Turning a Trying 2020 into a Thriving 2021

Ian Batchelor, Executive Director of Construction, and Simon Yung, Head of New Homes at ODS discuss their learnings from 2020 and what the future holds for the construction industry

2020 has been a challenging yet eye-opening year for the construction industry. We witnessed a record monthly output growth of 21.8% in June 2020 despite the impact of COVID-19, which then slowed to 3.0% in August.[1] The pandemic delayed £26 billion worth of projects in the UK at the start of the first lockdown in March, and more than 83,000 employees in the industry have lost their jobs. This has meant companies have needed to furlough employees, provide extra support and find new ways of working, including COVID-secure working practices.

A new way of thinking about construction is needed for 2021. The industry is one of the few permitted to continue working through lockdown, however it must adapt to the current situation and evolve it approach as the new year dawns. It has already started to make important changes, such as supplying workers with sufficient PPE, arranging bubbles and scheduling staggered break times, which are all steps in the right direction.

Whilst a new vaccine has just been approved for use in the UK, we can take what we have learnt this year and use it to improve. Changes made in the construction sector today will enable new efficiencies to be created tomorrow.

A brighter 2021

While 2020 has been difficult for everyone, we’ve all undoubtedly learnt a great deal from the challenges faced. We have also mastered how to work more efficiently and to become more creative in a predominantly on-site industry which, when everything is running smoothly, operates without pauses.

The pandemic will likely prompt several significant changes in 2021, benefitting the public, environment and construction industry professionals. These include: high-quality, energy efficient new builds and renovations, the proliferation of modular construction, and re-investment in apprenticeships.

Enhanced private and social housing

The pandemic has had an effect on housing in more ways than one. In addition to issues such as an increase in housing costs, mental and physical health have been greatly impacted by having to stay indoors for long periods of time. This means that, in 2021, there is likely to be a greater focus on more spacious, energy efficient housing, to avoid overcrowding as well as any negative effects caused by the outside environment. Further, working from home is creating demand for residences in more rural locations, as people escape to the suburbs for more space, scenic views and fresh air.[2]

Energy efficient housing can deliver healthy temperatures and humidity levels, reduced noise levels and improved air quality. As part of our commitment to help create a zero-carbon Oxford, we’re currently building zero-carbon social homes. Due to finish in spring 2021, an independent consultant has indicated the development is likely to achieve a 100 A or 99 A energy efficiency rating in their Energy Performance Certifications; the highest possible scores for energy efficiency. The homes will be suitable for the elderly and disabled, with hallways that are large enough for wheelchairs to pass through, entranceways with wheelchair charging points and wet room bathrooms.

More modular construction

Modular construction has been a hotly debated topic in the industry. But with MMC champion, Mark Farmer, calling on the government to build 75,000 modular homes a year, we will likely see greater adoption of this approach. With the world’s tallest modular building having been completed at the end of last year in London, and with more than £223 million of loans from the Home Building Fund agreed for projects using MMC, it’s clear  modular construction is the way forward.

ODS has already begun implementing MMC into its construction mix. Using the ‘Oxford model’, where the community is considered in all business decisions, of modular construction, we have largely built our zero-carbon homes off site before installation. This approach allows projects to be completed up to 50% faster than those built traditionally, and also allows us to be kinder to the community by reducing the amount of noise, dirt and pollution produced by large construction vehicles and machines. We also recently erected sports changing facilities and a community space for a local football club using modular construction. This minimised the impact on local residents and the site itself, and kept build times to a minimum.

Apprenticeships

Existing apprenticeships have been paused in the construction industry, and a number of businesses have found the Government’s current apprenticeship scheme to be confusing. This has posed a major problem for the industry’s future, particularly due to the effect Brexit may soon have on the number of EU nationals working in construction in the UK.[3]

The good news is the Construction Industry Training Board (CITB) has confirmed, under its new proposals recently submitted to the Government, thousands of construction SMEs will not have to pay a levy for 2021-22 and will still be able to claim CITB grants for their training and skills development.[4]

This will hopefully allow companies to re-focus on recruiting school leavers and other young people to the construction industry, and help them to get back on their feet in the new year. At ODS, we plan to continue offering work placements in joinery and construction apprenticeships.

Looking ahead

Construction performance has not been uniform this year, and companies across the country need to mobilise to ensure the problems which arose in 2020 are addressed, giving the industry an opportunity to thrive.

With new, greener methods of construction becoming increasingly popular and renewed hope for younger generations entering the sector, 2021 has the chance to become a year of recovery, change, and especially, innovation.

At ODS, ‘doing good business’ is our core purpose and this will shape our construction strategy looking ahead, with a major focus on sustainable social housing and carbon-efficient construction techniques. As always, every decision will be made with our employees, customers, suppliers, community and the environment in mind. Hopefully, the lessons learned from 2020, and ongoing support while adjusting to a ‘new normal’ will make things easier for our teams, and the construction industry as a whole in the coming months.

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[1] https://ift.tt/3pAjuLQ

[2] https://ift.tt/2HUjypI

[3] https://ift.tt/34ZTUIh

[4] https://ift.tt/3o8Qo68

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Construction Predictions for 2021

Amira Khan is a partner at Gateley Legal and handles both contentious and non-contentious matters. In this feature, she takes a look at what 2021 could hold for the UK construction industry.

No one could have predicted the events of 2020, and so predictions for 2021 are filled with some trepidation.  There are of course a number of statutory changes that have been postponed due to COVID-19 and have been waiting in the wings for some time. Nevertheless, there is still likely to be some fluidity in construction due to the market’s recovery from COVID-19, the settlement of the final Brexit negotiations, and the development of new laws particularly arising from the Grenfell enquiry.

The VAT Reverse Charge is finally expected to come into effect, which will shift responsibility for accounting to HMRC for VAT from the supplier to the recipient of VAT chargeable services.  This will affect contracts from 1 March 2021 (regardless of when the contract was entered into) and so many businesses have already been making preparatory steps in anticipation of these changes.  This includes establishing what supplies are affected by this change and whether any exceptions apply in their procurement.  Most contracts should be amended so that it is clear who has responsibility for paying VAT and whether or not the VAT reverse charge will apply to the transaction.

The International Federation of Consulting Engineers (FIDIC) is due to publish new materials on their contract suite during early 2021.  A revised edition of the Green Book (FIDIC’s short form contract) is anticipated, as well as a test edition of a new Bronze Book, which is an ODBO (Operate-Design-Build-Operate) contract intended for use on brownfield sites.  FIDIC does not currently have an ODBO contract and it is suspected that this will be of interest to those involved in upgrading existing facilities.  In addition, FIDIC will be issuing guidance notes for the 2017 editions of their Red, Yellow and Silver books with the intention that this will encourage further use and application.

The draft Building Safety Bill will no doubt continue to gather momentum in 2021. This Bill proposes a new safety regime, particularly for higher risk buildings, which is likely to have the most impact upon multi-occupied residential buildings.  The Bill focuses on the role of the Health and Safety Executive (HSE) as the Building Safety Regulator who will be responsible for overseeing the safety and performance of all buildings.  This will involve raising standards of competency among professionals (most notably architects) and taking enforcement action against non-compliance with Building Regulations, issuing compliance and stop notices, and prosecuting those who fail to obey.  In addition, there is likely to be a new “duty holder” regime in the design and construction of higher risk buildings.  This revolves around two new roles.  Firstly, there will be an Accountable Person who must assess the building safety risks relating to the building and take reasonable steps to prevent their occurrence on an ongoing basis.  Secondly, there will be a Building Safety Manager, appointed by the Accountable Person to support them in the day to day management of fire and structural safety in the building.  These proposals are in consultation with the industry at the moment and there is a great interest in putting these additional safety measures in place following the aftermath of the Grenfell report.

