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BUILDING MAGAZINE 04.07.2014

04.07.14

Leading the community since 1843

To read the leader, columns, blogs, letters and much more, go to the Agenda section on Page 26

Vince Cable described the tale of lost construction skills from the past recession as

a horror story, and no ones going to argue with him Joey Gardiner, page 26

To deliver even notionally zero

carbon homes you have to produce signifi cant zero carbon power on-site and on some dwellings, such as city centre blocks of fl ats, that simply isnt realisticBarny Evans, page 26

Here is my prediction about how technology and process will combine to create a very

different experience for a couple extending their home in the futureAdrian Malone, www.building.co.uk

It is a lack of stability over delivery

requirements that has previously undermined the Highway Agencys long-term planning; stability is therefore a keyrequirement Sheena Sood, page 40

There is an opportunity to

engage the public through technology, allowing them to view planned buildings in high-resolution render images and 3D models Pete Baxter, www.building.co.uk

As an industry we need to ask whats

changed in the transition from PSBP1 and PSBP2, and what does the industry need to consider prior to these projects coming to market later this year?Stephen Beechey, page 28

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News9 News17 Financial news

Comment & Analysis21 Hansom 22 News Analysis: How will the ICE State of the Nation report and Agenda 15 shape the governments future infrastructure policy?

Agenda26 Leader: Joey Gardiner 28 Stephen Beechey on the second phase of the Priority Schools Building Programme

30 Construction and the government To what extent is the construction sector still relying on public sector work?

Projects34 Cross-laminated timber Cheaper and quicker to build with than steel or concrete, could it replace both materials?

Legal

40 Sheena Sood The Highways Agency40 Jacqueline Backhaus & Henry Fitch Planning rows and overturning Section 106 agreements

Economics

46 Tracker: May 2014 Construction activity takes a small dip

48 Building Intelligence Has the public non-residential sector fi nally reached its nadir?

Business leads

50 Jobs

BIM The future of infrastructure lies with industy collaboration, by Peter Baxter No pain, no gain in BIM, by Peter Trebilcock Future impossible, by Adrian Malone

Green energy Zero carbon is costing us too much, by Barny Evans

Architects & design Why I am running for RIBA Council, by Ben Derbyshire

building.co.uk/communities

04.07.14 ContentsIn the magazineOnline

This weeks top debates

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Enjoy Building wherever you are

The Government Construction Summit

Get the latest GCS newsFor breaking industry news and updates from the key speeches and panel discussions at this years Government Construction Summit go towww.building.co.uk

005_BUILDING040714TSv1.indd 2 02/07/2014 12:22

How to contact usBUILDING

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Issue no 26 2014 Volume CCLXXIX No 8832 ISSN 0007-3318Building is published by uBM Built Environment

RICS invites you to join Property in Politics

As we head towards the election in 2015, Property in Politics is a conversation about what the property sector wants to see from the next government whether in housing, construction, infrastructure or planning.

Drawing together views and expertise from across the breadth of our membership, fi rms and industry network, RICS is developing a report for all parties highlighting our sectors key issues and solutions in order to shape the policies of a future government.

Help us demonstrate that land, property and construction play a distinct role in increasing economic growth and creating better communities.

Whether an individual member, a fi rm or industry partner, we need your expertise and ask you to contribute to Property in Politics. Together we shall:

Help to place property-led growth at the heart of politics Ensure that the issues effecting property are taken into account by all parties Build the profi le and infl uence of the profession Be part of a collective industry voice that works towards the long term growth of the sector

Share your views and let us know what you think are the biggest challenges facing housing, construction, infrastructure and construction,

by completing the online consultation at

www.rics.org/propertyinpolitics

Read more about the campaign at www.rics.org/propertyinpolitics and join the conversation with #propertyinpolitics

#propertyinpolitics rics.org/propertyinpolitics

006_BUILDING040714.indd 6 02/07/2014 11:22

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By Allister Hayman

Interserve has slammed the Ministry of Defences award of more than 4bn-worth of construction contracts to a Carillion joint venture, claiming in court papers that the winning bid could be abnormally low and undeliverable and that the competition for the work was not fair.

As Building first revealed last month, Interserve has launched a legal challenge to the award of three massive Ministry of Defence (MoD) construction contracts, together worth up to 4.35bn, to a joint venture between Carillion and Amey in a move that prompted the MoD to suspend the procurement process.

This week it also emerged that more consultants are preparing legal challenges to the governments procurement of a 750m public sector consultants framework (see story right).

The news of the legal challenges comes as the government this week outlined its progress on improving its procurement at the Government Construction Summit in London, where business secretary Vince Cable, infrastructure minister Lord Deighton and chief construction adviser Peter Hansford debated with industry the steps that need to be taken to deliver on the industrys industrial strategy (see p10-11).

Interserves legal challenge, which it has now filed at the Technology and Construction Court, alleges that the winning bids from the Carillion-Amey joint venture for the three Next Generation Estates Contracts (NGEC) could be abnormally low and/or undeliverable.

In court papers, seen by Building, Interserve claims that the MoD was

aware of this but failed to investigate, which it says constituted a breach of the principles set out in the procurement.

Interserve also claims that the MoD did not provide any or any proper information on the characteristics and relative advantages of the winning bidder, and that despite repeated requests for more detail the MoD only provided very limited information.

Nonetheless, it is clear from the limited information provided that the [MoD] was aware that Carillion-Ameys tender could be abnormally low and/or undeliverable, the court papers claim.

Interserve claims that as a result of the MoDs failed procurement process it lost the opportunity to take part in a fair competition and/or win the contract.

It said it was therefore seeking the contract award decision to be set aside and that it be awarded compensation for loss and damage, namely the profits on the anticipated contract and/or its wasted bid costs.

The court papers state that the exact amount of compensation

claimed will be set out at a later date, but that across the three contract awards that are being challenged it expects compensation in excess of 900,000.

The three NGEC contracts in dispute, which were due to be awarded last month, comprise: the 1.8bn Regional Prime Central contract; the 1.35bn Regional Prime South-west contract; and the 1.2bn Regional Prime South-east contract.

The contracts are for repairs and maintenance work across the defence estate, as well as facilities management and construction projects worth up to 3.9m.

Procurement on the contracts began in February 2012, with the shortlisted contractors announced in June 2012.

The legal challenge and delay is the latest in a long line of problems to hit the procurement of the MoDs wider suite of NGEC contracts, some of which began procurement nearly four years ago. They were hit by a series of delays as the MoD sought to undertake a massive restructuring programme, as well as contracting a private sector partner to take over

the operation of its estate arm the Defence Infrastructure Organisation (DIO).

Carillion, Interserve and the DIO all declined to comment.

Interserve slams MoDs failed 4bn contract award process Firm launches legal challenge claiming Carillion JVs winning bid could be abnormally low and undeliverable

N E W Ssustainability p15 / finance p17

AEcoM MULLS chALLENGE to 750M frAMEWork

Aecom is among a number of consultants considering challenging the award of a 750m public sector consultants framework.

Building understands Aecom is reviewing its position after missing out on places on four of the five lots of the Project Management and Full Design Team Services framework.

This was awarded by the governments private sector procurement partner UK Shared Business Services (UK SBS) last month.

Building revealed last week Turner & Townsend and EC Harris are taking legal steps to challenge the award.

The main grounds for challenges are expected to be the UK SBS system for judging bidders on pricing criteria.

Aecom and UK SBS declined to comment.

Overall, more than a dozen consultants won places on the long-awaited framework.

for more news and comment on the Government construction Summit 2014 see P10-11 and www.building.co.uk

009_BUILDING040714TSJCtsJCv4.indd 9 02/07/2014 17:01

1 / news

04.07.2014 BUILDING MAGAZINE

By Joey Gardiner

Vince Cable has told the industry to reform its fragmented structure and reliance on subcontracting, saying the model has contributed to a horror story over skills

Speaking to Building following this weeks Government Construction Summit, the business secretary said there was a need to confront deep-rooted issues around the lack of suitable skills in the industry, but that government was primed to help by ensuring properly-funded apprenticeship programmes for new workers.

