Long-standing low and recently falling margins in construction are in danger of becoming an expected norm. But does it really have to be that way?
Richard Daley is a director and infrastructure specialist at Vendigital. Along with Stephen Fox, a construction industry leader and Trustee of the Construction Industry Training Board (CITB), he recently shared his insights with Municipal Journal.
Urgent action is needed to upgrade the energy efficiency of some 30 million homes and other buildings in the UK, to avoid missing the Government’s legally-binding target to achieve net zero greenhouse gas emissions by 2050. However, some fundamental supply chain and skills issues must be addressed to implement the retrofit programme successfully.
The Green Homes Grant voucher scheme has been reported to have suffered from a lack of take up and has now closed (as of 31 March 2021). However, Energy Secretary, Kwasi Kwarteng, has recently announced an extra £300m to fund green home improvements such as insulation, heat pumps and solar panels for low income households through the Green Homes Grant Local Authority Delivery Scheme and Social Housing Decarbonisation Fund Demonstrator. Plus a further £1bn has been awarded to fund 429 retrofit projects for schools, hospitals and council buildings, through the Public Sector Decarbonisation Scheme. But in addition to this funding, what else needs to be done to ensure the supply chain is in place to make a difference?
Illustrating the scale of the UK’s retrofit carbon reduction challenge, a report by the Climate Change Committee has revealed that energy consumption by the UK’s 29 million homes accounts for 14% of the country’s greenhouse gas emissions. It also emphasises that a 15% reduction in energy used to heat existing buildings must be achieved by 2030 to meet the Government’s net zero by 2050 target. There is no time to waste and policy makers, local government organisations and other stakeholders must work together to take action to address the retrofit challenge now.
Understanding the urgency of the problem is the first step, but solving it will require a multi-faceted, coordinated and considered solution. In particular, greater focus should be placed on supporting the supply chain and creating an engagement process that is slicker and more user-friendly. Anecdotal evidence suggests that in the past, SME builders and independent tradespeople have been put off from getting involved in local retrofit projects because of a perception they are too complicated and the process too slow to engage with.
To increase retrofit activity, local authorities need to understand and address the needs of the supply chain, bringing together the relevant accreditation, training and support organisations in co-creating a comprehensive plan that raises awareness, interest and action (at pace).
A lack of supply chain skills may also be limiting take up of retrofit projects. The Technology Strategy Board’s Retrofit for the Future report sheds light on how a ‘whole-house’ retrofit approach can provide huge financial, comfort, carbon and social benefits. However, the solution requires careful planning and coordination of trades. For example, the building fabric should be addressed first to optimise heat retention and reduce air leakage, followed by a consideration of the most efficient energy services. As well as understanding the principles of this fabric-first approach, design accreditation is necessary, and contractors must meet specified retrofit standards (PAS 2035:2019 and PAS 2030:2019). Local authorities can help to support skills development in their area by ensuring local courses are available and that they are linked into the wider construction skills agenda.
By working together, central Government, local authorities and other construction sector support organisations can put in place overarching and local action plans to tackle the skills shortage and accelerate the delivery of retrofit activity, supporting the delivery of important environmental goals. Taking this action together now will not only help to combat climate change, it could also support the creation of valuable construction jobs and stimulate economic recovery.
Share this insight
The challenges and benefits of building supply chain resilience and how businesses should look to future proof their supply chain as an enabler of competitive advantage.
The pandemic has provided a
reminder of just how unpredictable patterns of supply and demand can be. Customers now expect a rapid, demand-driven approach to order fulfilment.