The impact of Bresco Electrical Services (in liquidation) v Michael J Lonsdale [2020] UKSC 25 will continue to be felt throughout 2021 and beyond.  This case permitted an adjudication to be commenced by a company in liquidation.  Since then there have been further cases determining when a                                                  decision in favour of an insolvent company will be enforced.  In Meadowside Buildings Development Ltd v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC), the TCC considered what requirements must be met to permit enforcement, which included if the adjudication determined the final net position between the parties; whether satisfactory security was provided and whether the losing party could recover the sum if it was overturned on final determination.  This was further developed in John Doyle Construction Ltd v Erith Contractors Ltd [2020] EWHC 2451, in which standard principles were developed to determine the circumstances in which summary enforcement for a decision will be permitted.  Due to ongoing demands on cashflow for contractors and sub-contractors, there is likely to be more cases arising in 2021 where such principles will be utilised to facilitate the recovery of payments through adjudication.

2021 may also see an increase in potential claims arising from Brexit and the continuing implications of COVID-19.  These changes are likely to put additional burden on the usual pressures of time and money within construction projects.  It is expected that Brexit may lead to longer lead in times or shortages in acquiring materials, due to the added border checks that are anticipated.  The combination of COVID-19 and Brexit may have already started to lead to labour shortages and difficulties in meeting programmes.  The potential for disputes can be mitigated now, by either negotiating specific remedies within contracts for projects yet to start, or by keeping appropriate record keeping during the works and promptly notifying any difficulties in accordance with the terms of the contract.

Many will be pleased to say goodbye to 2020.  Here’s to the year ahead and let’s hope it will lead to positive news for construction. In preparation for any unexpected events that may arise in the next year, it is always advisable to have a robust contract in place to deal with any risk areas and to adhere to this in your working practices so that you are best placed in the event of any potential claims.

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What Opportunities Await Contractors

Each year brings fresh challenges to the construction industry, and it is fair to say that 2020 was no exception. And while many sectors were encouraged to work from home, those employed in construction were some of the unsung key workers who remained committed to delivering projects. On growing opportunity for the construction industry is with the data centre sector, as demand continues to increase across the world. The Nordics region in particular offers fantastic prospects for UK and Irish contractors, as Billy Durie, Global Sector Head for Data Centres at Aggreko, explains.

Looking towards the Fjords

While doubt was cast on the survival of a number of industries, one which continued to boom during 2020 was the data centre sector. As working from home became the norm during the lockdown months, reliance on data usage and servers increased.

One area which is currently seeing a surge in new facilities is the Nordics region. Sweden, Norway, Finland and Denmark have all seen significant investments in data centres, including co-location and edge facilities, and it is believed that 200 data centres have been established in this region over the past decade. Countries in the Nordics have a number of benefits to investors, such as naturally lower temperatures offering greater free cooling capacity and availability of renewable energy.

So, then, how does this impact UK and Irish contractors? One of the major challenges for the Nordic region is a shortage of skilled teams and resource to deliver projects at the pace required. In fact, many data centre projects in the Nordics are managed by contractors based in the UK and Ireland. Understanding this region’s challenges is therefore key for contractors if they are to take advantage of this growing opportunity in 2021.

Temperature challenges

Temperature poses one of the biggest challenges in the Nordics region, dropping as low as -30^oC over the winter months. Throughout the construction phase, it is imperative that facilities remain operational for workers. The impact of Covid-19 has seen delays to projects in the Nordics, with travel bans restricting contractors from crossing the North Sea.

As such, planned construction phases, like excavation, which is usually carried out before the ground freezes, may have been pushed back. At this point, contractors must ensure that temporary heating is installed to help thaw the frozen ground to allow for construction to continue.

For facilities further on through the construction phase, rooms may need to be heated to certain temperature for contractors carrying out installations to meet local legislation and aid safe and productive work. Providing temporary heat may also be vital to ensuring ambient conditions are kept stable, so the installation of electrical and mechanical infrastructure can help contractors conform to manufacturer guidelines. However, the use of heaters could inadvertently cause issues further down the line, if used incorrectly.

Humidity’s rising

A second challenge that is facing construction industry is humidity. The Nordics are known for their cold, and often wet, weather. The issue of humidity is therefore a year-round concern and managing it is critical for the long-lasting performance of any facility being built.

Many contractors will solely rely on heaters to remove damp areas, but this can cause inefficiencies in the future. While on the surface, it may appear that heaters are an effective way to dry surfaces, there are many underlying damages that occur. That is because heaters simply move the moisture, rather than removing it from the atmosphere.

The damage moisture can cause is more long-lasting than people imagine. As well as causing premature deterioration of building materials, moisture can also find its way into the smallest areas and spaces, with electrical components particularly vulnerable to its effects. As such, it is imperative that moisture is managed effectively, given the reliance on data centres and damaging impact of any downtime.

If, during construction, extreme weather is experienced, it is strongly recommended that moisture is removed as part of the drying process. There are three stages required for the successful removal of moisture: moisture removal, heat and air movement.

Adding heat into the space excites water molecules, so they are drawn out of the building structure and into the expanded atmosphere. Fans should then be introduced to circulate the air, aiding the removal of moisture, while a dehumidifier should be the final step. Removing energised water molecules from the environment – and in turn reducing moisture levels – dehumidification eliminates water from the air completely, cooling the air below before condensing and draining away.

It is more important than ever that humidity is taken seriously on all construction sites. If volatile weather patterns are to become more consistent, then ensuring dehumidifiers are on-site is going to be essential to ensuring any facility’s long-term performance.

Preparing for the unpredictable

2020 taught us to expect the unexpected. For contractors which face pressures to meet ever-tightening deadlines, particularly within the data centre market, travel disruptions have caused supply chain issues around the world, highlighting the important role of critical equipment hire.

If the arrival of components and parts that are required during the construction or maintenance of a data centre is impeded in any way, operations could see significant delays. With data centre demand at a peak in order to facilitate remote working and medical data storage, and with a rise in demand for new infrastructure to facilitate emerging tech – such as 5G – downtime or delays are simply not an option.

Rental solutions, including dehumidifiers, heating equipment and generators, can ensure infrastructure projects can be carried out smoothly and completed on time. Allowing continuation of operations when there are delays in the delivery of critical equipment, temporary solutions are scalable and flexible and so can be implemented in any size of data centre for however long they may be required.

As the world’s largest hire company, Aggreko provides temporary power, battery storage, temperature control and testing around the globe, to meet the ever-growing demands of data centres. For more information, please visit www.aggreko.com/data-centres.

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2021: Construction industry predictions

2020 has proven that even that the best laid plans need to be flexible in order to survive. As one of the sectors hardest hit by both Brexit and the coronavirus pandemic, the construction industry has been forced to react, adapt, and innovate. But has this shaped the industry permanently and has it altered what’s on the cards for 2021? Kate Onions, head of construction disputes, and Adam Watson, construction lawyer, both at law firm Shakespeare Martineau, discuss their five predictions for the next year.

Putting the Brexit foot forward

The UK’s existing skills shortage is no secret. With EU talent currently making up eight percent of the construction industry workforce, there is a real concern that the skills gap may increase exponentially (a possible ‘skills gulf’) if EU workers are not permitted to remain in or enter into the UK.