Cable also said the government should be spending more on capital programmes to boost construction, particularly by giving councils signifi cant new freedoms to spend on local priorities, including housing.

Cable used his address at the summit to say an improvement in training and apprenticeships was his main priority for improving the construction sector.

Weve had a real horror story over

skills. The construction industry has lost 350,000 people, many of them highly skilled, many wont come back, they have dropped out of the labour market or are driving taxis, he said.

The cyclical nature of the industry means people are fi red in a downturn and re-hired in an upturn. Weve got to fi nd a better model. Its worth noting construction is the only sector of the economy where apprenticeships have declined in the past couple of years, everywhere apprenticeships have boomed.

Offi cial fi gures show there were 14,000 construction apprentices taken on in England in 2012/13, a drop of a third on the 2009/10 fi gure. At the same time the total number of apprentices being taken across all sectors on has increased by 82%.

Cable told Building: There are some very good companies. But nonetheless there are some deep-rooted issues [such as] the boom bust cycle in training and the

unwillingness of companies to hold on to staff during recessions. The key problem in terms of skills is that the tier-one companies dont have their own labour forces, and have traditionally relied on small outsourcing companies, and thats why theres been a lack of focus on the skills need of the industry [...] the industry has to develop a better model for supporting and retaining its staff .

Cable added that the government was also looking to tackle late payment by introducing legislation forcing large companies to publish their average payment times. The Small Business, Enterprise and Employment Bill, published last week, will pave the way for the

government to force main contractors to be more transparent in their payment practices.

However, he said he would not introduce sanctions for those fi rms guilty of slow payment at this time.

That may happen, but the problem with penalties is it is very diffi cult to distinguish between cant pay and wont pay, he said.

Cable also said the government made the recession worse by cutting capital spending too deep and too fast after the onset of the credit crunch. He added that a future Liberal Democrat administration would allow investment in capital projects to increase, spending on good projects without increasing borrowing.

The man in charge of the governments agship school building programme has said his organisation will consider revising the construction cost it is willing to pay for the next phase of the programme to take account of sharply rising prices.

Speaking at the Government Construction Summit this week, Mike Green, director of capital at the Education Funding Agency (EFA), said he was aware of the impact of the economic recovery upon construction costs, and would take account of cost pressures in the next 2bn phase of the Priority School Building Programme, running from next year.

He said: Of course we are looking at cost. Theres no point us having a programme with no-one wanting to work on it. We accept we have to remain attractive to the industry, and well keep that debate alive.

Greens comments follow predictions of sharply rising tender prices, particularly in London and the South-east, with reports of prices rising 10-15% in some trades.

They also follow the decision by contractor Bam to walk away from 50m of projects on a London priority schools batch after failing to agree a price with the EFA.

Speaking at the same event, Keith Rayner, Bam Construction framework director, said the fi rm was very committed to schools work, but that he was very nervous about the future and programme being able to support it with the pockets of increases in [subcontract] prices that weve seen.

Rayner told Building: There are question about how the programme will be delivered in the South, which is why weve had to walk away in some cases.

Some times youre being asked to price projects that will be built in two-to-three years. Now Ive no clue where the market will be in two-to-three years.

EFA looks at revising cost benchmarks because of rising prices

Vince Cable

Cable: Reform to avoid skills horror story Business secretary tells industry to look to end subcontracting model and invest in apprenticeships to make sector more stable

010_BUILDING040714JCv1.indd 10 02/07/2014 16:56

news / 11


The number of construction workers killed at work over the past year has risen to 42, up from 39 the previous year.

The latest statistics from the Health and Safety Executive for the year to March 2014, showed 42 construction workers were fatally injured, an increase on the previous year when there were 39 fatal injuries.

Construction was the worst industry for worker fatalities over the year, with 41 fatalities in the services industry, 27 in agriculture and 14 in manufacturing.

However, the level of fatalities in the construction industry remains beneath the five-year annual average of 46 worker deaths per year since 2008/09, while the latest rate of fatal injury is 1.98 per 100,000 workers, compared to a five-year average of 2.07 per

100,000 workers.Of the construction workers killed,

28 were employees and 14 were self-employed. Four members of the public were also fatally injured in construction incidents. The figures come after a number of high profile deaths on construction sites in recent months, including the death of a worker on the Crossrail project.

Overall, the total number of people fatally injured at work in 2013/14 was 133, compared with 150 in 2012/13.

Construction worst for fatalities, as deaths rise

One of Londons largest housing associations has appointed a total of 17 contractors to its new 900m construction framework.

The framework covers the next four years, during which One Housing Group (OHG) has set a target to deliver 1,500 units per annum.

The list of contractors, which will have the chance to tender for projects with OHG via the framework, includes Galliford Try, Wates, Mace, Lakehouse and United House, among others.

Alan Williams, group development director at OHG said: We believe in developing long term relationships with our contractors to ensure the best value for money when creating our high quality beautiful, aspirational homes.

Contractors on our housing framework will be tendering for projects to deliver 6,000 new homes.

Firms win 900m housing work

The Chinese developer of the 400m One Nine Elms development has confirmed the project team that will lead the massive regeneration scheme.

Wanda One (UK) said this week it had appointed architect KPF to the development, along with project manager Second London Wall.

Montagu Evans have been appointed to provide planning advice and AKT II and Grontmij have been appointed as structural and services engineers respectively. Wanda also announced the appointments of former Qatari Diar executive Peter Amato and Luit

Hazarika as development director and design directors respectively.

The development will consist of two towers measuring 200m and 160m, including 439 private residential units, 52 affordable housing units and a 187-room, five-star luxury hotel.

The development sits on the Thames riverfront at the eastern end of the Nine Elms regeneration area, near Vauxhall Bridge.

Wanda One (UK) is the subsidiary of Chinas biggest property investment and development company Dalian Wanda, and has been set up to deliver One Nine Elms.

One Nine Elms team confirmedNEWS ROUND UPn The infrastructure minister Lord Deighton said creating a stable environment for investment was the governments most important role in construction. He said: The more intelligence you can give us about how to create that stable environment the better - I think youll find us very responsive.

n Lord Deighton also indicated the government would consider incorporating the low-carbon agenda into the governments National Infrastructure Plan (NIP). In response to question from Paul King, UK Green Building Council chief executive, Deighton said: Im an enormous fan of putting emissions reductions as one of our NIP projects. Id be happy to look at that going forward. Deighton added that the government would publish an update on its NIP this summer with even more detail.

n Business minister Michael Fallon launched a new Built Environment Commitment on behalf of the governments Green Construction Board. He said the new commitment comprised a statement of intent that firms and industry bodies could sign up to that would demonstrate a clear intention to improve business performance, particularly focused upon carbon reductions and cost savings. It allows organisations to choose to take action on a range of issues including carbon reduction, waste reduction, improved resource efficiency and water risk, he said. In addition it drives collective action, encourages a consistent approach to measuring and reporting and promotes knowledge sharing.

n Fallon also announced that the government had decided to extend chief construction adviser Peter Hansfords appointment by a year to November 2015. Fallon said he was delighted with the role Hansford was playing and that the extension would enable Hansford to continue his great work.

n The industrys training and skills body CITB pledged to dip into its reserves over the next two years to pay more training grants and help the industry tackle its skills crisis. The CITBs new chief executive Adrian Belton told the Government Construction Summit that his two priorities on taking up the role were increasing training grants and simplifying the levy system.

For the full list of firms seewww.building.co.uk


12 / news


The former boss of Laing ORourkes Australian business has been appointed to lead the construction of the 850m Swansea tidal lagoon power project, writes Allister Hayman.

