five years, which included corporate planning groups or other strategic activities sometimes confined to board members.
The construction industry was characterised as being reactive a strength in that it can respond quickly to project briefs. Itwas contrasted with other industries such as pharmaceuticals or aeronautics where the development time for new products could take ten years or more. It was, nevertheless, acknowledged that large, complex engineering schemes could involve long lead-in times and the increase in PFI and related schemes was causing the industry to consider longer horizons and a life-cycle approach. A significant internal issue with a long horizon was that of staff development. Companies found it difficult to anticipate their needs 10 years or more into the future or to decide on appropriate staff development activities to meet those long-term needs.
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Future issues
About this section This section covers the issues discussed by the individuals, groups and stages involved in the study:
inter-company workshop involving two middle managers from each of the eight participating companies interviews with senior management representatives from each of the companies the individual company workshops involving up to 20 middle managers. the replies to the questionnaire analyses.
The commentary and content of this section is restricted to the views and issues expressed during the study. The commentary is neither presented as the single view of all the companies and participants concerned, nor as representing an industry-wide consensus of future issues. A broader-based view of the future is contained in the briefing document (6) also produced during the study. Presentation of material The material has been presented under the following headings: 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Socio-economics, environment and sustainability Technology including IT Global markets and competition The UK market Client relationships Staff, skills, training and development Knowledge management Industry structure.
Each section contains up to four sources of information. A commentary on the issues discussed, including the degree to which participants agreed with the statements included in their questionnaire The results of the voting on relevant statements seen by all companies ie excluding the senior managers' statements that were unique to each questionnaire.
% responding Policy changes have a dramatic effect on the industry ......... CI is reactive to change, the development of scenarios that reflect policy trends will ......... = Agree = Disagree 71.9 ? 20.8 7.3 Total voters 96
Examples of ideas arising from the in-company workshops
The global market
The opportunities of the global market, together with increased competition from overseas markets led one group of participants to recommend that their company took steps to identify relevant skills and capabilities...
A series of quotations from the senior management representatives interviewed during the study "Environmental pressures will have greater effect in the developed world than in developing countries. The third world still believes unequivocally in development because it will make things better and create wealth"
59.4
31.2
9.4
96
? = Neither agree or disagree
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4.1
ISSUES: SOCIO-ECONOMICS, ENVIRONMENT AND SUSTAINABILITY
The construction industry trades within a complex global environment that contains significant contrasts. In the third world, infrastructure development is providing basic human needs and steps towards self-sufficiency and wealth creation. In the developed world, people and companies have different requirements, which focus on getting more from an ageing existing infrastructure, on efficiency and profit, on enhancing quality of life and the environment. The development aspirations of third world countries, particularly in terms of mobility and energy demand, will create significant environmental pressures. The role of the developed world is not to deny these basic rights, but to make sure that they are delivered in the most appropriate way. This includes delivering infrastructure that not only meets needs, but also safeguards the environment. Energy efficiency and water conservation are obvious examples, although much of the infrastructure currently being constructed in these countries will lead to an unnecessary burden of environmental and financial costs for decades to come. Developed countries exist within a different framework to that above, and are subject to other political imperatives and signals. For example, at a macro level, the recent focus on sustainable development as an umbrella for environmental protection, economic development and social equity is one that is challenging all industries, including construction. Companies cannot sell sustainability, although those that understand it will gain a competitive edge. In the UK, transport, health and education are seen as imperatives. The European Union is placing emphasis on competition, common standards and empowering the consumer the European citizen. The resulting legislative framework is considered to introduce barriers by some, although others consider it to benefit innovative, flexible companies. The potential increase in corporate taxation is also a matter of concern. The increasing rights of the individual puts pressure on companies to act responsibly and to demonstrate this at global, national and local levels. Most respondents recognised that the construction industry operates within a changing environment, needs to anticipate policy and wider global trends, and should become more proactive.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
71.9 ? 20.8 7.3 Total voters 96
Policy changes have a dramatic effect on the industry, therefore the industry needs to get better at identifying policy trends and to strengthen its lobbying powers The construction industry is reactive to change; the development of scenarios that reflect policy trends will better inform research development and investment to better respond to these policy changes
59.4
31.2
9.4
96
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Environmental management The increasing emphasis on environmental issues worldwide will mean that companies will be subject to even greater scrutiny in the future. Inappropriate environmental actions by one part of a company operating at home or abroad could result in serious adverse publicity, potentially on an international scale, resulting in serious commercial damage to the company brand and reputation. Participants therefore recommended the development of appropriate environmental policies and practices.
The sustainability challenge Environmental social and economic issues will become increasingly important as the concepts of sustainability become better and more widely understood. The importance of strong environmental credentials was already recognised by many construction companies. However, in the future, companies would also be judged on their societal and economic contributions. Recognising these factors, participants suggested steps that their company could take to maintain a proactive stance on these issues.
"Environmental pressures will have greater effect in the developed world than in developing countries. The third world still believes unequivocally in development because it will make things better and create wealth"
"Life cycle costing and life cycle assessment will be increasingly used to drive both economic and environmental improvements"
"Sustainability issues will require greater consideration of the standards to which buildings and infrastructure in developing countries are built"
"Sustainability issues will continue to enjoy a high public and political profile. From a business perspective, companies that are able to understand, quantify and offer solutions to these issues will gain an edge" "Mobility aspirations in the developing countries will require innovative conceptual, design and delivery solutions if sustainability is not to be compromised"
4.2
ISSUES: TECHNOLOGY INCLUDING IT
Information and communication technology (ICT) will significantly influence technological change within the construction industry. Already, IT has had a pronounced effect on the way we communicate and our ability to access information. Improvements in communication capabilities release the potential for all construction industry employees to have greater access to data, knowledge and other central support irrespective of location, nationwide or internationally. Conversely, remote-control techniques will mean that some tasks will not require the same degree of involvement by construction operatives or managers. IT will underpin many of the services the construction industry provides, such as infrastructure optimisation, or in working with clients to define their needs by using virtual reality techniques. Communication within and between companies and the increasing importance placed on knowledge management will depend on an appropriate ICT platform. Advances can also be expected in other IT applications such as CAD. Of the other advances anticipated, in both materials and technologies, standardisation will be the most significant. Standardisation is not about providing standard products and solutions, it is a step towards modular design. Clients will still expect unique solutions standardisation will help the industry deliver this cost-effectively.