Currently, EU nationals who live in the UK before 31 December 2020 are allowed to continue to do so until 30 June 2021, which is the deadline for applying for settled status. However, any EU nationals arriving after 31 December 2020 will require a visa or sponsorship in order to secure employment.

When it comes to the import and export of goods and materials, there is real uncertainty surrounding how tariffs may be impacted. A change in tariffs for imports, in particular, is likely to lead to the inflation of prices from EU suppliers providing goods and materials to the UK. This is a serious concern given that almost a quarter of construction products used in the UK are imported, with almost two thirds of such products coming from EU countries.

It is good practice, in any event, for contractors to ensure that the channels of communication with their supply chain are open. This will help ensure that when issues do arise there is likely to be good communication and dialogue in resolving the issues without causing pinch points and critical delays to projects.

The impact of Brexit on the planning process could influence development programmes, where consents must be obtained before construction works can even begin. It is therefore more important than ever for contractors to plan ahead and include a buffer zone (i.e., float) into any strategy. However, it is also key to avoid the tendency to try to cover all eventualities and focus on the most important suppliers and the most vital information in any supply chain mapping.

Ongoing impacts of the COVID-19

The biggest impact of the COVID-19 pandemic on the construction industry has arguably been financial. However, one of the most noticeable impacts on a day-to-day basis is the huge increase in on site safety, something which will continue to develop and increase during 2021 and beyond.

In order to mitigate the spread of the virus, the construction industry’s focus will be on the separation of workers, and enhanced equipment and cleanliness protocols. Separation is a particularly difficult thing to achieve on site, where close cooperation and teamwork are the norm. Therefore, it is likely that smaller teams will be used, with the potential for staggered shifts to limit numbers. With the likelihood that social distancing will continue to be a fixture in 2021 with those working on site required to wear masks, use sanitizer, and keep their distance where possible.

Make way for modular construction

Modern Methods of Construction (MMC) are increasingly being used in the construction industry. Certainly, we’ve seen an uptick in usage, particularly on the part of social housing providers. This no-doubt reflects the fact that recently, processes and materials have become more refined, and industry confidence in MMC is growing. In 2021, it is likely that there will be a huge boost in interest. In the post-pandemic era, both the manufacturing process itself and the results of modular construction are perfectly suited to the times.

Buildings constructed off-site are already built in a way that promotes low worker density. The manufacturing is often undertaken in big, airy buildings, with plenty of room for distancing. The equipment used is also specifically designed to let fewer workers move larger components, reducing proximity, as well as labour costs.

Once constructed, modular buildings lend themselves to growing and evolving businesses, for example, if a company needs individual offices with independent systems, a remote worker requires an office at home, or a hospital needs additional rooms. Prefabricated buildings have the dual advantage of being affordable and short-term or long term, as required. After all, in times of uncertainty, a temporary, flexible solution is often the best option.

Payment disputes

It’s well known that the construction industry often operates on very low profit margins. When project issues arise, cash-flow problems are inevitable. Since the start of the pandemic, the number of construction companies becoming insolvent has been on the rise and it is expected that this trend is set to continue.

With the main concern for many being getting paid and with construction projects rarely running entirely smoothly, if the issue of non-payment does arise, parties may be forced to either bring or defend a claim for non-payment.

In these cases, employers and main contractors alike need to ensure that the appropriate payment and pay less notices are issued in accordance with the terms of the contract. Failure to do so can lead to ‘smash and grab’ adjudications, where a party claims the whole amount of the payment applied for simply on the basis that no payment / pay less notice was issued.

The reality is that smash and grab adjudications are here to stay. Therefore, the key is that paying parties need to avoid leaving themselves open. By checking that they have the appropriate procedures in place across all projects, they can ensure that payment deadlines are met.

Sustainability innovations

The ‘Absolute Zero’ report, published at the end of last year by researchers from a group of UK-based universities, states that the construction industry uses half of all steel and cement produced globally and is responsible for 30 percent of its carbon emissions. If the UK is to stand a chance of achieving its target to achieve net-zero carbon emissions by 2050, this will need to be addressed by the industry as a whole.

From start-ups turning construction waste into bricks, to businesses engineering wood for optimum carbon storage, the world of sustainable building materials is growing at a rapid pace.

With the continued emphasis on using sustainable materials for the long term, and with clients more than ever requesting sustainability specifications, sustainability innovations are only going to continue to rise in 2021. However, for a sector used to tight operating margins, fiscal incentives may be needed to accelerate change, encouraging contractors to make use of the eco-friendly alternatives that now exist.

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Virtual Meetings Key for Digital Transformation

Jocelyn Lomer, Chief Executive at  nuVa Enterprises explains how enhanced virtual meetings are a key element for digital transformation and Net Zero attainment in the construction industry as we move into 2021.

Powerful forces of change are sweeping the construction industry catalysed by Covid-19 and consequent changes in working practices allowed by digital technology. These fundamental changes are coupled with digital innovations and the drive to Net Zero that will further solidify shifts in working practice and dominate business activity over the next decade.

Business leaders should remain aware of the environmental factors at play and be able to manoeuvre their organisational design to meet the needs of the future. The Climate Change Act of 2008 committed the UK to an 80% reduction in carbon emissions by 2050. In June 2019, legislation increased that target to 100%. Although it is unclear precisely how these legal targets will be enforced, the UK Court of Appeal ruled the Heathrow Expansion as unlawful insofar as carbon reduction was inadequately considered.

Link between digital transformation, climate change and virtual meetings

Examination of the Greenhouse gas emissions proportions will set the overall environmental scene that organisations will operate under. This analysis coupled with the digital capabilities available will allow the organisation to manoeuvre effectively and position not just for efficient green operations, but for the ‘agile knowledge organisation’ of the future.

Research from the Department of Business, Energy & Industrial Strategy found that transport is currently the largest emitting category and must therefore be the principal target for carbon reduction. Examining this data, it’s evident that 78% of the carbon expended is from transport, energy supply, business and residential. The energy supply category is being targeted by wind and nuclear, plus carbon production from coal is in rapid decline, with residential not currently, (apart from home working) being business related. This means remote focus can be applied to transport and business carbon expenditure. This is where the biggest Net Zero contribution lies and it is currently more important than energy supply.

With transportation as the largest emitting category, it’s important to consider the detail contained within that vertical which is defined as road, railways, road transport, domestic aviation, shipping and fishing, which all accounts for 28% of the burn. According to BEIS/DEFRA, a car kilometre with one passenger is 171grams/km, whilst rail is 41grams/km. Clearly rail is nearly four times more efficient, however due to Covid-19 and social distancing, rail passenger miles are not forecast to recover for around four years. When the rail service returns to normal, we can expect similar figures to 2018. Notwithstanding rail business miles are a major contributor to carbon expenditure but four times more efficient than car miles.

What’s more, according to the Department of Transport data less than 50% of rail travel is for business purposes, that is commuting and pure business rail journeys. This is a huge figure and is ripe for major reduction, excluding international air travel, which is another major carbon source.

It has also been found that at the very least 35% of car journeys are about business travel. Car journeys constitute 90% of road traffic and in 2019, cars and taxis clocked 278.2 billion vehicle miles at 228.2 grams per mile, which is equal to 63,485,240 metric tonnes of carbon consumed. Therefore, using virtual meetings to reduce this load is a prime target for businesses.

Going virtual

Without further drilling down into precise figures, we can see that business travel is one of the major contributors to carbon and greenhouse gas emissions, with carbon representing 95%. In this case, how then can we reduce business travel and what is business travel actually about?