Steve Hollingshead (pictured), the former chief executive of Laing ORourkes Australian division, has taken the role of construction director at Tidal Lagoon Power, the company established to build the massive energy project in Wales, which on completion is expected to generate electricity for around 120,000 homes by harnessing the power of the tidal movement of water in Swansea bay.

Hollingshead took up a role of director of human capital at Laing ORourke Group in May last year, after being recalled from

running the fi rms Australian business, where he had been chief executive since 2011.

But as Building fi rst revealed in December, he stood down from that role after just six months.

This week Tidal Lagoon Power confi rmed Hollingshead would now lead the construction of the Swansea tidal project, which was submitted for planning permission

earlier this year.The project entails building a 9.5km sea wall in the bay with turbines to capture the seas power.Atkins is lead designer

on the project and is working with contractor

Costain, turbine

fi rm Alstom

and technology fi rms GE, Andritz and Voith.

LDA Design is the masterplanner, architect FaulknerBrowns designed the international watersport and hatchery centre, and Juice Architects designed the off shore visitor centre (pictured above).

The project includes facilities for international sports events, education, arts and a 10km sea reef.

Ex-Laing ORourke boss joins 850m tidal project

Engineering consultant Cundall has appointed a new managing partner, Toms Neeson, who replaces David Dryden after 12 years in the role.

Neeson takes over at the 450-strong company this week after Dryden completed the maximum term for a managing partner as set out in the companys rules.

Neeson joined Cundall in 1993 and has had various senior roles, including running the lifestyle sector and Heathrow

offi ce and, latterly, taking a senior role in the Newcastle offi ce and joining the management board.

Neeson said: In just over a decade of Davids leadership the management team has transformed Cundall from a regional fi rm into an industry leading international business competing for, and winning, the most prestigious projects from 20 offi ces around the world. I see my role as ensuring that Cundall remains on the same path.

Cundall appoints new managing partner APPOINTMENTS

HOK and Arup have unveiled plans for a new Thames crossing that is being proposed by business leaders concerned about the lack of infrastructure in the Thames Gateway. The speculative project was announced this week to coincide with the 120th anniversary of the completion of Tower Bridge, the eastern most bridge

over the Thames in London. Called Bridge East London, the campaign for a crossing between Beckton and Thamesmead is being promoted by the London Chamber of Commerce and Industry.

aSend your project images to [email protected]

ConsultantsNexus Planning has appointed Peter Mawson chairman.

Capita has appointed John Graham director for London and international in its design and management division.

John Rowan and Partners has appointed Andrew Crosher partner in its building surveying team.

WYG has made a series of appointments in its Manchester offi ce. Paul Shuker is promoted to head of planning, Richard Shepherd is promoted to associate director, Mike OBrien is promoted to associate, Catherine Johns is promoted to principal planner, Angela Scarr is promoted to principal planner and Elinor George and Matthew Britton join as town planners.

Atkins has appointed Dr Abdelijabbar Ben Salem head of rail systems in the Middle East.

ContractorsEmanuel Whittaker has appointed Paul Hughes operations manager.

Balfour senior appointments Balfour Beatty has made four senior appointments to boost its major projects, regional and engineering services businesses.

In its major projects business, Alun Williams has been appointed to a new position of executive general manager for the energy and power sector.

Simon Higginson will join as commercial director for the business, joining from Lend Lease, while Barry De Falco becomes operation director in London, joining from TClarke.

In Balfour Beatty Regional, Paul Gandy joins from Lend Lease to lead a major construction delivery unit for design and construction of major jobs in London and the South-east.

Bridge East London

012_BUILDING040714cmJCv3.indd 1 02/07/2014 12:34

news / 1


By Dave Rogers

Architects and developers have been warned that they risk threatening Londons historic skyline and damaging its appeal as a place to visit if a host of towers planned for the capital get off the ground.

Nigel Barker, English Heritages planning and conservation director, said the people responsible for giving tall buildings the green light were in danger of destroying one of the main reasons people visit London.

There is a complacency that says the historic environment will be there, he said.

More than 230 towers of over 20

storeys are planned for the capital in the coming years and Barker warned: The scale of transformation that is going on in London at the moment could threaten the value of London as a place to come and visit, as a place to come and live [] because we are creating different sorts of areas, which do not actually say this is London.

But he admitted tall buildings such as Renzo Pianos Shard and Rafael Violys Walkie Talkie were now part of the capitals heritage. The minute they go up they have a value. Those values will be different for people from their different perspectives. Will the Walkie Talkie become a

listed building? I would not bet on it.In comments made to the

Greater London Authoritys planning committee earlier this month, he also singled out the recent decision to give the Shell Centre Scheme the go-ahead.

We should not be using, as we currently do and the Shell Centre decision is a classic case in point claimed architectural quality as a justification for harm to existing character and value.

Barkers comments received some unlikely support from Peter Rees, the Citys former chief planning officer, who said one of the reasons why tall buildings were being built

in London was to attract overseas money rather than meeting the housing needs of the capital.

In most cases we are not building homes at all, he added. We are trying to appeal to that [overseas] market because the one thing that does appeal in this international market is glitzy high-rise buildings.

Rees, who left his position at the City of London in April after 29 years, also questioned whether super-high towers made good residential blocks. It is fine for people who are rich enough to get out [] It is not so good for people who are on low incomes, stuck in a high building, feeling isolated.

Galliford Try has won a capital-funded batch of schools in Hull and East Riding under the Priority School Building Programme, worth 36m.

The batch represents Galliford Trys first success since its appointment to the Education Funding Agencys (EFA) new main contractor framework in November 2013. The Hull and East Riding batch includes the 19m construction of Hessle High

School and Sixth Form College, as well as new buildings for primary schools in the region, including, Eastfield, Francis Askew, Wold and Ainthorpe.

Greg Fitzgerald, Galliford Try chief executive, said: Education remains a key sector for our construction business and we look forward to working with the EFA and the schools in the Hull and East Riding batch to produce the high-quality buildings and facilities

their pupils deserve.As Building revealed last month, the EFA is

readying 11 batches of schools worth 460m for procurement over the next six months, comprising all the remaining schools in the PSBP.

Earlier this year the government announced a new tranche of 2bn in funding for a second phase of the PSBP, from 2015 to 2021.

English Heritage fires warning over rise of London towersGroups conservation director says complacency risks destroying Londons historic appeal

Galliford Try sees off rivals for 36m Hull priority schools batch

Manhattan Loft GardensBouygues has been appointed main contractor on a 42-storey residential tower in Stratford, east London. The contractor will build Manhattan Loft Gardens, a major development for developer Harry Handelsmans Manhattan Loft Corporation, which renovated St Pancras Hotel in north London. The double-cantilevered tower includes three gardens and a hotel. SOM is architect and structural engineer, Hoare Lea is M&E engineer and DBK is quantity surveyor. Handelsman said: The appointment of Bouygues UK will add to the vast experience of our already top class project team.


013_BUILDING040714TSJCpmv3.indd 1 01/07/2014 16:05

14 / news


The Bank of England has announced plans to limit large loans to housebuyers in an effort to cool the housing market, writes Iain Withers.

Bank of England (BoE) governor Mark Carney unveiled the measures, including tougher checks on if borrowers can afford to repay their loans when interest rates rise. However, shares in housebuilders soared as measures were less stringent than feared.

The Financial Policy Committee (FPC) recommended that: n No more than 15% of new mortgages are extended to people borrowing more than 4.5 times their income.

n Banks stress test borrowers ability to repay loans, even if interest rates were 3% higher than the level at the time their loan was approved.

The recommendations will now be considered by the Prudential Regulation Authority (PRA) and the

Financial Conduct Authority (FCA). A consultation will run until 31 August, with final rules to come into effect on 1 October 2014.