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Everyone agreed about the increasing influence of information and communication technology and the changes and opportunities it would present. Some felt that overreliance on IT and software introduced new risks either as a consequence of systems failures or through reduced understanding of the limitations of computer analyses. Views were also split as to other IT-related risks, particularly in terms of software development. The views on the statements about the changes that standardisation might bring about were also split, since these introduced secondary issues such as the use of robotics, the pace of development of modelling, the removal of trade barriers, and the role of construction professionals. Many of the participants disagreed that construction would be increasingly required in technically difficult spaces, but qualified their view by stating it would be not be likely within a 510-year horizon. Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
97.9 84.5 34.0 32.3 47.9 ? 2.1 9.3 26.8 50 33.3 0 6.2 39.2 17.7 18.8 Total voters 97 97 97 96 96
Increased awareness and use of IT will lead to greater computer usage Increased awareness and use of IT will enable and/or require flexibility of working Increased reliance on IT will increase risk of engineering catastrophes Increased government awareness of strategic R&D will lead to increased efficiency Increased government awareness of strategic R&D will lead to increased private collaboration Standardisation will cross all countries and cultures and remove trade barriers. It will also lead to an increased use of construction robots Refurbishment of buildings will grow relative to new build; more recycled and fewer primary raw materials will be used There will be increasing use of space which has hitherto been considered too expensive or too technically difficult to develop. This might include on and under the sea, and in desert zones Standardisation and IT together will dispense with the need for traditional professionals with the exception of conceptual architects. Construction professionals will be project managers equipped to integrate all the processes involved in project realisation Standardisation and advances in IT will allow the construction of models of the whole process, from land acquisition to demolition, which can be applied anywhere in the world. The models will be multi-dimensional and will represent all issues including social, environmental, economics and political as well as technical. We shall know everything about every project before committing to it Construction companies will no longer develop their own software, because they will not have sufficient IT resources to keep ahead of the market. Software houses will provide for all their needs Future investment in IT will carry a high risk. Progress will be incremental rather than revolutionary
37.5
22.9
39.6
96
66.7
21.9
11.4
96
38.5
24
37.5
96
14.1
9.8
76.1
92
41.7
18.7
39.6
96
58.3
15.6
26.1
96
36.4
27.1
36.5
96
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Technological innovation The company already has a good technological base but this has to be maintained and the company shown to be innovative. This will require corporate will and resources, involving key personnel in all disciplines. External links will have to be maintained with research organisations. Key staff will need to be given the responsibility to allocate resources and change attitudes. A culture of innovation needs to be fostered and the innovations communicated across the company. Standardisation managing information The standardisation of components can provide value for money. The information needs to be managed so policy-makers can communicate to all the potential users of the standards. This needs resourcing and monitoring.
"Virtual reality will enable clients to visualise developments and help to refine specifications accordingly"
"Despite the facility for continuous working across time zones, "real-time" interactions between client, and the construction team(s) involved will add the greatest value"
"The pace of change in IT software will mean that staff at all levels will be required continually to update their IT skills. Senior managers will rely increasingly on junior staff for analyses. This will provide a two-way learning opportunity" "The quality and effectiveness of IT systems will provide companies with a competitive advantage, particularly in facilities management"
"The industry will continue to experience pressure towards standardisation on the one hand and bespoke engineering solutions on the other"
"Portable communications equipment will make it possible to provide more support and information for employees at the workface and in remote locations"
"The manipulation of information and the use of knowledge will be critical to the success of companies"
"Technological developments will provide opportunities for innovation. However, the feature that will differentiate successful companies will be the people who can exploit these opportunities to innovate."
"The provision of support to staff, irrespective of where they are working, will remain a vital issue. The use of IT to harness company knowledge and experience and make this available to staff will be vital to maintain international competitiveness."
"Hub organisations will include central information and problem-solving resources which local design or site staff can access through sophisticated IT and communication equipment"
"The tools (technology) used across construction will continue to change, although many of the underlying tasks and processes will be recognisable"
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4.3
ISSUES: GLOBAL MARKETS AND COMPETITION
The rate at which developing countries are expanding their infrastructure represents an enormous construction market. However, the international market presents a number of challenges. Most countries now have a local/national construction capability, which will develop further. Competition for work will therefore increase. Companies will require an international credibility beyond the profile and reputation that a company may enjoy in the UK. They will need to adapt to meet the requirements of clients of different cultures and with differing values, for example by developing links with local partners or by establishing local offices staffed for the long term. Of the potential markets, China is considered to be the largest. However, China does not acknowledge a need for support from the West, and is already trying to adapt and apply western technologies on its own. Advances in communication are opening up trade. The challenge for UK companies will be to develop and offer high-value services internationally. In the context of construction, the provision of UK labour in overseas markets is neither feasible nor competitive. The opportunity lies in providing innovative professional services (including design, management, finance and operation), the management of local labour and resources, and the introduction and transfer of novel, but appropriate, technologies. The opportunities presented by globalisation were recognised by almost all participants. A majority also felt that the industry needed to recognise that a different approach was required to developing foreign markets, although a number queried whether this should require global or non-construction alliances.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
97.9 ? 1.05 1.05 Total voters 97
Globalisation will bring increased opportunities. The industry needs to be flexible enough to respond to the challenges and take advantage of the opportunities Too often, global working has meant colonisation. Truly global organisations must be able to react to foreign markets and develop their services within them The need for a global presence and the delivery of an integrated service will force construction companies into global alliances, perhaps with nonconstruction companies There will be a global labour market
87.6
8.2
4.2
97
80.4
11.4
8.2
97
36.2
15.9
47.9
94
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Selling globally "The company has the services, skills, mobility and distribution to take advantage of the movement towards global companies. After a period of analysis senior management should draw up a strategy that involves all staff, especially in overseas offices. This needs to be carried out in conjunction with any developments in the company structure."
The global market The opportunities of the global market, together with increased competition from overseas markets led one group of participants to recommend that their company took steps to identify relevant skills and capabilities that they were able to apply to overseas markets and to promote and develop these accordingly.