Fundamentally, business travel and commuting is about gathering in the office to share knowledge around the various projects that we are working on. It is about knowledge exchange and for reasons of face to face meetings with artifacts (documents and these days CAD) is preferred. A ‘natural meeting’ is preferred due to millions of years of evolution, meaning our bodies and minds have evolved to socially collaborate and these important human factors should not be underestimated for we interrelate in many subtle ways.

Current remote collaboration media does not emulate this required natural meeting and this is why we become uncomfortable and suffer from the so-called ‘ZOOM’ fatigue, for it is a strain upon our minds to meet in this unnatural way. It is called ‘cognitive reluctance’ and in plain language, it is a hassle and quite tiring.

A new generation of virtual meetings is now available, that understands how we work and engages our minds in a most natural way. This and other emerging remote meeting media now allow us to share knowledge in this knowledge economy, immediately without travel, sharing the most complex documents and apps, such as complex BIM models.

Transforming the drawing board

Construction is obliged by the Climate Change ACT to halve their greenhouse gas emission, focussing on reducing carbon emissions by 95%. Advanced virtual meetings are one of the key areas for reducing CO2, for it is no longer necessary for key knowledge workers to assemble at the PMO and it is 100% possible to obtain project progress through shared applications all around the Programme without any travel at all. Knowledge can be ‘beamed in’ from anywhere. These benefits can be measured in reduced mileage and actually faster decision making. Similarly those rail journeys reduced by using virtual meetings can be used to free up railways to carry more freight, taking the freight traffic away from the roads with their high carbon spend.

Advance virtual meetings do not just reduce carbon, as their implementation is a vital stepping stone toward digital transformation, for it is the interface between the ‘world of digital apps and documents’ and the world of people. This is digital transformation in action, allowing immediate decision making from anywhere in the world, collaborating over visualised Big Data. In the terms of knowledge flow for innovation, the broader reach to external knowledge is simply revolutionary.

Digital champions and environmental leaders need to not only consider energy supply in their calculations, but also the major impact that advanced virtual meetings may have in meeting their Net Zero targets, as well as aiming to set the framework for the ‘agile organisation’.

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Willmott Dixon 2020 Construction Round Up

There is no doubt that 2020 has been a remarkable year which has brought with it numerous challenges – but also the opportunity to reflect and innovate as we look to move forwards and out of the COVID-19 pandemic. Nick Gibb from the national contractor Willmott Dixon discusses what we have learnt this year and considers what might come from 2021.

He said: “The construction industry is hugely important to the UK economy and, as such, we were one of the sectors that was encouraged to keep working, even when the rest of the country was forced into full lockdown back in March. That in itself brought with it numerous challenges that everyone operating within the sector was forced to adapt to very quickly.

“Almost overnight, swathes of people across the UK were told to stay at home – including significant numbers of those non-site-based workers within the construction industry. As a business we had already invested in our technology and training so the transition for our teams was easy but everyone was forced to adapt very quickly. On-site teams were also asked to understand and observe new health and safety guidance to help keep our teams, visitors and partners safe on site and stop the spread of the virus.

“This is one of the real positives to come my opinion; we are more agile as an industry than ever before and have been able to flex quickly and effectively to meet changing government guidelines whether that be on-site or our office-based teams. We have all learned a great deal during the last few months which will undoubtedly have a positive impact on the industry moving forwards.

“Surprisingly perhaps, as a business, we have seen productivity on site rise overall. We didn’t incur any major project delays and, in some cases, actually accelerated progress on-site, which is incredibly positive and a result of really careful planning and the need for a real focus on logistics.

“Throughout the Covid-19 pandemic, we have embedded the Government-backed Construction Leadership Council Site Operating Procedures at all of our sites across England and Wales.  Through implementing these safe working practices, as well as the endeavor of our site teams and embrace of technology, we have been able to keep 100% of our sites operational, supporting critical supply chains and the local economy at a time where it has been needed most.

“That being said, we have definitely noticed a shift for certain sectors with larger programmes particularly within the higher education and commercial sectors being paused by customers. Elsewhere, we have seen customer priorities changing in response to the pandemic and have needed to adapt quickly and focus on really being consultative and support customers. For example, we are now seeing increased emphasis being placed on offsite and modular construction products – which may create a challenge in itself as capacity becomes problematic.

“This focus on communication and collaboration is incredibly important. Communication is at the heart of success for any business and it is the cause of the most distress and disconnects, so it is hugely valuable to invest time into communicating effectively both internally and within a project team. Being open and objective is vital, interrogating what we are doing and prioritising accordingly.”

Moving into 2021

“We are expecting to see a relatively slow start to the year but as the pandemic hopefully eases with the roll out of a vaccine and things starting to return to something more like the world pre-COVID, we project some acceleration towards the back end of the year.

“Housebuilding continues to be priority for government with a focus on ‘building back better’ and delivering much-needed homes across the UK. The National Infrastructure Strategy also places infrastructure at the heart of the recovery and levelling up agenda so that will also be a hugely important sector.

“I think we will also see science and tech projects and the health sector coming forwards as well as the education commitment outlined earlier in the year. But 2021 will be a year of re-stabilising; getting society back to some sort of normality and stimulating the economic recovery with a view to recording growth again into 2022.

“As an industry, we may well see fair pricing and competition become challenges. Challenging times can see over-optimistic pricing enter the marketplace which presents issues throughout the industry – especially as we are expecting to see economic growth in a relatively short space of time. It’s important that we don’t fall into the trap and create issues moving forwards.

“More than ever, it will be important to work in collaboration with our customers to understand their issues, opportunities and any new ways of working that have come into play over the last few months. At Willmott Dixon, we are passionate about acting as a consultant and trusted adviser for our customers, working alongside them to deliver the very best outcomes. This will drive innovation and improvements across the industry and will allow us to bring key schemes forwards, despite the obvious challenges we are facing.”

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Building an Innovative Future for Construction

Simon Robinson, MD of Red Diamond Executive Headhunters, looks at how technology is changing the way even the most traditional industries work – and will continue to do so into 2021.

When you think about sectors that have embraced technological innovation during 2020, the building industry is probably not the first that springs to mind. Cloud computing, A1, education, self-driven cars perhaps, but not construction. With the best will in the world, builders have never been renowned for either their speed or their grasp of the digital marketplace.

Yet the current pandemic is forcing even this most traditional of industries to rethink its way of working – and technology is threatening to disrupt processes that have been the norm for decades, while presenting opportunities to work both faster and smarter.

And that’s not just from a consumer point of view, where apps enable you to browse stock in real time and order products in store for immediate collection or next day delivery. Nor is about upgrading the building machinery itself – it’s more about the everyday solutions.

Software and mobile apps have been developed for use at various stages, from planning to field reporting. However, many are specialist in nature and can require a substantial initial investment. What’s really revolutionising the way the industry works are relatively everyday practices being used in practically every sector right now – such as video conferencing.

Take, for example, the role of the construction product salesman. Pre-Covid, a salesperson could be on the road from Monday to Friday, clocking up the miles with overnight hotel stays and sandwiches eaten hastily in the car.

Until March, it was the norm for reps for manufacturers of items such as valves or boilers to meet developers in person with a view to ensuring their products were chosen for a range of new builds.

If successful, and the products had been designed into the plans, the next step would be another meeting to establish specifics such as the number of bathrooms or kitchen size. Factor in another meeting with financiers – and the time taken for a salesman travelling to and from meetings and the almost inevitable traffic congestion and the process can easily become a relatively slow one.

While technology has certainly been incorporated into product development of late, with 3D printing and CAD becoming widely used, the process itself has changed very little – despite changing client expectations and the continuing evolution of video technology.