Shares in all listed housebuilders rose after the announcement, with the biggest, Taylor Wimpey, Barratt and Persimmon, all rising by between 5-6%.

Paul Smee, Council for Mortgage Lenders director general, said: Limiting the level of a lenders lending to no more than 15% of new mortgages at 4.5 times income or above (and none at all for Help to Buy guaranteed loans) is likely to impact the London market more than elsewhere. Nationally, 9% of new loans are at 4.5 times income or

more, but the figure is 19% in London.

Simon Rubinsohn, chief economist at the RICS, said the announcement was not a game changer.However, he added that it showed the Banks determination to act if house prices continue to rise. Mortgage affordability stress testing and capping the proportion of high loan-to-income mortgages at 15% of total new mortgages sends a signal to the public at large that the BoE is willing to act to prevent lending from compromising financial stability, but the FPC was always going to act tentatively at first, rather than bring the mortgage market to a standstill.

The government has released a 105m package of funds to boost housebuilding at sites around the UK.

Communities secretary Eric Pickles said the government will release more than 53m from its Local Infrastructure Fund to accelerate construction of more than 7,000 homes on developments in Manchester, Medway, Swindon and Kettering.

A further 49m is also to be released from the

governments Build to Rent programme to support projects in Hampshire and Croydon.

This funding will help deliver more than 540 homes specifically for private rent, bringing the total number of homes supported through the programme to more than 1,600.

A 3m fund is being made available to help planning authorities tackle barriers to work

starting on site.This will give authorities more capacity to focus on

issues such as finalising section 106 agreements and signing off planning conditions, to get work started on sites as quickly as possible.

Bank of England acts to cool housing market

Pickles releases 105m to boost housing schemes

Housing stats nEw-Build salEs and complEtions in may 2014

Private registrations and completions continue to be higher than a year ago, while the public sector declines

Regional completions

Region total plots Scotland 1,140 Northern Ireland 239 North-west 720 North-east 376 Yorkshire and Humberside 628 Merseyside 183 Wales 399 West Midlands 706 East Midlands 910 East Anglia 1,123 London 1,285 South-east 1,446 South-west 1,249

Total 10,404

new-build, sales, registrations and completions

may 13 may 14Average daily sales 335 304Private registrations 9,617 10,278Private completions 7,428 8,082 Housing association registrations 4,297 2,942Housing association completions 2,255 2,168

NHBC is the leading warranty and insurance provider

for new homes in the UK. Established over 75 years

ago, its main purpose is to help raise the standard of

new homes and provide protection for homebuyers. NHBC statistics

are based almost exclusively on information relating to its 13,500

registered housebuilders, which construct more than 80% of new

homes in the UK. As such, they represent a unique source of

information on new home construction and the housebuilding

industry.

For further information visit www.nhbc.co.uk.

For full details on this story seewww.building.co.uk

014_BUILDING040714TSJCtsv3.indd 1 02/07/2014 12:40

sustainability / 15


By Allister Hayman

A 92m highly sustainable national automotive research centre at Warwick University, aimed at developing green vehicle technologies, has won planning permission.

Designed by architect Cullinan Studio, the National Automotive Innovation Campus (pictured), which is part-funded by the government, will focus on technologies to reduce the dependence of cars on fossil fuels and cut carbon emissions.

The 33,000m2 building will run across four fl oors and is being developed by Tata Motors, Jaguar Land Rover, which Tata owns, and Warwick Manufacturing Group,

the engineering research arm of the university.

The centre, which was given the green light by Coventry council planners this week, has been

designed to achieve a minimum BREEAM Excellent rating.

The project was fi rst announced by chancellor George Osborne at the 2012 Conservative Party conference.

Alongside Cullinan Studio, Rider Levett Bucknall is acting as project manager, Arup is the engineer and Buro Four is providing project management support.

Procurement of a contractor for the building is under way, with a start on site targeted for the fourth quarter this year. The project is part of the universitys masterplan to increase its estate by 170,000m2.

Green light for 92m low- carbon vehicle innovation hubContractor sought for sustainable Cullinan Studio-designed scheme for Tata and Jaguar Land Rover

Bam Construction has been confi rmed as the main contractor on the University of Exeters 50m green research centre, after the fi rm took over the contract from Wates.

Bam confi rmed this week it had taken on the contract to build the universitys Living Systems Institute, designed by architect Hawkins Brown, which will focus

on the diagnosis and treatment of a wide range of human, animal and plant diseases.

The building has been designed to achieve a BREEAM Excellent rating, with solar panels and high levels of insulation as well as a combined heat and power plant.

The project is entering its main construction

phase this summer, with completion scheduled for May 2016.

Wates was originally appointed as main contractor on the project last year.

However, as Building revealed in January, the fi rm was replaced by Bam on the job after Wates and the university were unable to agree on a price.

Bam takes over from Wates on 50m research centre

Primary coloursSkanska has been appointed by Bristol council to design, build and fi t-out a 5.5m primary school in the city. The 420-place Oasis Academy Marksbury Road primary school, designed to achieve a BREEAM Excellent rating, includes provision for 60 special educational needs places, new playground space, habitat areas and a multi-use games area. The 2,200m2 school is scheduled to open in 2015.


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fi nance / 17


By Iain Withers

Consultant Sweett Group is diverting investment to its UK division from the Asia Pacifi c to capitalise on the UK markets powerful recovery, Dean Webster, Sweett chief executive, has said.

Webster said the fi rm was drawing back resources from its Asia Pacifi c division which has doubled in size to 28.6m turnover in three years to invest in expansion and a recruitment drive in the UK.

Webster said: Were restraining growth deliberately in Asia Pacifi c in order to grow in the UK. Asia Pacifi c has now got to run off its own working capital.

Webster was speaking after Sweett posted an increase in overall revenue of 9% to 89.4m in the year to 31 March 2014, in full-year results announced this week.

The consultant posted unchanged operating profi t of 2.3m for the

year. A 970,000 non-cash gain from exiting a foreign exchange contract hedging Australian dollars boosted its pre-tax profi t, which includes fi nance costs and gains, by 56% to 2.8m, up from 1.8m the previous year.

Sweetts European division, of which the UK makes up the lions share, grew 12% to post 49.3m revenue, up from 33.2m the previous year.

Sweett said recovery in the UK regions outside London and the South-east had boosted the business, as well as the expansion of its presence in the UK energy and infrastructure sectors, with these divisions growing 145% on the previous year.

Sweett argued its continuing

independence in the context of consolidation elsewhere in the UK consultancy market had also helped the fi rm: As one of the few remaining players who can off er a truly independent service with global capability, we are in a solid position to benefi t from the improvements which we see [in the UK market].

The fi rms Asia Pacifi c division grew 10% to 28.6m, up from 26m, while its Middle East, Africa and India division contracted 3% to 11.8m, down from 12.2m.

The groups order book grew by 9m to 109m, while staff numbers grew 10% to 1,535. Webster said he expected headcount to grow a further 7-10% in the current fi nancial year.

Sweett said discussions were ongoing with the UKs Serious Fraud Offi ce and the US Department of Justice over bribery allegations made in the Wall Street Journal in June 2013 relating to Sweetts historic operations in the Middle East.

Sweett said no proceedings have been issued by either of them and a second independent investigation commissioned by the fi rm to investigate the claims, by lawyers Mayer Brown, is ongoing.

The fi rm increased its planned total dividend payment for the year to 1.3p per share, up from 1p the previous year.

Webster added: The group has performed strongly driven by a powerful recovery in the UK market, where we have gained market share.

Our order book is at record levels and we are trading well with prospects for turnover and margin improvement being on track.

The results come after the fi rm issued two profi t warnings and delayed publication of its accounts in 2012.