"Competition from other countries will increase in terms of both cost and quality"
"Success in the international market will increasingly depend on greater understanding and respect of local cultures"
"Transparency and the demonstration of integrity in the industry's relationship with clients will become increasingly important, and hence saleable, particularly in foreign markets" "The greatest opportunities for international work will arise from emerging, as opposed to mature, markets. This will require versatility, flexibility, toughness and the willingness to work in volatile and chaotic markets"
"There will be a global pool of resource for design capability, but not for construction. This poses a major threat to designers in all advanced countries"
"There will continue to be a difference between developed and developing countries. In Europe, personal wealth and transport/mobility are the big drivers. In eastern Europe and the former USSR, it's about living standards"
"The industry will become increasingly specialised to meet specific needs. There will be plenty of room for players of varying sizes focused on specific, or local client needs"
"China will be the home of major construction projects in the next ten years and could well come to be seen as the market leader, in preference to western companies"
"The UK has amongst the highest labour costs in the world. Where adequate services can be purchased overseas at a lower price, IT will enable this to happen"
"Overseas, UK construction companies need to be market-led by developing a long-term presence in the local market place and integrating with that local market"
"The economy will become truly global so it will no longer be an advantage to have global operations that level the effects of regional differences"
"As better communications make globalisation easier, people will erect other barriers to international trade"
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4.4
ISSUES: THE UK MARKET
There have been significant changes in the UK over the past decade and these are likely to continue, if not accelerate. The loss of heavy industry in recent decades and the more recent changes in our approach to commerce changes in banking, e-commerce etc mean that the construction industry will have to respond to new clients with changing needs. The introduction of PFI has resulted in radical alterations in the way certain large projects are delivered. Some argue that while PFI involves long-term risks, it is essentially a short-term solution. The current system is considered to focus too much on finance and risk. However, it is seen as an area where large construction companies or consortia will continue to invest. Such investment decisions may involve projections of 20 years or more. PFI will therefore alter the emphasis placed on life-cycle considerations and lead to different design decisions. The other related trend, where the UK is seen as being in the forefront internationally, is facilities management. Increasingly, private and public sector companies will be concentrating on their core business and commission others to operate and maintain their estates buildings being viewed as facilities that support their business functions. Involvement in FM and PFI schemes will also enable longer-term client-supplier relationships to be established. In the UK, the shift from new-build to maintenance refurbishment and other work on existing buildings and infrastructure has already occurred. For instance, investment in the new road programme is making way to maintaining the existing infrastructure and using it more effectively, often involving sophisticated IT solutions. Most participants agreed that to increase margins in construction, the industry would be required to develop new products or longer-term cash-streams. A majority also agreed that the trend from new-build to refurbishment would continue, as would the increased use of recycled materials.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
84.4 ? Total voters 96
Margins in construction will remain small. Profitability will spring from longerterm development cash-streams or from the development of higher margin products PFI will emphasise value for money, whole-life costing and long-term performance guarantees Refurbishment of buildings will grow relative to new-build; more recycled and fewer primary raw materials will be used
11.4
4.2
72.9
18.7
8.4
96
66.7
21.9
11.4
96
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CIRIA Funders Report CP/64
"The industry needs to be market-led not production-led"
"Commodity design does not exist, so it is not an issue for the future"
"Major construction companies will invest in construction through PFI schemes. Others will only provide sub-contract packages. Ownership, pride and control of work will be key factors in the delivering projects successfully"
"PFI will emphasise value for money, whole-life costing and longterm performance guarantees"
"Standardisation and preassembly ("flat pack building") will have a significant effect on building procurement and the nature of professional advice required by clients"
"Currently, PFI is a short-term fix to meet government financing needs, but not of meeting long-term objectives. The industry should work with government to find alternatives which share risk better and have lower whole life costs"
"The distinction between clients, contractors and consultants is already blurred. Their respective roles will continue to overlap and the range of services required will vary"
"Major construction companies will invest in construction through PFI schemes. Others will only provide sub-contract packages. Pride, ownership and control of work will be key factors in the delivering projects successfully"
"The UK's track record on privatisation and facilities management is widely known. Companies which can demonstrate their expertise in this area will gain a competitive edge in growing international markets"
"The industry will continue to experience pressure towards standardisation on the one hand and bespoke engineering solutions on the other"
"Life cycle considerations both purely in terms of cost and in terms of sustainability will lead to different client perspectives and different design decisions"
"Construction companies are working increasingly far upstream in the decision process for schemes with the expectation of later returns"
"PFI is poor value for UK plc and will remain so until the customer gets preference over the service providers"
"Increasingly, organisations of all kind will outsource activities which do not form their core business"
"Involvement in PFI and similar schemes and the longer-term commitment and responsibility which this involves will alter the way design decisions are approached"
"The amount of PFI-type work will increase. Time horizons will also increase. Risk assessment will therefore become a critical skill for construction companies"
"UK clients will continue to want uniqueness that can be delivered economically"
"Clients will increasingly wish to procure a facility to support their business functions and not just a building"
Building lives will be shorter. Designers will need to focus on design life and `whole life value'. There is an absence of design criteria to enable this
"Many companies will move from a focus on new construction to the optimisation of clients' assets throughout their lives"
New commercial and domestic buildings will be designed with greater allowance for flexibility and expansion to accommodate the changing needs of companies and families "Construction companies are working increasingly far upstream in the decision process for schemes with the expectation of later returns"
"The type of work we are asked to do will continue to move away from new build towards refurbishment, maintenance and management"
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4.5
ISSUES: CLIENTS AND RELATIONSHIPS
The UK construction industry is not sufficiently customer-oriented. The need for change in both relationships and processes is well documented. With ever-changing markets, the construction industry will need genuinely to understand its clients if it is to meet their developing needs. Construction clients will continue to be defined by the industry in a variety of ways repeat or occasional, sophisticated clients prepared to invest in what they want, or business-focused clients looking to procure a facility minimum at cost. Some will accept standard products; others will expect uniqueness that can be delivered economically. Each client will have a different set of requirements, but all of them will need to be understood if the construction industry is to deliver an appropriate service. Of fundamental importance, however, is the need for the construction industry to understand not only its clients' businesses but also their objectives and values. Construction should not just be about driving costs down; it should be about adding value for the customer. The successful construction companies of the future will be working with clients to maximise their mutual understanding of the value added by the construction process, rather than just the value for money (still judged by many as being the lowest cost) of the scheme. The measurement of added value remains a challenge for the construction industry. The varying needs, values and cultures of clients are even more pronounced in international markets. Nearly all participants recognised their responsibility to add value to their clients' businesses, although most also agreed that this value is often difficult to demonstrate. While only half the participants felt that the industry did not already understand its clients, most agreed that the industry could improve the way it added value to its clients.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
50.5 ? Total voters 97
The industry does not understand its clients and therefore does not add real value. The industry must therefore gain a greater understanding of their clients and find ways of adding real value Even when value has been added, it is not always recognised. The industry therefore needs to find robust ways of measuring added value Clients will define a need only and expect a single point of contact to deliver a comprehensive solution with minimal risk The industry needs to deliver more effective value management, within a single team To be competitive in the global marketplace, and indeed to survive, companies must add more value to their clients' businesses than their rivals, through increased costeffectiveness and quality
27.9
21.6
76.9
16.8
6.3
95
63.6
15.6
20.8
96
83.1 96.9
13.7 2.1
3.2 1.0
95 96
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"Clients will increasingly wish to procure facilities to support their business processes and not just buildings"
"The industry has not yet properly understood the role of clients or sought to influence them. Even now, the public sector is still mainly buying on lowest price"
"Successful projects and client-industry relationships will result from a shared clear understanding of project objectives and flexibility by each party with respect to the processes employed" "Transparency and the demonstration of integrity in the industry's relationship with clients will become increasingly important, and hence saleable, particularly in foreign markets" "Reconciling clients' increasingly demands (low costs, better value, better quality) with risk will become a vital skill for construction companies and their staff"
Clients perception and values Client purchasing decisions frequently depend on the client's perception of the quality of the supplier. Many firms let themselves down through complacency, by not communicating adequately with clients and by not sharing intelligence adequately within the company. Delegates recommended that there should be a company-wide initiative to discover how clients perceive the firm and to use this information to provide a better service and to add more value to projects.
Becoming market-led Consulting engineers need to be market-led, but have often allowed themselves to be productionled. The latter tends to result in a limited client base, which inhibits growth in the business and represents a threat if client spending reduces. Companies should aim to widen their client base in chosen sectors and to ensure repeat business. There is a need for significant culture change in most organisations, including much better crossfertilisation between offices and more unified approaches to clients.