But along with the pandemic came the rise of videoconferencing technology and suddenly it became possible to have three meetings in one. All parties can be present at the one meeting while screen sharing enables the process to stay interactive, reducing the timescale by not just hours but weeks. Designers know what targets they need to hit and thanks to the latest generation of software, different products can be dropped in and their performance evaluated.

It’s unlikely that any of the players in the industry, be they designers, sales teams or the builders themselves, will remain untouched by technology, albeit at differing levels. Energy efficiency and IoT connectivity are huge considerations; BIM (building information modelling) – especially 5D planning and budget – is expected to bring improvements in cost, quality, reducing delays and security to the entire process, from design to sales.

While it’s not necessarily the case that video conferencing will replace face-to-face meetings entirely – after all, there’s nothing quite like a ‘proper’ get-together in person – ultimately, the technology exists to make all aspects of project management more time-efficient and as a result more cost-effective. And that has to be a win-win situation for all concerned.

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What can Construction Expect to Face in 2021?

With the pressures inflicted on the construction industry by Covid-19 in 2020 many firms will be breathing a sigh of relief to have reached the end of the year. Parm Bhangal, Managing Director of multi-award winning quantity surveying and estimating firm, Bhangals Construction Consultants, reflects on how the industry has fared during a tumultuous year and gives his insights on what it is likely to face in 2021.

The construction industry has faced unprecedented challenges during 2020 following the onset of the Coronavirus pandemic. Looking back to the second quarter of the year construction output in Great Britain fell by nearly 36%.

Firms working on everything from small domestic projects right through to multi-million commercial schemes saw their endeavours come to a standstill with the introduction of the first lockdown. As we know sadly, as a consequence, not all construction firms who were operating at the beginning of 2020 have made it through to the end of the year.

Fortunately, suspended sites in England and Wales reopened more rapidly than initially anticipated which brought a breath of life back to the nation’s construction industry. This translated into construction output growing by a record 41.7% – or in cash terms £11,070 million – during the third quarter of the year. This is by far the largest demonstration of growth since quarterly records were introduced at the beginning of 1997 and substantially larger than the previous record quarterly growth of 4.9% in the second quarter of 2010.

The growth in the third quarter of 2020 was also the first time the industry experienced month-on-month growth since the early part of 2018. However, growth did slow over the period, starting off strongly with output increasing by 17.4% in July, then dropping to 3.8% in August and finally ending with 2.9% in September.

September’s £369 million increase was driven by growth in the areas of new work and repair and maintenance. There was growth across all construction sectors, apart from public new housing and other new public work, but only private new housing and infrastructure recovered above their February 2020 pre-pandemic levels. New housing overall grew by 88.7%, or £1,527 million, in quarter three of 2020, driven by 102.9% – £1,531 million – growth in private housing. Anecdotal evidence has suggested work on larger civil engineering sites more easily adapted to social distancing measures. For housebuilders, anecdotal evidence suggested firms managed to continue to work at sufficient capacity, particularly on sites currently in progress when the first lockdown hit.

All other types of work failed to recover to their pre-pandemic levels by September 2020, with public new housing the furthest below its February 2020 level at 29.4%.

Despite the increased output in the latter part of the year, it is clear coronavirus continues to have an impact on the industry. Overall, productivity in the construction sector remained 7.3% lower in September than it was in February, before the main impacts of the pandemic were seen. Health and safety measures, such as social distancing, have meant the capacity and level of work are not at the same level experienced prior to such restrictions being imposed.

Looking ahead industry experts are predicting the construction business is likely to experience a gradual and sustained recovery over the next two years. Although health and safety measures may continue to have an impact on the industry going forward it was heartening to see a widespread closure of construction sites was not required during the second national lockdown towards the end of 2020.

It is expected that consumer confidence will go up when a Covid-19 vaccine comes out and that this will lead to a rise in the number of individuals undertaking construction projects. Hopefully, a vaccine will help to get the country back to normality and lead to a reduction in the current restrictions which hold back productivity.

There are also predictions of increased public sector investment in 2021, particularly in road schemes, to help underpin the ongoing recovery of the construction industry. There are suggestions that 2021 will see an increase in school building projects as councils seek to reduce the nation’s shortage of available secondary school places. There have also been promises made about increases to NHS capital funding which is expected to lead to the advent of more building projects. The Government has further promised to boost investment in infrastructure and there is an expectation that civil engineering projects disrupted by lockdown this year will recover in 2021. In addition to this, major schemes, such as the £4 billion Thames Tideway Tunnel project and HS2, are expected to boost Great Britain’s civil engineering output over the next couple of years.

However, the beginning of the New Year will also bring with it Brexit on January 1 which is expected to create its own challenges. It is predicted that new customs regulations and non-tariff barriers may disrupt supply chains for the construction industry and the wider economy which could have an impact on the country’s economic recovery from the pandemic.

If the construction industry does experience material shortages it could lead to an increase in costs which may in turn slow down future building projects. The UK’s departure from the EU is also expected to shrink the availability of skilled site labour in this country.

To safeguard themselves against the ongoing challenges presented by Covid-19 and Brexit in 2021 and the years ahead, firms would be wise to invest in digital and design solutions that reduce the amount of time spent on site at the pre-construction and construction stage of projects. This will cut down their reliance on on-site labour which will help them to reduce the impact of any ongoing Covid-19 restrictions and any difficulties they may face in hiring skilled workers.

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Gleeds on Track to Deliver New Cruise Terminal

Property and construction consultancy firm Gleeds has confirmed its appointment as cost manager for the new £55 million cruise ship terminal at Southampton’s Western Docks.

The scheme is the result of a strategic partnership between Associated British Ports (ABP), MSC Cruises and Norwegian Cruise Line Holdings and is to be the port’s fifth dedicated facility for cruise passengers.

Set to be next generation ready, once the terminal has reached completion it will be able to accommodate the world’s largest ships, which are capable of carrying 6,000 passengers each. It will also feature a host of sustainable features, including the use of glulam beams and roof-mounted photovoltaic panels. The building will also boast “Shore Power connectivity”, which will enable suitably equipped vessels to plug into a local power supply while in port, as opposed to using onboard generators.

Having received a grant from the Government’s Getting Building Fund, work on the 11,695m2 building began in early 2020, and has continued at pace despite the challenges presented by the COVID-19 pandemic. The fibre reinforced ground floor slab and steel frame have already been installed, with curtain walling and cladding now well underway. A link bridge to connect the ships to the shorelines has also been created to ensure the facility is fully operational in time for the 2021 holiday season.

Tony Deacon, Director at Gleeds, said: “Having worked with ABP on this scheme since its inception in 2018, it is incredibly heartening to see such fantastic progress now being made on the ground. As Britain’s busiest cruise port, around two million passengers would usually pass through Southampton every year and this investment in future proofing cruise infrastructure here represents a commitment to ensuring that it is able to bounce back stronger and greener from the effects of the COVID-19 pandemic.”

Alastair Welch, Regional Director at ABP in Southampton, said: “We’re incredibly proud to announce this major advance in our cruise infrastructure. This investment is a huge vote of confidence in the future of cruise and this next-generation ready cruise terminal places us firmly at the forefront of a growing industry.”

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Reflections and Predictions for Construction

Christopher Wareing is Director of Wareing Buildings and in this feature for UKCO he reflects on a year in construction as well as looking at what 2021 holds for it. 

“Though our year got off to a flying start, with the order book filled up to April as early as the first week of January, we succumbed to the same halt on operations as the rest of the industry in March.