Sweett diverts Asia Pacific investment to UK division Consultant group hopes to capitalise on UK markets powerful recovery, says chief executive

Logistics specialist Wilson James has won the high-profi le job to provide construction logistics for Heathrow Airports 1.5bn development programme.

Wilson James is understood to have seen off competition from DHL, Bradford Airport Logistics, and Swissport for the role of logistics integrator, which will see the fi rm provide construction logistics for Heathrows 1.5bn development programme as well as operational support through the management and distribution of the airports engineering materials.

The appointment extends Wilson James presence

at Heathrow, after the fi rm was fi rst appointed as Heathrows construction logistics integrator in 2008.

As Building fi rst revealed in March, contractors Balfour Beatty, Mace, Morgan Sindall and Ferrovial have been appointed to carry out Heathrows 1.5bn programme of works.

For the fi ve-year programme, which started in April, Heathrow has carved its estate into four chunks with each of the winning contractors taking responsibility for a single chunk as a delivery integrator.

The move to single-delivery partners for each part

of the airport, fi rst revealed by Building last year, is a signifi cant change of procurement strategy for the UKs busiest airport, which has previously made extensive use of framework agreements to procure construction work on a project-by-project basis.

Mark Dobson, chief executive at Wilson James, said: Having been a fi rst tier supplier to Heathrow for over 10 years, we understand the importance of maintaining the integrity of Heathrows existing operations throughout their development programme.

Wilson James wins logistics job for 1.5bn Heathrow development

WERE RESTRAINING GROWTH DELIBERATELY IN ASIA PACIFIC IN ORDER TO GROW IN THE UKDEAN WEBSTER, SWEETT GROUP

THIS STORYBROKE FIRST ONBUILDING.CO.UKTUESDAY

TO ACTIVATE YOURONLINE ACCESS, GO TOWWW.BUILDING.CO.UK/ACTIVATE

Dean Webster, Sweett Group

017_BUILDING040714TSJCv3.indd 17 02/07/2014 15:06

18 / fi nance


The ownership of Foster + Partners has been brought back in-house after the fi rm bought out the stake which has been held by private equity fi rm 3i since 2007, writes David Rogers.

No fi gure was ever put on the deal when Fosters sold a 40% stake to 3i to help fi nance growth at the business although 3i said this week the return on its investment was close to 150m. It said this was 1.8 times more than its original stake meaning the amount it pumped in was at least 80m.

At the time of the deal, turnover at Fosters was 50m which, according to its last set of published results for the year to April 2013, had jumped threefold to 153m.

Just over 20% of Fosters business was in the US and Asia back in 2007 with the two regions now accounting for more than half of its revenues.

This week chairman Norman Foster said: We have enjoyed an excellent relationship with 3i over

the last seven years.They have helped us on a

number of fronts including strategy, investment in research, governance, planning, accessing new markets and bringing best practice to the way we manage our business.

A company spokesperson said the buy-back was fi nanced by cash from the fi rms strong balance sheet.

All partners will now be shareholders, increasing share

ownership from 80 to all 140 partners, Foster added. Foster said the business will now be led by a new partnership board comprising himself as well as acting managing partner Matthew Streets, joint heads of design Spencer de Grey and David Nelson, and design directors Stefan Behling, Grant Brooker, Nigel Dancey, Gerard Evenden, Luke Fox and David Summerfi eld.

3i said it had been paid 70m in

cash for its stake which, together with loan repayments and a deferred payment of 40m, took the amount it received from its investment to 148m.

The move comes after Foster + Partners wrote down the value of its business by nearly 130m in its latest results for the year to 30 April 2013, after it revised forecasts for its international division.

The writedown helped push the group to a pre-tax loss of 142m over the year, down from a pre-tax profi t of 5.7m the year before. Group revenue fell 6% to 153m.

The accounts said the revaluation of the company was prepared as part of management discussions concerning a potential fi nancial restructuring.

The group has debts of 378m, on which it paid more than 40m in interest charges in 2013.

Earlier this year, chief executive Mouzhan Majidi left the business after the fi rm decided to do away with his role.

Foster + Partners brings ownership back in-house

Kier was the governments most-used construction contractor in 2012 and 2013, with the fi rm winning 1.4bn of work over the period, according to a new analysis of government spending fi gures.

The contractor ranked ahead of Balfour Beatty in second place and Carillion in third in terms of public work won by contractors over the period.

The ranking was produced by think tank the Institute of Government and data analysts Spend Network, based on analysis of 38 million transactions from 2012 and 2013 made publicly available by the government.

Eight construction fi rms ranked among the governments top 20 most-used suppliers, with a combined 6.2bn of spend on the construction suppliers over the period.

The remaining fi ve, in order, were Willmott Dixon, Amey, Babcock, Interserve and Bam.

Kier ranked fi fth in the overall table behind IT contractors HP and Capgemini, telecoms fi rm BT and outsourcing giant Capita, which also offers construction consultancy services.

Kier tops list of governments most used construction contractors

All partners will now be shareholders

Firm 2012 2013 Total

Kier 788m 603m 1.4bn

Balfour Beatty 576m 371m 948m

Carillion 400m 397m 797m

Willmott Dixon 385m 302m 687m

Amey 340m 314m 654m

Babcock 359m 293m 652m

Interserve 289m 341m 630m

Bam 196m 196m 438m

Kiers new boss has taken the helm of the fi rm with a target of double-digit profi t growth over the rest of the decade.

Haydn Mursell, whose appointment as chief executive took effect this week, was set to outline his strategy for future profi t growth to analysts and investors as Building went to press on Wednesday (2 July). In a trading update this week, outlining the fi rms performance over the year to 30 June 2014,

the fi rm said it would be targeting double-digit compound annual [profi t] growth for the period to 2020.

Mursell take the reins of the contractor from Paul Sheffi eld, who announced in February he was stepping down from the fi rm.

Mursell said Kier was incredibly well placed to make the most of recovering markets. Kier reported that underlying trading performance for the year to

30 June 2014 remained on course with a strong pipeline of opportunities in place.

Kier said construction had experienced a good second half of the year with an encouraging level of opportunities. Operating margins remain stable at around 2% and the approximately 2.6bn order book of secured or probable work represents 90% of anticipated revenue for the year to 30 June 2015.

as new boss takes helm and sets ambitious profi t target for Kier

018_BUILDING040714cmJCTSv3.indd 18 02/07/2014 15:55

comment / diary / 21


HANsoM Quite a performance Roll up, roll up And enter a magical world where cranes dance on building sites, construction professionals ride dragons across the waves, civil engineers are funny, and death metal bands are completely silent

Interpretive danceWell now Ive heard everything. In Greece last week construction of a new cultural quarter in Athens, Greece, paused for a very special performance. The Greek National Opera teamed up with developer the Stavros Niarchos Foundation and the schemes architect Renzo Piano to present Dance of the Cranes, a creative dance performance involving the choreographed movements of ten giant cranes on the construction site. Special lighting and visual effects highlighted the cranes, as they moved to music from composer Gustav Holsts The Planets. The 566m (454m) project will be home to the Greek National Opera and the National Library of Greece once it opens in 2016. UK-based consultant Faithful+Gould is the project manager and employers representative on the scheme.

How to train your dragon boat Now to the West Reservoir Centre in north London and the 16th annual construction industry dragon boat challenge to raise money for homelessness charity CRASH. Over 40 teams battled it out over the 200m distance last week and after several rounds of competition Balfour Beattys Charioteers were crowned overall champions. The Charioteers won after overhauling British Gyspsums Board and Plastered, who had held pole position for most of

the day. AKT II Komodo Crew won the mixed male and female category. Bancroft won the sponsorship award after raising an impressive 3,800 for CRASH. Two crews from Buildings publisher UBM performed with gusto but not a great deal of speed, with both finishing towards the back of the pack. However, our Eco Warriors team did win the best dressed award for their fetching superhero outfits. The event as a whole raised 27,800. Congratulations to all involved.