Partnering and supply chain improvements Greater focus on adding value to clients' businesses would lead to different client-supplier relationships. This, in turn, would require changes in the way the construction supply chain was formed. Participants proposed that their company explore ways of further improving their project teams
Offering a complete service to clients The increasing importance of improved relationships with clients, and the mutual benefits that these delivered, led the participants to suggest ways of improving their understanding of clients and of the skill base available across their organisation.
Flexible working across time zones/responding to client needs "The response to global working can be met by improving the communications and reporting structure within the company. This will involve key personnel from all disciplines to develop and train all staff. The company already has the multi-disciplinary structure and global presence to build on."
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"The longer-term relationships arising from facilities management means that contractors will develop a greater understanding of their clients' business. Successful contractors will identify how the operation of their clients' facilities and assets can be further optimised"
"Successful organisations will have staff who genuinely understand what clients want and how to deliver it. This will require a blend of hard and soft skills, and the intelligent application of value management"
"Despite the facility for continuous working across time zones, real-time interactions between client, and the construction team(s) involved will add the greatest value"
"Clients will demand projects on time, to budget and with zero defects. Companies will need to develop separate strands of technical experts and construction managers, having equal status and respecting one another's skills" "Clients will range from sophisticated, repeat clients receptive to partnering and risk sharing, to those who wish to pursue conventional contractual approaches. Successful companies will need staff who can understand and respond flexibly to the needs of these different clients" "Value, cost and risk will be discussed more openly with clients and be more transparent. The construction process should not just be about driving construction costs down, it should be about adding value for the customer"
4.6
ISSUES: STAFF, SKILLS, TRAINING AND DEVELOPMENT
Intellectual capital is as important a factor in the success of companies as financial capital or labour. Having an appropriately skilled staff is vital to the success of any organisation. There have been significant changes in the way staff are employed within the construction industry. As with other industries, staff move between organisations more frequently in pursuit of experience and career development. Staff development is a long-term task often driven by short-term needs. The planning of staff development involves timescales longer than those used in business planning. The pace of change in the trading environment, particularly in terms of the skills needed, makes it more important for organisations to identify their skills and capability requirements and to have appropriate mechanisms in place to deliver them. International experience is one way in which construction staff can experience heightened responsibility and gain experience. However, not all are able to take advantage of this. Flatter, or less hierarchical, organisations may also be perceived as offering less opportunity for career progression. However defined (eg professional/management; technical/managerial; hard/soft; logical/creative), the importance of maintaining an appropriate balance of skills within construction companies will be even higher than at present. Much of the challenge of providing these skills rests with companies. However, the education sector will also have to change so that it can equip graduates with the skills appropriate for an industry and market base that is likely to change radically over a period of five years or less. There will also be increased focus on continuous professional development.
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New skills The UK construction industry has predominantly been driven by logical as opposed to creative thinking. However, the future industry will rely on individuals with a balance of logical and creative skills. Staff will need to be trained for breadth. The industry will need to further develop its soft skills in order to understand clients' needs. However, it will also be important to retain hard skills such as financial engineering, risk management, logistics and understanding the technicalities of new types of industries. Co-ordination and communication will become more important, requiring people who can manage processes efficiently and co-ordinate work between parties and disciplines.
"Risk management and risk sharing will become critical competencies for construction staff"
"The construction industry needs to recognise the importance of attracting high-calibre individuals to positions of leadership
The industry needs people with the breadth of view to understand the client's needs and to put together teams with appropriate skills. Companies should recognise the diversity of skills needs and reward accordingly
"Successful companies will be those that can attract and retain individuals with a balance of logical and creative (scientific and humanistic) skills"
"Staff will increasingly chose to change employment as a means of accelerating skills and career development"
"The pace of change, both in construction and within the industries construction serves, will mean that training will increase in importance. The education sector and the industry will need to find innovative ways of delivering this effectively"
"The amount of PFI-type work will increase. Time horizons will also increase. Risk assessment will therefore become a critical skill for construction companies"
"Young engineers will have to choose early in their careers between professional work and line management. Both routes will be valued, but company leaders at the very top are likely to come from management"
"The pace of change in IT software will mean that staff at all levels will be required continually to update their IT skills. Senior managers will rely increasingly on junior staff for analyses. This will provide a two-way learning opportunity"
The majority of participants agreed that the attitudes and skills of people would become valuable differentiators for companies in the future. Fewer agreed with the suggestion that skills would migrate from traditional construction to broader commercial areas. Almost all agreed that risk management and public awareness are two areas in which the industry needs to improve.
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Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
90.7 67.0 ? 6.2 20.6 3.1 12.4 Total voters 97 97
We need to improve risk management and public awareness Contractors will need to develop new skills, especially in the field of finance. They will need to form long-term relationships with banks and governments, subcontractors and suppliers, both in the UK and overseas. Core skills will lie not in construction but in deal-making Standardisation and IT together will dispense with the need for traditional professionals with the exception of conceptual architects. Construction professionals will be project managers equipped to integrate all the processes involved in project realisation Successful companies will recognise continuous change as a fact of life; the pace of change will be limited only by people's resistance to it Companies will need to invest in hard technology (especially IT) and soft skills (peoplerelated) to ensure they can offer world-class performance
14.1
9.8
76.1
92
89.6
3.1
7.3
96
97.9
1.05
1.05
96
Delivering the clients' needs Understanding and respect of clients' needs and the ability to deliver innovative solutions required a range of skills, both "hard" and "soft". Participants proposed a number of initiatives that their company might consider pursuing. These included further development of staff, equipping them with the skill required to better establish clients' needs and the sharing, among staff, of lessons learned on projects. The establishment of an appropriate knowledge base, as part of a wider communications initiative was seen as a key element of this proposal.
Promoting a client facing culture The most successful companies have a positive and forward-looking culture. In such companies, staff are perceived to be self-motivated at all levels. There is a sense of pride and ownership of the product. To succeed in the future, companies must seek to emulate the best of their peers. Too often, company baggage (history, procedures, hierarchy) inhibits advances. Delegates recommended that there should be an initiative to strengthen the culture of the company, especially among support staff. This should be started by reviewing and refocusing all procedures and systems to ensure that they were efficient, positive and client-facing. Optimal use of IT should be sought and systems devised to measure the results of the initiative.
Training and continuous improvement In an uncertain world, both competitiveness and the ability to add value beyond routine project development will be the determinants of success. This will require a culture of continual improvement and the ability to benchmark performance against the competition. Delegates recommended a liaison group to constantly review training needs and to improve the company skill base.
Skills and training needs Staff skills and strengths form the principal asset of design firms. Internal initiatives should be taken to strengthen product quality, to exploit staff strengths and to improve internal communications. This should focus on a skills database, on matching training provision to identify needs and on improving assessment of performance through better staff appraisals. Training in customer relations will be an essential skill for the future.