“There seemed to be a mass panic in the sector when lockdown was announced; this was completely unchartered territory. Even during war times – that which has been so commonly used as a metaphor to describe this strange period we are living in – construction continued. But in 2020, there was an uncertainty that no-one had any experience of.

“In hindsight, though every day we weren’t active felt like a week, it was only a relatively short space of time before the government gave construction the go-ahead to restart. It’s heavily invested in developing UK infrastructure, so while the world stood still, construction did not. We were some of the lucky ones. Low interest rates enabled customers to gain the capital to continue with their projects, using the downtime of their staff as an opportunity to refurbish their premises ready for when normality resumed. Though we were sceptical about how many team members could safely return to work, within a matter of weeks we were back to full capacity because demand required it.

“A major hurdle – not just for us, but across the board – was the sourcing of materials. We manufacture our own steel products and are lucky enough to carry stock for three months’ worth of developments. Still, we are reliant on several different supply chains working in harmony to source the products we buy in, such as cladding. But our clients quickly learnt the art of compromise; they could either wait months for the exact product we specified at the start of the build, or they could have their project delivered on time using an equally high quality product that was more easily sourced, but was simply a different colour than planned. Communication became even more crucial to our offering. By conveying that we were pulling out all the stops to meet our clients wishes, it made them even more willing to work together with us, and our partnerships thrived.

“Our heritage is in agricultural buildings, and we’ve seen an even greater surge in demand for them as the country strove to become more self-sufficient. There were already rumblings of this before lockdown, as Brexit and no trade deal talks developed, but Covid-19 – and government grants for harvesting and food manufacturing businesses – enabled growers and processors to ramp up their offering. As a country, we became more reliant on home-based produce, and we were an integral part in helping household name food manufacturers to adapt, to grow and to supply in line with demand.

“It would’ve been naïve of us to rest on our laurels and not put some investment into futureproofing the business. We spent on new machinery and continued working on our digitalisation strategy to ensure we remained at the pinnacle of our sector. Before the lockdown, we had implemented Tekla Powerfab across the business which, almost overnight, made us much more efficient and has proven the best natural evolution for what we do. It has enabled us to retain a level of continuity and, despite Covid-19, we have achieved an almost 10 per cent productivity gain. unlocking capital which we set aside to protect our staff should the going get tough. Thankfully, it didn’t.

“Coronavirus has made businesses much more risk averse; they now know the world has the capability to change in the blink of an eye and they want to make safe investments. Rather than go to tender and welcome unknown suppliers to present their ideas, clients are increasingly relying on word of mouth. Trust, reliability, and tangible evidence of professionalism is driving decision making. Recommendations are the best form of marketing right now, and we’re eternally grateful to those clients who have been happy to pass on a good word about our service.

“Looking ahead, we see steel framed buildings playing a stronger role in commercial and industrial sectors. Online delivery has dominated retail, and to ensure brands can meet consumer demand, businesses are developing satellite warehouses across the country to get products to the end user faster than ever before. Additionally, more corporate organisations are considering the benefits of building pop-up, steel framed offices on industrial parks, rather than renovate dilapidated buildings or empty units on high streets which are teamed with higher overheads.

“We count ourselves lucky every single day that we as a business, and the industry as a whole, hasn’t seen the downturn in productivity that was initially predicted. Seeing other sectors crumble has been devastating, especially when you know construction and clever design played a strong role in their previous success. If the government continues to prioritise incentives which enable businesses to bring teams back, or create new roles, it will spark a new wave of economic activity which might see the country recover relatively quickly. This, teamed with a continual investment into construction which enables companies to modernise and find efficiencies, will drive employment and growth. How long that will take, time will only tell, but we are committed to playing a role in getting the country back on its feet.”

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Construction: 2020 to 2021 Review

Nick Sacke is Head of IoT and Products at Comms365. In this feature he looks at what 2020 gave construction, and what 2021 holds for it.

A majority of businesses across a range of sectors have faced unexpected challenges caused by COVID-19, and the construction industry is no different. Being brought to a halt earlier this year, the pandemic has had a significant impact globally on the construction industry, with projects being cancelled or delayed, a reduction in workers through social distancing measures, as well as supply chain disruptions.

Recent research revealed that over 70% of construction businesses experienced a decrease in turnover, and nearly 70% of business owners reported having to cease operations during the pandemic. However, nearly half of those have now resumed trading – in the hope that the construction industry will rebound post-Covid. As businesses face increasing demand and pressure to pick up where they left off, a new and innovative approach needs to swiftly be put in place ready for 2021 to ensure that they can meet expectations whilst supply chains remain contended, for the foreseeable future.

Meeting Optimistic Construction Targets

After months of on-and-off lockdown, the European construction industry is gradually opening back up and resuming both old and new projects.

In November, the Government announced a target of building at least one million new homes in the next five years, but following COVID-19, this is going to become a much bigger challenge. With increasing pressure on the construction industry to build new homes, as well as the uncertainty and resulting fluctuating values driven by COVID-19 and Brexit, the incentives for developers to build in the short term are reduced.

Additionally, the planned HS2 high-speed railway in the United Kingdom has been under scrutiny since 2009, and was originally due to open by the end of 2026, which has now been pushed back to 2029-2033. Construction on-site has now formally begun after months of working restrictions, but now with office-based employees urged to work from home and a reduction in travel, many businesses are questioning again whether or not the building projects should go ahead.

The Catalyst for Digitalisation

The pandemic has accelerated the use of digital solutions across healthcare, retail, and now construction. The construction industry has often hesitated in the past when it comes to embracing technology, avoiding investment into digital trends without proof of return. However, new and innovative technology is now essential to construction businesses in order to keep up with demands, changes and to meet the aggressive government targets for building projects mentioned above.

The digital tools available to construction firms have advanced rapidly, including drones, robotics and augmented reality, which are proven to deliver efficiency and productivity opportunities across projects – revolutionising construction field operations as we know it.

However, all of these innovations require reliable and high-quality internet connectivity at sites to deliver the full value of these digital solutions.

Underpinning the Construction Industry with Connectivity

To effectively deploy digitalisation at sites, the basic requirement of portable and reliable internet networks to support applications and collaborative processes should be the first priority, not the last. All sites must have access to portable, high-quality internet connectivity to keep pace with growing user demand, retain profitability, and to expand the use of digital technology at the construction site.

With instant connectivity upon deployment, businesses can benefit from the adoption of new technology, even in rural locations where there is often no existing connection. As internet connectivity is no longer restricted to fixed-line provision only, portable wireless units can be installed so that sites have a suitable communications resource that satisfies business Internet needs – irrespective of location. For example, a high-quality internet connection at site offers the possibility of patching through data from drones directly to application hosting servers, cutting down the time to generate, deliver and make available field survey reports.

Furthermore, advanced bonded Internet solutions enable organisations to add resilience capability to their connection to ensure business continuity for applications and ensure productivity. Precise performance management of the unit can be included, along with management of data usage, to ensure there is control over costs and quality of service delivery. This is highly suitable for immediate deployment situations; especially if Internet services are required last minute and on an urgent basis.

Conclusion

New statistics have found that the UK construction sector has shown positive signs of recovery after reporting the sharpest rise in monthly activity in almost five years. In order to keep this pace up, the construction industry must set aside outdated processes and management methods, and instead, embrace digital advances and adopt smarter ways of working and technology to bounce back stronger in 2021. Businesses have two choices: either embrace the cultural and digital shift, or risk falling behind and failing.

To be successful in this transition, sites should consider working with an ecosystem of experienced and trusted providers who can supply both the digital communications infrastructure and the technology innovations without retraining and hiring additional headcount. For construction firms willing to harness digital technology innovation, 2021 and the years ahead look more positive, due to the potential operational rewards that it can bring to their businesses and customers.