How to train your dragon boat 2 Staying with the dragonboat challenge, word reaches me the team fielded by Keepmoat, Keepmoat Dragons, had a team member who competes for Great Britain and is a world champion in the sport. A ringer, perhaps? Keepmoat claims not. Apparently the dragonboater in question, Ian Rains, is a bid manager for the contractor in his day job. Despite Rains pedigree in the sport, Keepmoat Dragons could only make the semi finals and ranked second place in the mixed competition. Can we expect more world champion dragonboaters to miraculously find their way onto construction firms payrolls by next years competition?

Only time will tell.

Laugh a minuteThe Institution of Civil Engineers latest State of the Nation report on UK infrastructure, published last week, makes for sobering reading. Thankfully, then the mood at the launch at Great George Street was lightened when a mobile phone rang through the hallowed halls at the very second ICE president Geoff French had asked attendees to ensure they were switched off. The jovial atmosphere continued with the arrival of former new Labour transport secretary Lord Adonis. Adonis entered the House of Lords in 2005 at the tender age of just 42, one of just 4% of peers under the age of 50. He revealed that as he entered the chamber for the first time, he was able to audibly pick out one of the more seasoned members commenting on his arrival by saying: My God, its child labour. Anyone for Lords reform?

noisy neighbours?

It has been reported that 30 St Mary Axe (better known as the Gherkin) is close to being sold, with a 640m price tag. But could potential buyers be put off by noisy neighbours? Many will no doubt have been alarmed to hear that a death metal band, Unfathomable Ruination, has taken up residence outside the Gherkin to play their songs throughout the summer. But they can relax, because the band is being hermetically sealed and soundproofed in a tiny steel cube as part of an art installation by Portuguese artist Joo Onofre. Only the residues of the sound vibrations from the box will attest to the sealed performance. Rock on!

asend any juicy industry gossip to [email protected]


A n A l y s i s & C o m m e n tagenda p26 / Stephen Beechey p28 / letters p28 / public sector clients p30

04.07.2014 BUilDinG mAGAZine

26 News AnalysisTSpmJCV3.indd 22 02/07/2014 11:50

BUilDinG mAGAZine 04.07.2014

news analysis / UK infrastructure / 23

ALL THESE FIGURES ARE MEANINGLESS, YET THIS IS THE PUBLIC DEBATE. INFRASTRUCTURE HAS GOT TO REFLECT A HOPE AND A VISIONmiCHAel Heseltine

time to ACtAs the Institution of Civil Engineers delivers a worrying State of the Nation report on UK infrastructure, Joey Gardiner charts the changes that the sector believes should be prioritised by the next government

L ast weeks State of the Nation report by the Institution of Civil Engineers painted a worrying picture of the UKs infrastructure provision, and made a series of recommendations for the main political parties to consider as they work up their manifestos in advance of next years general election.

As reported last week by Building, the Institution of Civil Engineers (ICE) review found a deteriorating picture for parts of the UKs key infrastructure notably fl ood management and local transport and fl agged serious concerns about energy generation capacity. Despite the governments National Infrastructure Plan, at the heart of many of these problems was the UKs inability to make a credible long-term strategy for the construction of new infrastructure, around which the industry can gear up to deliver. As Building pulls together the responses to its own Agenda 15 campaign, what implications do the ICEs fi ndings have for the new government after next May?

Responding to the report last week, shadow infrastructure minister Lord Adonis said: There is no substitute for leadership and taking policy decisions. One of the biggest failures in infrastructure policy over the decades has been the failure to take big decisions in a timely manner.

This is clear from the report itself. One example is the area of energy generation

infrastructure, where the ICE is critical of the governments failure to follow through on the promise of its energy market reforms by implementing the secondary legislation needed to allow companies to make investment decisions. This lack of certainty was underlined a day after the report was launched when Ofgem confi rmed its intention to launch a competition investigation into the utility suppliers, demonstrating the unstable political environment the ultimate clients of these energy projects fi nd themselves in. Former Atkins chief executive Keith Clarke, chair of the group that produced the report, simply said the government needed to get on with it over energy infrastructure.

This lack of clarity over big decisions aff ecting future infrastructure provision was mirrored in other areas: in fl ood management, the ICE found government needed to provide longer-term certainty over funding; for strategic transport, a national plan is required; in local transport, the ICE said city regions needed to get devolved powers to take proper control of spending.

And in the debate at the launch of the report, both Adonis and former deputy prime minister Lord Heseltine raised the struggles over HS2 and increasing airport capacity in the South-east of England as concrete examples of this malaise on the ground.

Steve Bromhead, UK head of infrastructure at EC Harris, says the report highlights a need to accelerate the investment that is already


04.07.2014 BUilDinG mAGAZine

2 / news analysis / UK infrastructure

planned by making quicker decisions. We are facing a crisis in sustaining energy in the UK and we have capacity constraints in our transport system, he said. Our inability to determine the right solution for aviation and the political posturing around HS2 shows how we struggle to plan ahead and make decisions quickly.

Bromhead says this shows the need to ring-fence infrastructure investment and take it off of the political agenda where it is subject to the

frequent U-turns of vote-seeking politicians.But anything that impacts on the lives of

individuals to the extent major infrastructure projects do cannot expect to be taken completely outside the political realm. Currently the government attempts to depoliticise infrastructure investments by using supposedly neutral return on investment metrics to demonstrate the benefi t of major projects to a suspicious public. However, the debate around HS2, which generates a relatively poor return under Treasury evaluations, has shown how this is not always successful, and the report fi nds a diff erent approach is needed. Instead, it recommends fi nding a way to generate cross-party support around a vision for the country, which then dictates which investment should be prioritised. Clarke said: The Treasury talks a lot about evidence-based policy criteria. But you cant have evidence about what the economy is going to be like in 50 years time. The key is understanding the rationale of why youre doing it in the fi rst place.

This view was echoed by Heseltine, who told the industry to for Gods sake keep your slide rules in a drawer when assessing which projects should go ahead. All these fi gures are meaningless, yet this is the public debate. Infrastructure has got to refl ect a hope and a vision.

Adonis said the best way to achieve a long-term vision for the UKs infrastructure backed by cross-party support was by implementing the proposals of Sir John Armitt, Olympic Delivery Authority chair. Armitt last year recommended the creation of an independent National Infrastructure Commission which would make 10-year recommendations to government to be approved by parliament, and his proposals are now Labour policy. The ICEs fi ndings are precisely the reason why our party has recommended a National Infrastructure Commission, said Adonis. It should boost spending, as by making the nations infrastructure requirements clear it will make it harder for individual governments to dodge that.

The ICEs president Geoff French, said the Labour proposal would be welcome if it was one way to turn the National Infrastructure Plan into a real plan, but the body will not formally say if it supports the proposal or not.

Clarke said this was in part because of fears that implementing any major structural change would consign the infrastructure sector to three to fi ve years of stasis while the reforms work through, throwing away any progress made. He said: I dont think bringing in a minister of infrastructure would work, because you lose two years with any departmental re-organisation. Were most keen that the system weve got is made to work as well as possible. The main issue for us is not whether to have an Infrastructure Commission, but whether the government makes the decisions on its plate today.

THE QUESTIONS WE ASKED YOU

What is the single biggest policy change that would help the growth of a sustainable and world-leading construction industry in the UK?

What is the single most important spending measure that a future government could bring in, and why?

What do you believe are currently the biggest barriers to the growth of the construction industry in the UK?

What do you believe is the most signi cant policy change the government could make to promote a greener built environment?

Which, if any, areas of current government policy towards the industry do you feel must be preserved?

What measures would you like a future government to take to encourage and support longer-term infrastructure planning?