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4.7
ISSUES: KNOWLEDGE MANAGEMENT
Technology transfer, whether between companies, industries or countries will be an important element in maintaining an innovative position. The ability to offer innovative solutions to clients will also be a key differentiator. In this respect, the UK is already seen as having moved from employing purely traditional solutions to offering innovative approaches to problems. A key to any successful construction company in the future will be to possess and apply skills that nobody else can replicate. Companies already recognise that they need to fully utilise the latent knowledge within their organisations and this will become increasingly important in the future. The exploitation of existing knowledge and the skill to use and manipulate information will become a standard competency for organisations. The industry will have access to greater amounts of information the successful company will be one that can interpret and apply this knowledgeably. Knowledge management can be delivered in many ways. The technology to support it is already here, and the challenge for the future will be how to procure, store, access and interpret this information. Almost half of the participants disagreed with the concept of the virtual company (a team formed from individuals not companies) introduced in the questionnaire, although this introduced several strands of thought. Just over half agreed with the concept of shared information. A majority felt that ideas, innovation and people would flow between industries.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
58.4 ? Total voters 96
Information will be shared rather than husbanded. Competitive edge will stem not from possession of information, or even access to information, but from how that information is applied The virtual company will become a major feature, consisting of people (individuals and enterprises) in different locations, brought together through information and communication technologies for each project; any member of the team may be working for more than one company at any one time Innovation will be brought about by bringing people in from other companies and other industries
20.8
20.8
36.5
18.7
44.8
96
69.8
17.7
12.5
96
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Integrating knowledge The ability to apply knowledge will become an important competitive differentiator for companies. Construction organisations possess a breadth of skill and knowledge. Participants proposed that improved management of, and access to, this knowledge would result in better decision-making, reduced risks, continuous improvement, leading to the company being able to offer an even better service to clients. Participants then suggested steps that their organisation could take to achieve this.
Knowledge management Knowledge management and skills innovation are the key future factors that will allow companies to gain competitive advantage, to reduce risks and to increase efficiency. The knowledge base is often hidden across companies. Company strategy should be to identify the range of knowledge and skills among staff and to market them as best practice. There will be a need to put systems in place to capture and disseminate knowledge, to promote the sharing of information and to showcase knowledge and skills to all existing and future clients. Companies will also benefit from becoming actively involved in R&D focused on innovation.
"The manipulation of information and the use of knowledge will be critical to the success of companies"
"Reconciling clients' increasing demands (low costs, better value, better quality) with risk will become a vital skill for construction companies and their staff"
"Knowledge management will become a key competence for successful companies. Learning and knowledge sharing through intranets and libraries will provide one route. Providing company structures which promote exchange of ideas and broadening of experience will also be important. Company and project-related experience will become a vital part of this. Some vital knowledge will always be retained in individual's heads" "Technological developments will provide opportunities for innovation. However, the feature that will differentiate successful companies will be the people who can exploit these opportunities to innovate"
"Organisations will need to learn continually from their experiences, and capture and process that knowledge. However, the skills to apply and exploit that knowledge will be what differentiates the successful organisation"
"The provision of support to staff, irrespective of where they are working, will remain a vital issue. The use of IT to harness company knowledge and experience and make this available to staff will be vital to maintain international competitiveness"
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4.8
ISSUES: INDUSTRY STRUCTURE
There is no agreed view of the future shape and structure of the industry, and visions are highly influenced by one's organisational perspective. It is generally agreed that large multinational companies offering total engineering services will exist, although how dominant these will be or how "total" the total engineering will be remains to be seen. The need for smaller companies within any future industry is also recognised. Some will offer niche services, some will only work with smaller clients, although others, through alliances, will offer world-leading capabilities on large projects. There is an even less clear view as to the role of medium-sized companies. However, there is a widely held view that flexibility rather than size will be an important criterion for successful companies. Creativity, less hierarchy, and the possession of bestin-class skills will be sought after, irrespective of company size. Increasingly construction will involve the management of processes and specialists rather than the maintenance and deployment of large workforces. Construction will also move towards becoming more of a manufacturing and assembly process. The majority agreed that the trend towards forming large companies would continue. Many of the statements related to issues that would need to be addressed in the near future. Industry image was one area that most participants agreed was poor.
Views on statements
This table indicates how managers responded to the statements circulated to all companies.
% responding
58.1 ? Total voters 98
Increased instability of work market will lead to increased flexibility in employment practices (eg hub organisations) The public perceive the industry as low-tech improve the status of engineer The public perception is of an industry that fails to deliver on time or within budget. Added value will be created by integrating across the interfaces of an industry which is fragmented The industry will be dominated by large "total engineering" companies offering a seamless service from conception through operation to abandonment. Total engineering companies will be committed to continuous improvement, and will therefore form lasting alliances throughout the supply chain A second rank will offer the same range of service, but in niches where they have specialist expertise
28.6
13.3
68.8 75.2 71.9
15.6 18.6 17.7
15.6 6.2 10.4
96 97 96
73.2
19.8
7.0
86
75.0
20.8
4.2
96
"The distinction between clients, contractors and consultants is already blurred. Their respective roles will continue to overlap and the range of services required will vary"
Companies have to develop innovative ways of satisfying their clients, by being more flexible, innovative and taking more risk
"The industry will become increasingly specialised to meet specific needs. There will be plenty of room for players of varying sizes focused on specific, or local client needs"
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Preparing for change Changes to the construction industry are already occurring, and further radical change is anticipated. The industry was recognising the importance of a customer focus and its potential wider role in assisting clients meet their business objectives, which went beyond the mere provision of buildings. Participants suggested a means whereby the industry could work with clients in establishing their performance improvement aims.
Changing industry structure Client demands for a one-stop shop will change the structure of the company, but there is no single model that suits the diverse requirements of the group. Whatever route is selected, flexibility must be of prime importance. The shareholders should investigate possible scenarios and proceed with the support of the employees. Independence is to be valued and a precautionary approach should be taken.
Changing structure of the industry Companies are merging to form larger organisations. This has started in the company, but the capital base needs to be widened. More expansion, partnerships and acquisitions should be identified and formed. IT and communications will have to be improved to support the size of the company.
"Flexibility rather than size will be the main success criterion for companies"
"There will always be a role for small firms to form relationships with small clients"
Work will be packaged so that no single company can do it. We will need to expand our expertise beyond the technical, into operations, finance and facilities management
"The greatest improvements to industry performance will come from less hierarchical working"
"The key differentiator between successful and unsuccessful companies will be their ability to be creative"
"Clients will often prefer to assemble specific teams drawing on leading edge skills across a number of different companies. Total Engineering companies will not necessarily be able to provide all these skills from within their own organisations. The possession of best in class skills will provide organisations of all size with a competitive advantage"
"Boundaries between consultants, contractors, facilities management companies, clients and suppliers will continue to blur"
"Small and medium-sized companies will compete through greater innovation, flexibility and the creation of appropriate alliances"
"Some construction companies will seek ways of delivering products and services, which attract a premium payment. Others will continue to work with low margins"
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Participants' views of the study
Workshop participants As the objective of the study was to promote a forward-thinking approach within the companies concerned, the aims and views of the participants formed an important element of the study. At the start of each in-company workshop, participants were asked to set out what they hoped the workshop might deliver. The responses illustrate the positive way in which participants approached the study in general and the workshops in particular, which they saw as an opportunity to:
work across the company listen to and contribute views and ideas identify future skills consider specific issues in more detail develop a broad view of the future identify commercial opportunities to see how issues fitted in with present company initiatives.