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Brexit and the Construction Industry

With free movement of goods and people coming to an end and in less than 4 weeks, the construction industry must come to terms with the reality of UK’s departure with the European Union.

The construction industry has been heavily reliant on foreign labour for skilled and non-skilled workers, which includes a decent proportion of EU,EEA and Swiss nationals that had the freedom to travel for UK in the UK whilst maintaining their residence in the home country. This will no longer be an option from 01 January 2020, as EU, EEA, and Swiss nationals that are not already residing in the UK by 31 December 2020 will be required to satisfy the requirements of the new points system to reside and work in the UK.

So, were fears that the new points system could limit immigration prove to be detrimental for the construction industry?

The new points system appears to have simplified the process of recruitment of overseas skilled workers to meet the demands of the industry. The government has lowered certain requirements for skilled workers and to reduce fear of global investors starting to take their money out of the UK market. Mentioned below are some of the key changes to the new points system.

• The abolishment of the Resident Labour Market Test (RLMT) means that employers are no longer required to advertise the job for 28 days to find a suitable settled worker in the UK. This would help recruitment of specialist workers from overseas and reduce the lengthy immigration process.
• The industry can now benefit from a reduction to the required skill level from RQF level 6 to lower skilled occupations at RQF level 3 allowing business to recruit lower skilled staff not available in the UK labour market.
• A reduction in the minimum annual salary requirement for overseas skilled workers from £30,000 to £25,600 (or going rate for the occupation, whichever is higher) will enable businesses to target a wider market overseas. A migrant may be paid a lower minimum salary of at least £20,480 per year providing they are able to trade points for other attributes to meet the requirements.

The table below shows some of the key occupations in the construction industry and the required salary (going rate) for each occupation.

Occupation	Job titles	Salary (going rate)
Production Managers and directors in construction	·         Construction manager ·         Director (building construction)	£34,900
Construction Project managers	·         Contract manager ·         Project manager	£28,700
Architectural and town planning technicians	·         Construction planner	£23,800
Construction and building trades not elsewhere specified	·         Property developer (building construction)	£23,000
Construction and building trades supervisors	·         Construction foreman ·         Construction supervisor ·         Site foreman	£31,400
Civil Engineers	·         Building engineer ·         Site engineer ·         Structural engineer	£35,000
Town planning officers	·         Planning officer	£28,500
Chartered surveyors	·         Building surveyor ·         Chartered surveyor ·         Land surveyor	£30,200
Building and civil engineering technicians	·         Building services consultant ·         Civil engineering technician ·         Survey technician	£23,400
Inspectors of standards and regulations	·         Building inspector	£26,600

We recommend that businesses in the construction industry apply to the Home Office to become approved sponsors, which will enable them to recruit specialists and skilled workers from abroad. We appreciate that not all businesses recruit workers from overseas; however, you may still be impacted if anyone in the supply chain requires overseas specialist workers.

It can take up to 8 weeks after submission of the application to become an approved sponsor, so time is of the essence given that freedom of movement ends after 31 December 2020.

You will be issued a sponsor licence for 4 years and can request a Certificate of Sponsorship (CoS) using the Sponsor Management System (SMS) for individuals.

Contributed by Ikram Malik, Business Immigration Law Partner at Aaron & Partners

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UK Infrastructure: A Year in Review

Andrew Barker is Director of Dalcour Maclaren. In this feature he takes a look at the rollercoaster year construction had in 2020.

The end of 2020 is nigh! For reasons I need not explain, it has become famed as the ‘year to forget’ right across the globe.  Mentally, we are so desperate for 2021 to be a clean slate; we all want to be positive and hope that vaccines early next year will start the ‘post-covid’ era.  And let’s hope it is an era to celebrate!

But when you look back at the 2020 rollercoaster, it is not all doom and gloom across the infrastructure sector.  Yes, there have been some knock-backs and hurdles, but there has also been a fair share of progress.  Clearly the sector is vast, and the activity is widespread, but here are the highlights in my calendar based on what we, at Dalcour Maclaren, have been working on:

January – Hornsea One Offshore Wind Farm was declared fully operational and took the prize for the World’s Largest Offshore Wind Farm with a generating capacity exceeding 1GW for the first time.

February – UK Government approved the £106bn HS2 Project.

March – On 11^th March, the government promised “the biggest programme of public investment ever” as part of its Budget for 2020, with planned investment in roads, railways, affordable housing, and broadband.

Just 7 working days later, on 23^rd March, the PM announced the UK wide Lockdown; and it arrived with a brutal thump.  Heathrow’s Third Runway and Gatwick’s Runways Extension Projects were both halted as Covid tore up their short-term plans.

April – Covid started impacting on Public Inquiries and Hearings as DCO programmes start to slip and increasing numbers of projects suffered delays.

May – Sizewell C Nuclear Power Station DCO application was submitted.

June – Crown Estate Scotland announced the launch of ScotWind Leasing, the first round of offshore wind leasing in Scottish Waters for a decade with the potential to deliver up to 10GW of total generating capacity.

July – Norfolk Vanguard Offshore Wind Farm DCO is granted allowing the development of 1.8GW of energy off the Norfolk coast.

August – following a window of hope in the Covid statistics in July, we all try to find a quiet little corner of England for a short respite from our home offices!

September – HS2 formally started construction as the main civil engineering contractors launched the first ‘shovels in the ground’.  (Previous works focussed on preparatory work including design, ground clearance and demolition).

October – Wylfa Newydd nuclear power station DCO decision is delayed for a third time.

November – Boris launches a ‘Green Industrial Revolution’ with his 10 Point Plan, closely followed by the National Infrastructure Strategy and then Rishi Sunak’s Spending Review where Infrastructure is put in pole position.

December – could be an interesting month!  2020 has seen 17 Nationally Significant Infrastructure Projects having their DCO’s granted with 6 further DCO decisions pending, some of which are long awaited but due by the end of the month.

Whilst 2020 has had its challenges, and I sympathise enormously for those working in sectors that have suffered the most, there are now vast opportunities out there.  Boris is starting to set the direction; ‘building back greener and better’ is the headline and the National Infrastructure Strategy is a start to putting the meat onto the bones and providing the certainty that investors require to fill a funding gap which will require more than a little Polyfilla!

Our Prime Minister is hosting the 26^th UN Climate Change Conference of the Parties (COP26) in Glasgow in November 2021. The climate talks will bring together heads of state, climate experts and campaigners to agree coordinated action to tackle climate change.  The UK needs to have clear plans in place well before then if we are to shine on the national stage and stand a strong chance of reversing the economic damage of 2020.

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Just When Business Thought it Couldn’t get Worse

Ongoing Brexit negotiations and a second national lockdown have added to the economic uncertainty many business owners are currently experiencing. With the recent Office of Tax Simplification (OTS) report doing little to lighten the mood, Simon Hughes, partner at leading law firm Taylor Walton, says owners should exercise caution before selling their business.

The report, the first to consider Capital Gains Tax (CGT) specifically, was undertaken in response to the Chancellor’s request ‘to identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent.’

In other words, the Government is looking for new sources of tax revenue to replace the billions expended on addressing the coronavirus pandemic and its impact on the UK’s economy. In the current political climate, targeting wealth creators is probably a vote winner, so be warned.

Tax grab to pay the COVID bill?

The OTS report makes suggestions that will fundamentally change the capital gains tax rules in the UK if adopted and any outcry proves no deterrent. One suggestion is to align CGT rates with income tax rates, which will significantly increase the tax paid when a business is sold.