ICES RECOMMENDATIONS FOR GOVERNMENT Ensure the right regulatory environment exists to incentivise private infrastructure operators to build resilience into infrastructure Be appropriately resourced to make and implement decisions on key issues affecting the UKs resilience or competitiveness, such as aviation capacity Provide the longer-term certainty needed to improve ood resilience by committing to a long-term capital and maintenance programme for ood management which protects funding beyond the current ve-year cycle Enact secondary legislation to implement electricity market reform by the end of this parliament, establishing long-term investor con dence and entrenching cross-party support for electricity decarbonisation Extend devolved transport powers and funding through the creation of more powerful, fully integrated transport authorities in city regions.

THERE IS NO SUBSTITUTE FOR LEADERSHIP AND TAKING POLICY DECISIONSloRD ADonis

This is the sixth State of the Nation report compiled by the ICE a process it repeats each time an election is looming in order to in uence the debate. The ICE has agreed to allow Building to use its submission to inform Buildings own consultation on the shape of the industry over the next ve-year political cycle known as Agenda 15. This campaign, which has been running since January this year, has asked the industry to submit its answers to six key questions (listed, right) that we aim to use to inform the policies the next government will adopt towards the built environment sector.


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04.07.14 AgendaLeader

Business secretary Vince Cable was right to identify skills as the major challenge to the UK construction industry in his keynote to the Government Construction Summit this week. He described the tale of lost construction skills from the past recession as a horror story, and no ones going to argue with him.

Over 350,000 staff lost, the volume of apprentices cut by a third, and an industry divided into thousands of subcontracted specialisms in a bid to avoid main contractors sitting with the liability of an expensive workforce on their books: it doesnt make for a comforting story.

All of this leaves the UK with a big

problem when it comes to growth. As Cable said, the last thing anyone wants is for the current construction output growth to come to a shuddering halt because of a lack of skilled people.

The construction industry has to put its hands up here the subcontracting business model most of the industry works by means main contractors do not put a premium on recruiting, training and holding on to skilled technical staff . The low margins in the sector mean that spending money on training, as on R&D, is too often regarded as a luxury for the boom time, not a necessity of doing business.

For many it is enough to simply grumble about the CITB levy (often with good reason) and then get on with the day job. Cables pledge to help reform apprenticeships funding is welcome, but it is unclear what it means, with the CITBs new chief executive this week saying he is not able to say how it will work.

However, when Cable calls for the industry to look at its structure, it has to be coupled with a real

understanding within government about why the industry works as it does. Without that understanding there is no chance of providing the help needed to change it.

The construction industry moved to a subcontracting model in the seventies and eighties during recessions in which large (and sometimes militant) labour forces became a liability to companies as work dried up. With no guarantee of a pipeline of contracts, construction fi rms took the view they couldnt have thousands of employees on their books.

This uncertainty remains a huge problem, with most contractors feeling the recent recession would have seen a far greater number of corporate casualties had they retained big workforces.

The obvious way to combat this, then, is by giving the construction industry a greater degree of certainty over future workloads something that has been the driver for the government to produce its construction pipelines (hosted, by the way, on Buildings

website). This is good progress. However, as well as identifying projects, the industry has to know that projects in the pipeline wont be unexpectedly delayed, cancelled, retendered, reduced or expanded at any moment. The government has a long way to go on this front.

And the industry also has a right to expect procurement to be handled in a way that promotes collaboration after all, no one is a more experienced client (in theory) than the government. But the glut of legal action over government tenders (see page 9) suggests while one shouldnt pre-judge the outcome of challenges that there is a long way to go here too.

However, the carping shouldnt be overdone. The government is, after all, a customer of the industry, accounting for around 30bn of work in 2013, and the customer is always right. But before bemoaning the sector the government should make sure it is helping, through its actions, the construction industry to deliver the outcomes it desires.Joey Gardiner, deputy editor

The biggest client of them allJoey Gardiner

From the building.co.uk Green energy communityZero carbon is costing us too muchBarny Evans, WSP principal consultant, renenwables and energy effi ciency

I remember in 2007 when I fi rst heard that all homes would be zero carbon from 2016. I was working in a mechanical and electrical team and we agreed that it just

wasnt possible. To deliver even notionally zero carbon homes you have to produce signifi cant zero carbon power on-site and on some dwellings, such as city centre blocks of fl ats, that simply isnt realistic.

However, to reduce the CO2 emissions from dwellings by around 80% was possible, and relatively cost-effective; it was the fi nal 20% that was very expensive and often led to perverse incentives. Therefore the best thing to do would be to deliver effi cient, cheap to run, low carbon homes and stop there. Everybody wins.

The previous government pressed on and created the Zero Carbon Hub (ZCH). I admire the ZCH, it has produced good reports and analysis. However, two things have stopped it delivering: a moving target, and an inability to conclude that you cant deliver zero carbon homes and stop there. The moving target has come from a series of government policy shifts, the fi rst

being that the target would not include unregulated loads in the calculation (basically things you plug-in), the second being the recent announcement that small developments wont have to meet the standard.

Most importantly, prompted by the ZCH, the government proposed Allowable Solutions (AS) which will see developers pay for off-site carbon emission reductions to off-set remaining emissions.

Apart from the fact that AS will probably not deliver predicted carbon savings, the AS payments will ultimately be paid for by the buyer/occupier and will not be used to improve the effi ciency of their home or produce the power on-site, so it will not reduce their bills.

The result is that people buying their new home in 2017 will be told they are buying a super-duper zero carbon home, but actually pay a carbon tax (AS) of 1,000-4,000 they wont know about (unless the home is part of small development), and have energy bills that arent particularly low. On top of that, it is doubtful the carbon emission reductions calculated will be delivered. To read the full version of this blog go to www.building.co.uk

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comment & analysis / agenda / 27


Reader polls

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The result of last weeks online poll is in. We asked, is todays industry more collaborative than when Sir Michael Latham wrote the Constructing the Team report, 20 years ago? Heres how you voted

57%

29%

14%

Yes No Undecided

With private sector recovery gathering pace, is the government still the industrys most important client? Vote online at www.building.co.uk/governmentvote

The week in pictures

Image of the week: Here be dragonsTwo teams from Buildings publisher, UBM, took part in the 16th Construction Industry Dragon Boat Challenge in the West Reservoir Centre, north London. The event, which featured teams from across the industry raised over 27,700 for homelessness charity CRASH. Read more in Hansom (page 21)



AgendaComment / Stephen Beechey

Picture the scene. The schools minister David Laws announces a huge 2bn increase in funding to refurbish (and in some cases to partially rebuild) schools that missed out on essential funding in the fi rst wave of the Priority Schools Building Programme (PSBP) back in 2011. Construction pats the Department for Education (DfE) on the back for a job well done, and then quickly proceeds to focus on the new priorities that the second tranche of funding presents for the industry.

This reaction should have been what happened last month before the Trojan Horse scandal about radicalisation in free schools bubbled away and then fi nally exploded on to the news agenda. While the stories are of course separate in nature, an unrelated scandal in the education world has ended up casting a distracting cloud over the challenges that face both schools and contractors in making the best use of the 2bn in extra funding set aside by the DfE for wave two of the PSBP.

First, as an industry we need to ask whats changed in the transition from PSBP1 to its sequel PSBP2, and what does the industry need to consider prior to these projects coming to market later this year?