Working across the company
Many participants saw the workshop as a chance to interact with colleagues from other sections or locations with whom they did not usually have the opportunity to work. Others hoped the workshop might identify opportunities to work across parts of the company and help remove perceived barriers. Some were interested in learning of others' views and ideas, and in being able to contribute their own views. Some participants felt the study could be useful in identifying likely future changes in work practices and in assessing the individual or corporate skills required. Others saw it as contributing towards their own professional development Many participants were interested in finding out more about how specific issues would affect their company. These covered a range of issues and levels of detail including: environmental issues; facilities management; the use of IT; the role of technology; and the reuse of buildings Several of the participants were keen to gain a wider perspective of the future issues affecting the industry in the broadest sense and to get a sense of future direction of the industry. Some saw the workshop as helping them to spot or avoid missing opportunities, to stay ahead of the game. Many of the companies participating were already pursuing planning, market or other strategic studies. Participants were interested in hearing how this study would feed in, or relate to, those initiatives.
Views and ideas
Identifying future skills
To consider specific issues
To develop view of future issues
Commercial opportunities Relationship with on-going initiatives
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The workshops might not have been able to deliver all these individuals' aims, due to constraints of time or because of the need to follow a defined structure. However, participants were requested to complete an (anonymous) feedback form. The responses indicated that, as well as contributing to the study, many of the participants identified other specific benefits. These are shown below. Again, they illustrate the degree to which participants value the opportunity to share views with other colleagues and to be able to "think outside the box". Participants were also asked how the study might have been improved. These comments are covered in Annex 1.
"A better understanding of other departments and some of the pressures they perceive acting on them." "A shift in mindset to thinking more strategically about issues facing the company." "An insight into how my colleagues feel about what the company's short-term business strategy should be." "To share views with other individuals from within my company and gain an insight into the views of other companies who are taking part in the study." "The chance to meet and work with colleagues from the company's regional offices." "Look forward to comparing different company views and to receive the overall output document Interaction with others/others' views." "An appreciation of the diversity of the practice nationally from first hand, especially the skills and ideas/views of colleagues. The day proved most stimulating and thought-provoking (probably by all attendees). That stimulation and motivation should be captured and developed to the benefit of the practice and its employees." "Simply the opportunity to meet with colleagues and discuss such issues around the table and learn of their views was interesting and beneficial." "Encouragement about the broad consensus of views concerning change within the practice. Greater insight into the views of staff from regional offices." "Gained insight into what colleagues within the company think about various issues within the company." "The gathering together in a sensible format of various thoughts and ideas. The "Views on statements of the future" (questionnaire) issued prior to the workshop was very interesting." "A lot of good work was done in identifying key issues." "Internal company networking between regions very important."
Feedback questionnaire responses
Steering group views Steering group members attended the in-house workshops as observers. Their views of the study concur with those of the other participants. The opportunity given to participants to express views on areas outside their immediate areas of responsibility and outside normal line management structures was also recognised. The need to pursue some of the ideas and to make the maximum benefit from the study was recognised by both the participants and the steering group members. In many cases, steering group members reported that some of the proposals developed in the workshops were already under consideration, or would be considered during wider planned internal initiatives. Others noted that some of the ideas and issues raised would be considered further by senior management.
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References
1
Foresight in business preparing for the future Foresight in the construction industry: a case study Office of Science and Technology, London, 1998 Realising our potential Government White Paper on Science, Engineering and Technology DTI, London, 1993 Progress through partnership Report of the Construction Foresight Panel Office of Science and Technology, London, 1995 Foresight: Consultation on the next round of the Foresight programme Office of Science and Technology, London, 1998 Blueprint for the next round of Foresight Office of Science and Technology, London, 1998 UK Construction 2010 future trends and issues: briefing paper Funders Report CP/65 CIRIA, London, 1999 Foresight for Trade Associations and other Member Based Organisations Office of Science and Technology, London, 1999
2
3
4
5
6
7
A more comprehensive bibliography is contained in Reference 6 above. The Office of Science and Technology website, www.foresight.gov.uk, provides further information on Foresight activities including details of the Foresight Knowledge Pool.
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Annex 1 Study rationale
This section reviews the steps involved in undertaking this study, and explains the rationale behind the development of the process. It also discusses the merits and difficulties of the techniques employed and the feedback obtained from participants. Readers considering undertaking their own Foresight study might also wish to read Foresight for Trade Associations and other Member Based Organisations (7) and Foresight in business (1) which are available from the Office of Science and Technology.
Establishing aims
The aims will influence how a Foresight study is undertaken and whom it involves. There should be a clear statement of the desired outcome of the study, together with any written outputs. The aims of this study were:
to promote a forward-thinking approach within a number of separate organisations to report this, maintaining an appropriate degree of commercial confidentiality where required, to the wider construction industry.
The report would consider both the range of future issues developed and the process itself, since a secondary objective of the study was to illustrate the benefits of Foresight to the wider construction community.
Participants
One of the benefits of Foresight is that it involves individuals who might not necessarily be involved in the strategic planning processes. The Foresight process also benefits from having a wide range of disciplines and backgrounds and who can bring a different perspective. Depending on the aims of the exercise, participants could be drawn from a part of, or across an entire organisation. The study might also involve external participants. To be successful, the study also needs commitment from senior management. The study involved a board-level/senior management member within the company. The in-house workshops involved middle managers from across the organisation with a range of backgrounds and responsibilities. The focus nevertheless was on the individual company. Participants valued the opportunity to hear the views and perspectives of others within the company, and the workshops delivered a great deal of consensus on the issues of importance. However, many remarked that the discussion, particularly of future issues, might have benefited more from a wider representation of disciplines from within and outside the organisation.
Setting a horizon
It is important that the groups have a shared view of the Foresight horizons to be considered. Most participants agreed that this should be beyond current strategic planning horizons, which meant the workshops focused primarily on 510 years ahead.
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Planning the overall approach
Planning the approach should consider such aspects as:
the timescale over which the study would be undertaken the resources in terms of staff time to be devoted to the study. whether external support is to be sought the steps involved, how participants would be briefed, how participants would contribute and the techniques to be used. how workshops would be run, and whether these use internal or external facilitators.