Its particularly interesting to consider that when the funding structure for PSBP1 was unveiled, the DfE anticipated that its 261 target schools would be wholly funded using PF2. Yet this hasnt been the case, and as a result its curious that capital expenditure is now the route thats been favoured by the Education Funding Agency (EFA). Does this indicate an unwillingness to apply private fi nance on social infrastructure projects? The reluctance to use PF2 again is surprising, especially given that the EFA has opted to underwrite the cost of PSBS2 with capital spending. That being said, the guidelines also suggest merging local funding options with national fi nancial support wherever possible but this will have to be watched closely to ensure that a level playing fi eld remains in place for

those schools most in need of support.Drilling down further into the guidelines,

pragmatism is clearly the note that the EFA wishes to strike in terms of which schools are chosen to receive assistance. Almost from the outset, the document argues that we do not want to raise expectations unrealistically and encourage speculative bids which are unlikely to be successful. To that end, the DfE urges local authorities to nominate schools that are in need of fundamental support rather than those that could be dealt with using existing local programmes such as the Local Authority Co-ordinated Voluntary-Aided Programme (LCVAP). Although this is a laudable commitment to localism on the DfEs part, for this to function there still needs to be a shake-up of the available data used to judge which parts of the countrys school estate are in the worst condition and therefore most in need of intervention. This data gap, unless addressed in good time, risks causing delays in decision-making and, ultimately, to the

Rebuilding schools: the sequelAs the government opens bidding for its second wave of the Priority Schools Building Programme, its important schools and contractors consider the challenges ahead to make best use of the 2bn of extra funding

Letters & comment

Making sustainability simpleSimplicity is key (Sustainability should be simple, 11 June, www.building.co.uk), but lets also throw into the discussion a couple of other thoughts how about intelligent buildings that take the human factor out of the control side of things, that would be super simple if there were no controls at all. Sure, comfort should be maintained but perhaps we should manage our own expectations of the workplace.

The second point to address is whether we actually act in a sustainable way while in the offi ce. There is plenty of evidence to suggest that people behave less sustainably at the offi ce than they do at home for a range of diff erent reasons. If taking the control out of the workplace meant bringing people back to how they normally behave at home would that be a good thing ?

The only other comment Id make is about ensuring that buildings are set up to work in

the way they were designed. Im sure we have all had projects where the systems were signed off as having been properly commissioned, only to fi nd out the control panels or pipe work arent connected to allow any control whatsover. Now that requires behavioural change from a diff erent set of people.Mitch Cooke, via www.building.co.uk

Contracts exist for a reasonIts the old attitude and case of, when things are going ok, lets do it our own way, when its not, lets read the contract (Extension of time: Time is not on our side, 19 June, www.building.co.uk). If we

Join the debate

Comment on any of our articles online at www.building.co.uk or write to us directly at [email protected]

Are we as sustainably aware at the of ce as at home?

028_BUILDING040714.indd 28 02/07/2014 12:21

comment & analysis / agenda / 29


procurement process.Granted steps are already afoot to fi ll in the

blanks in the data currently available to the EFA. The much-delayed Property Data Survey Programme is on track to release its fi ndings later this year, and is likely to transform the list of priority regions across England that are in line for help. If this dataset provides the necessary accuracy, it will be a game-changing moment for schools, local authorities and contractors. With the survey, construction should receive the clarity it needs to deliver a new long-term pipeline of work, if the work is prioritised and eff ectively programme managed.

While PSBP2 will focus on replacing individual school buildings, were yet to be told the detail about how it will all be delivered. If individual buildings for diff erent schools within a particular region need to be rebuilt, this could present challenges from a logistics and cost standpoint as contractors may need to respond to the challenge of working across numerous sites. Therefore

aff ordability will need to be the watchword for the programmes second phase, and it will be essential for the EFA to reassure the industry that it can chart a clearer course for construction at a time of continuing pressure on profi t margins across the sector.

Ensuring that individual school projects are costed correctly has been a perennial challenge for contractors throughout the history of the programme and at the centre of this are the EFAs often controversial baseline designs and Facilities Output Specifi cation. Their often prohibitive restrictions have frequently caused schoolbuilders to claim they exert an adverse level of pressure on cost. Time will tell as to whether this remains the case, but at this stage its diffi cult to see how these requirements can continue to be delivered at current aff ordability levels at this next phase of the PSBP. Stephen Beechey, managing director education sector & investment solutions for Wates Construction

As an industry we need to ask whats changed in the transition from

PSBP1 and PSBP2, and what does the industry need to consider prior to these projects coming to market later this year?

all read and followed the contract half of our issues wouldnt exist. Its as much attitude and behaviour as technical diligence. The contract is there for both parties to understand exactly the obligations of both sides. Its about time, we collaboratively followed the contracts for the benefi t of all. NEC3 is a good start in that process.Michael Hardman, via www.building.co.uk

Off -site manufacturing is the only option It might sound like a broken record but off -site, off -site, off -site (Boom or not, we need more homes, 20 June, page 26)

Its been shown by BRE Smart Life, Egan, etc, that off -site is the only way we will be able to meet the housing need. Commercial arguments aside where there is a will, there is a way physically, off -site is the only way forward.

Commercially, off -site has again been proven to be better. Builders / developers are fi nished and paid quicker, thus the money changes hands quicker, reducing operating cash fl ow. There is also the advantage that aesthetically it can be anything you want it to be. Stephen Napper, via www.building.co.uk

The Green Construction BoardI refer to Vern Pitts excellent article on the Green Construction Board (Its not easy being green, 20 June, page 22).

I was astounded to read that the board had dropped (as one of its actions) a project to determine whether it is possible to deliver, using collaborative working principles, a sustainable retrofi t of a school that achieves a 70% reduction in carbon emissions for the same capital cost as refurbishment to Building Regulations standards.

If this was the only thing the board had done (and in doing so, had managed to achieve the 70% reduction) that would have made a real diff erence. The consensus in the industry is that procurement innovation embracing collaborative working from the outset with supply chain expertise fully engaged will help reduce carbon and improve energy effi ciency.

I urge the board to link up with the on-going work on one of the governments model procurement options using integrated project insurance.Professor Rudi Klein, via email

Michael Fallon, co-chair of the Green Construction

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feature / public sector clients / 31

This shifT in The balance of spending, combined wiTh The overall picTure of more conTracTs coming To markeT, suggesTs ThaT The indusTry is becoming less beholden To public secTor work

recovery posiTionPublic sector work has kept much of the construction industry off the critical list for the past six years but with the private sector now in increasingly robust health, how much is government really needed as a client? Joey Gardiner and Sarah Richardson report

For much of the past six years, even so much as a cough from government on the direction of capital spending has been enough to attract the immediate attention of construction firms desperate for work.

The public sector was the life raft that kept the industrys head above water in the early days of recession, with public work rising from 20% of the industrys output in 2008 to 29% in 2009, and 33% in 2010, according to data analyst Barbour ABI. Although the coalition brought with it swingeing spending cuts when it entered government that summer, the time taken for these to feed through to projects meant that the public sector continued to provide a large amount of the sectors work throughout 2011 and 2012, when it accounted for 30% and 27% of output respectively.

Even when the cuts did start to take effect, the continuing absence of recovery in the private sector meant that construction firms still scurried after any spare change thrown their way from Whitehall. They also scrambled to adapt to any ways of working, such as BIM, that might find favour with public sector clients.

But now the landscape appears to be shifting. Recovery is steadily progressing: ONS output statistics for April 2014, the most recent available, show 4.6% growth compared with a year ago.

And, in contrast to the past five years, much of this extra spending is coming from the private sector, particularly in the form of a 23% surge in private housing work.

This shift in the balance of spending, combined with the overall picture of more contracts coming to market, suggests that the industry is becoming less beholden to public sector work. It is also a picture that in some cases is playing out in bidding tactics two years ago, for example, it would have been hard to imagine a contractor returning almost 50m of schools work on the basis that it was concerned about profitability on some of the projects, as Bam did last month.

But equally, there are numerous recent examples of ferociously competitive public sector deals, particularly on large contracts. At least three consultants that have lost out on a 750m government framework deal are concerned enough about the potential impact of the work on their pipelines that they are taking legal steps to challenge the decision, while Interserve has mounted a similar offensive after losing out on 4bn Ministry of Defence work.

So, how much does the industry really still need government as a client? We asked three experts a contractor, an SME and an industry

Documents

Bldg Journal 040714