The aim of the project was to work with a range of individual companies, but to report the conclusions in a generic form to a wider audience. The exercises undertaken within each company therefore needed to follow a similar framework. The decision to deliver and complete the exercise via a single half-day inter-company workshop and a further single workshop per company also influenced the need for such a framework. The steering group agreed that the workshops would be run by people outside their own organisations. Several CIRIA staff were involved in this process, all of whom were used to working with groups and had received formal facilitation training
Background information
The Foresight study will involve participants thinking about issues outside their own areas of responsibility and experience or beyond the timescales they are used to considering. Since the study is likely to draw participants from across the company, its aims, the proposed methodology and the degree of senior management support should be explained to all participants at an early stage. While it may be considered valuable for participants to identify issues from first principles, a certain degree of pre-briefing may be considered desirable. Due to the large number of participants in the study (more than 140) and their spread across companies and locations, it was decided that a background document was written. This was circulated to participants (6). The document was intended to provide all participants with a common briefing rather than form a basis for discussion in its own right. Some participants would, nevertheless, have valued more time to discuss this document at the in-house workshops. A second role of the in-house workshops was to consider specific statements about the future from various sources. These included previous studies, individual senior managers and middle managers. The statements were compiled and circulated beforehand in the form of a questionnaire. Participants were thus able to reflect on these statements in the context of the briefing document before the workshop began. The questionnaire results were handed out at the workshop. Discussion was limited to highlighting areas of disagreement and confirming that participants had understood the statements. Some participants commented that they would have appreciated the opportunity to discuss these in greater detail.
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Workshops
Location, facilities, resources and structure will all need to be considered when planning a workshop, the format of which should contain a variety of activities that might include working individually, in pairs, sub-groups etc. The need for a time constraint and framework will inevitably lead to instances where balances will need to be struck between aspects of specific interest to participants and those necessary for the aims of the study. The programme adopted for the workshops held during this study was ambitious. Some participants considered the workshop could usefully have:
been longer or split into two focused on fewer issues (narrower scope) permitted more time to develop more proposals.
Achieving a long-term, external focus
As mentioned above, the study will need to provide a means of encouraging a long-term view. Interacting with a group of varying disciplines will lead to a broadening of views and synergy. However, additional positive steps to facilitate this will also be required. This could take many forms such as one or more thought-provoking presentations, brainstorming exercises or through providing background material. Another method is to present candidates with others' views of the future. As well as the circulated briefing material, the workshops included a brainstorm session on future issues.
Internal issues
To consider how the individual participating companies should react to the issues identified, the characteristics of the organisation will need to be considered at some point. However, the group will need to refocus on longer-term aims rather than addressing current problems. For this study, this was done by identifying company strengths and weaknesses. A few participants felt that the internal focus received too much attention at the expense of looking at longer-term issues.
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Selecting issues for development
The study will identify a number of issues, not all of which can be developed further. A means of selecting those issues most important to the company will need to be established. This can be done by a variety of means and against a number of criteria. A variety of methods were used in this study. In some workshops more than one method was used and the results compared and contrasted. Methods included: individual intuitive reactions; agreeing a range of selection criteria with the group; voting; and mapping the issues against the strengths and weaknesses using a matrix approach. It was felt that this was a critical stage in the process, and the process was refined and streamlined as the series of workshops progressed. However, some participants suggested that this aspect could have been executed more effectively. The prioritising methods nevertheless required participants to consider the issues and company characteristics in detail.
Development of proposals
Once several issues have been identified, these will need to be worked up in greater detail. A basic structure at an appropriate level of detail will make it easier to compare proposals. For this study, groups were required to work within the following headings and the workshops concluded with presentations of the ideas using an overhead projector.
Issue Relevance to company Aim Internal focus External focus (partners) Short/medium/long-term actions.
Scenarios
The Foresight process should involve a "what if" or scenario-testing stage. This means that the proposals identified and developed against a particular set of assumptions about the future can be tested for robustness against another set of conditions. The steering group agreed that the study would not include this stage, mainly for reasons of time.
Feedback and follow-up
The benefits of a Foresight study will be the way the organisation considers, reacts to and takes up the proposals. The way ideas are considered and taken forward will need to be considered at the outset of the study. The organisation set up in this project meant that the conclusions would be reported to senior management representatives.
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Annex 2 Questionnaire results
CEO STATEMENTS FROM PREVIOUS FORESIGHT STUDY
The table below has been compiled from the returns from all eight companies. In the case of many compound statements, participants often agreed only with part of the statement.
Percentage voting
Statement To be competitive in the global marketplace, and indeed to survive, companies must add more value to their clients' businesses than their rivals through increased cost-effectiveness and quality Standardisation will cross all countries and cultures and remove trade barriers. It will also lead to an increased use of construction robots There will be a global labour market Margins in construction will remain small. Profitability will spring from longer-term development cash-streams or from the development of highermargin products PFI will emphasise value for money, whole-life costing and long-term performance guarantees Refurbishment of buildings will grow relative to new-build; more recycled and fewer primary raw materials will be used There will be increasing use of space, which has hitherto been considered too expensive or too technically difficult to develop. This might include on and under the sea, and in desert zones Added value will be created by integrating across the interfaces of an industry which is fragmented A number of super-companies will emerge, with substantial asset and financial resources, formed by alliances between Europe's existing major players The industry will be dominated by large "total engineering" companies offering a seamless service from conception through operation to abandonment. Total engineering companies will be committed to continuous improvement, and will form lasting alliances throughout the supply chain A second rank will offer the same range of service, but in niches where they have specialist expertise
96.9
? 2.1
1.0 96
37.5
22.9
39.6
96
36.2 84.4
16 11.5
47.9 4.2
94 96
72.9
18.8
8.3
96
66.7
21.9
11.5
96
38.5
24.0
37.5
96
76.0
15.6
8.3
96
71.9
17.7
10.4
96
73.3
19.8
7.0
86
75.0
20.8
4.2
96
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Contractors will need to develop new skills, especially in the field of finance. They will need to form long-term relationships with banks and governments, subcontractors and suppliers, both in the UK and overseas. Core skills will lie not in construction, but in deal-making Standardisation and IT together will dispense with the need for traditional professionals with the exception of conceptual architects. Construction professionals will be project managers equipped to integrate all the processes involved in project realisation Successful companies will recognise continuous change as a fact of life; the pace of change will be limited only by people's resistance to it Information will be shared rather than husbanded. Competitive edge will stem not from possession of information, or even access to information, but from how that information is applied The "virtual company" will become a major feature, consisting of people (individuals and enterprises) in different locations, brought together through information and communication technologies for each project; any member of the team may be working for more than one company at any one time Innovation will be brought about by bringing people in from other companies and other industries Companies will need to invest in hard technology (especially IT) and soft skills (people-related) to ensure they can offer world-class performance Standardisation and advances in IT will allow the construction of models of the whole process, from land acquisition to demolition, which can be applied anywhere in the world. The models will be multi-dimensional and will represent all issues including social, environmental, economics and political as well as technical. We shall know everything about every project before committing to it Construction companies will no longer develop their own software, because they will not have sufficient IT resources to keep ahead of the market. Software houses will provide for all their needs Future investment in IT will carry a high risk. Progress will be incremental rather than revolutionary
67.0
20.6
12.4
97
14.1
9.8
76.1
92
89.6
3.1
7.3
96
58.3
20.8
20.8
96
36.5
18.8
44.8
96
69.8
17.7
12.5
96
98.0
1.0
1.0
96
41.7
18.8
39.6
96
58.3
15.6
26
96
36.5
27.0
36.5
96
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STATEMENTS FROM INTER-COMPANY WORKSHOP
Percentage voting Statement The industry does not understand its clients and therefore does not add real value. The industry must therefore gain a greater understanding of their clients and find ways of adding real value. Even when value has been added, it is not always recognised. The industry therefore needs to find robust ways of measuring added value. Globalisation will bring increased opportunities. The industry needs to be flexible enough to respond to the challenges and take advantage of the opportunities. Too often, global working has meant colonisation. Truly global organisations must be able to react to foreign markets and develop services within them. The need for a global presence and the delivery of an integrated service will force construction companies into global alliances, perhaps with nonconstruction companies. Policy changes have a dramatic effect on the industry, therefore the industry needs to get better at identifying policy trends and strengthen its lobbying powers. CI is reactive to change; the development of scenarios that reflect policy trends will better inform research development and investment to better respond to these policy changes. Increased awareness and use of IT will lead to greater computer usage Increased awareness and use of IT will enable and/or require flexibility of working Increased reliance on IT will increase risk of engineering catastrophes Increased instability of work market will lead to increased flexibility in employment practices (eg hub organisations) Increased government awareness of strategic R&D will lead to increased efficiency Increased government awareness of strategic R&D will lead to increased private collaboration As environmental issues become more apparent, the industry will need to develop low impact solutions Clients will define a need only and expect a single point of contact to deliver a comprehensive solution with minimal risk The industry needs to deliver more effective value management, within a single team. The public perceive the industry as low-tech improve the status of engineer The public perception is of an industry that fails to deliver on time or within budget We need to improve risk management and public awareness 50.5 ? 27.8 21.6
Total voters
97
76.8 98.0
16.8 1.0
6.3 1.0
95 97
87.6 80.4
8.2 11.3
4.1 8.2
97 97
71.9
20.8
7.3
96
59.4
31.3
9.4
96
97.9 84.5 34.0 58.2 32.3 47.9 91.8 63.5 83.2 68.8 75.3 90.7
2.1 9.3 26.8 28.6 50 33.3 6.2 15.6 13.7 15.6 18.6 6.2
0.0 6.2 39.2 13.3 17.7 18.8 2.1 20.8 3.2 15.6 6.2 3.1
97 97 97 98 96 96 97 96 95 96 97 97
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Annex 3 Acknowledgements
This study involved approximately 140 participants. Their contributions to the study are gratefully acknowledged. CIRIA would particularly wish to express its gratitude to the eight Core Programme member companies for agreeing to take part in this study.
AT WORKSHOPS WS Atkins
Joe Read Carl Babb Ross Ellerby Reg Sweet David Fox Tim Broyd* Owen Jenkins Keith Montague Joe D'Agnilli Trevor Wilson Will Paskins Jitesh Patel Chris Blundell Jane McGechie Sean Haley Stephen Reffit Terry Fleming Rod Rennison Brian Griffiths Chris Tooth Neil Tomkins George Beeching Bob Hutchinson
Buro Happold
Nick Nelson Martin Duffy Abigail Matthews Owen Jenkins Paul Cullen Paul Westbury Ashley Greensides Peter Bransby Alan Harbinson Padraic Kelly David James David Herd Neil Francis Stephen Brown
Davis Langdon and Everest
Matt Bennion John Blasby Lawrence Brett Andrew Smith Jim Meikle * Owen Jenkins Daniel Leggett Martin Lockwood Ian Memmott Simon Rawlinson Ewan Shaw Matthew Timms Chris Ward Stephen Waltho Paul Zuccerelli Peter Davies Wayne Ganderton Ash Hirani Roland Thomas
Gibb Ltd
Jane Thrasher Iain Turnerbull Roderick Duncan John Done Judy Payne Brian Reed David Hemenway Keith Elliott Simon Dew Helen Beveridge Lucy Feder Jonathan Gee Emma McNab Tim Mead David Wood*
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Charles Haswell & Partners Limited
Auf Al-Habib Peter Bojczuk Colin Bruce Vincent Burgess Keith Montague Simon Cleaver Bob Cole Tony Edginton Adrian Higgins Richard Lillywhite David McCann David De Rosa John Sweetnam Brian Turner Graham Tyler Darrell Whitt David Whittington David Gutteridge*
Hyder
Brett Doughty Les Frankland Jason Guneratne Keith Montague Mike Higgins Roger Jones Tim Kelly Peter Bransby Lydia Morrow-Singh John Mullins Robin Tyler* Michael Thompson
Laing
J Reynolds D Mullins David Curtis* Owen Jenkins S Revill S Onoufriou D Throssel Andrew Pitchford R Sehmi L Peperell G Searing J Adams W Perry J Barber
Mott Macdonald
Drew Quarrier Robert Musgrove Jimmy Carter David Hand Ron Williams * Judy Payne Brian Reed Andy Ward Andy Thomas John Wright Mark Griffin Ian Baird Martin Parker Gabriel Reilly Tony Southwood Paul Norris Nick Sexton John Perry Richard Davies
*
Company steering group representative CIRIA workshop facilitators
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SENIOR MANAGEMENT INTERVIEWEES
David Slater Padric Kelly Paul Morrell Scott Steedman Malcolm Nunn Tim Wade Paul Whitmore Paul Chesworth chairman managing partner senior partner director of engineering managing director group managing director chief executive group board director WS Atkins Facilities Management Ltd Buro Happold Davis Langdon & Everest Gibb Ltd Chales Haswell & Partners Hyder Consulting Ltd Laing Limited Mott MacDonald Group Ltd
PROJECT STEERING GROUP
Jim Meikle (chairman) Tim Broyd Michael Dixon David Wood David Gutteridge Robin Tyler David Curtis Ron Williams Anita Langley John Goodburn Tom Greenway Paul Simmonds Herb Nahaphiet Peter Bransby Owen Jenkins (project manager) Davis Langdon Consultancy W S Atkins Buro Happold Gibb Ltd Charles Haswell & Partners Hyder Consulting Laing Technology Mott MacDonald Ltd Office of Science & Technology Foresight Director DETR until March 1999 Construction Best Practice Programme (for DETR) from March 1999 Technopolis UK Detention Services Ltd CIRIA CIRIA
CIRIA STAFF INVOLVED IN WORKSHOP FACILITATION
Peter Bransby Keith Montague Judy Payne Owen Jenkins Daniel Leggett Andrew Pitchford Richard Lillywhite Brian Reed director general development director commercial director operations director head, water engineering head, technology research manager, water engineering research manager, water engineering
The project was funded through the DETR Partners in Innovation scheme and CIRIA's Core Programme.
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