There have already been mutterings from within Government that the money to pay the COVID-19 bill will have to come from somewhere and it’s unlikely to be another round of austerity, so we have to accept CGT rates will probably increase in the new year.

The news is another blow to those business owners considering a sale, having only just recovered from the reduction in March of the entrepreneurs’ relief (now Business Asset Disposal Relief) limit from £10 million to £1 million, with any balance of CGT payable at a rate of 20%.

If as suggested in the OTS report the rates are aligned in the Budget, this 20% rate would be increased to 45% and owners will pay a huge increase in tax following the sale of their business.

Keep calm and sell wisely?

Whilst the uncertainty around Brexit remains and the economic impact of the pandemic is expected to extend into 2021 and beyond, it may not be the easiest time to sell a business, but for those ready to sell, there remains a window for still extracting maximum personal reward from any deal.

There are many considerations for any owner wishing to sell, but if you are already in discussions with a potential buyer, it’s important at an early stage to require them to execute a Non-disclosure Agreement.

You should then only proceed to full legal documents once the prospective transaction is well-described in a ‘heads of terms’ agreement.

If you are trying to sell now before the potential hike in CGT, it’s critical to get the advice of experienced corporate lawyers who will ensure that as the seller you do not make easy or unnecessary concessions early on in the ‘heads of terms’ before the deal becomes binding.

With the right advice at an early stage, there is more likelihood of being able to get the buyer to commit to key points crucial in maximising the value you can generate, which might include:

• Cash at Completion: this maximises the up-front payment made to you and minimises any extended earn-out;
• Security for deferred payments: if any payments are to be deferred, it is important to establish what security the buyer can offer;
• Clarifying what the price really means: it is also crucial from the outset to properly describe the interdependence of price i.e., whether it assumes a cash-free, debt-free asset and whether a target level of working capital is required;
• Locked box vs Completion Accounts: proposing a Locked Box structure instead of completion accounts. This generally favours the seller by accelerating any asset-value disputes to a point, before signing the share purchase agreement, when you have more bargaining power, rather than after completion when the buyer arguably has greater leverage;
• Liability limitations: establishing the level of financial-based and the duration of time-based limits on the seller’s warranty liability;
• Buyer’s ability to fund: establishing whether the buyer requires third-party financing to complete the deal and whether that introduces greater uncertainty to the prospect of a deal;
• Timetable: setting timetable expectations and limits on any exclusivity period

These are just a few considerations and a conversation with an experienced corporate law team is likely to throw up a host more, but the key thing is to seek advice early in the process, long before you mention to anyone the possibility of selling your business.

If you hope to sell your business before any rise in CGT is announced next year, a law team will talk you through the process and explain what is possible in the time available to ensure you extract the maximum value from the sale, whilst making the process as painless as possible.

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Firm Gears up Waste Management Wake Up

adi Group has set its sights on transforming the UK’s approach to waste management in 2021. The group has been bolstered in expanding its presence, after it was revealed that a local authority in North West England has bought into its innovative concept of underground waste systems.

The new framework agreement will give all publicly funded organisations access to acquire the unique waste solution.

adi Group and its Waste Systems division is the UK and Ireland distributor of innovative underground containers from Sotkon. These containers present a smart, sustainable 21st century approach to waste management with the Sotkon containers aiming to paint an altogether sightlier alternative landscape to the thousands of wheelie bins which line the country’s streets.

Operating via a smart data system, the bins – which come in sleek, multi-coloured designs – send municipal waste underground into large capacity containers, improving on traditional domestic and street bin systems by eliminating unsightly overflows or overspilled waste.

For Mark Burgess, Managing Director of adi Waste Systems, the bins present a massive opportunity to transform a sorely outdated aspect of the UK’s sustainability focus:

“It’s simply astonishing that the UK hasn’t clocked on to the benefits of underground waste systems as yet.

“We all know the picture: unsightly commercial wheelie bins in city centres, overfilled with rubbish spilling out before collection day – this is a scenario that really shouldn’t be happening in today’s modern landscape.

“When you go on holiday in Europe, I know I for one am always impressed generally on how clean and aesthetically pleasing the city centre pavements are.

“That’s because popular destinations like Portugal, Spain and France have widely bought into and are utilising the underground waste concept, keeping city streets clean despite the thousands of tourists and residents that use them every summer.

“It’s high time the UK woke up to this and realised the smart benefits in going green with underground waste containers.”

Sotkon has already installed more than 36,000 of its large capacity 3m³ and 5m³ containers throughout Europe. By utilising smart tags and fill sensors, the system is able to notify responding waste management organisations when they are full. Usage data can be captured at the point of collection, and logistic systems communicated with to determine optimum routing, so that carbon footprint and emission reduction benefits are realised.

In the UK, adi Waste Systems already has over 450 units installed or planned in the near future at the University of Cambridge.

And with adi’s underground systems set to be adopted and expand more widely across the UK with the solution’s green and cost-reducing concept, Burgess heads into 2021 with a positive outlook:

“What we’re doing is highlighting how forward-thinking city authorities, just like the pending ground-breaking framework agreement in the North West, can really set a precedent across the UK for a positive and effective change on how to manage waste into the next decade,” he added.

“Local authorities, planners, architects and construction development organisations – these are the types of people that can plan cities of the future with these systems in mind, so that their sustainability initiatives are covered in all aspects, as well as looking at the more widely publicised concepts like electric vehicle charge points and such like.”

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Mixed industry outlook for architects

Just under a third of architects (31.1%) consider the outlook for the industry over the next three to six months to be challenging, with a further 3.9% responding that it was bleak. A slightly larger proportion, however, (36.7%) had a more positive outlook overall, considering the coming three to six months as either positive or very positive. 28.2% considered it to be steady.

These are the latest findings from SpecifiedBy, the specification-led marketing and product data specialist, as part of its first ever industry barometer. It will test the temperature of the industry and provide regular insight into market perceptions. The barometer leverages responses from what is the largest network of architects, specifiers and product manufacturers in the UK. New figures will be released to identify trends and address topical industry issues.

Positivity was highest among architecture firms with operations in the residential sector, although only with a slightly higher rate of respondents selecting either a positive or a very positive outlook for the next three to six months (35.3%) compared to those that saw it as challenging or bleak (34.9%). Architect firms with operations in the commercial sector came next with 34.4% of respondents selecting either positive or very positive, but 1.8% less than those that saw it as challenging or bleak.

The short-term outlook for firms with operations in the transport sector saw 19.7% more negative responses than positive. This was followed by leisure (14.2%), environment (11.9%) and civic and community (11.3%).

Although just a small proportion, the most bleak outlook was recorded by firm that have operations in the retail sector, with 4.7% of respondents selecting this option. The most positive outlook came from firms with operations in the hospitality sector, as 12.3% registered a very positive outlook, representing contrasting views from two sectors that, in general, have faced difficult lockdowns.

What are the top concerns for architects in this climate?

Unsurprisingly, the impact of ongoing COVID restrictions dominated concerns. These were split between the impact of the virus on business prospects (55.3%), working conditions, such as the need to work from home or the threat of increased employee sickness (41.7%), and supply chain disruption (37.0%).

The recession followed closely as a chief concern for 53.5% of the architects surveyed. With these factors creating an uncertain future, certainly in the short term, meeting annual targets was noted as a concern by only a fifth of those surveyed (19.6%). Keeping staff in jobs, on the other hand, was considered much more important with 35.0% responding that this was a concern that shaped their outlook for the next three to six months.

Other important issues for the industry received less cause for concern. New safety regulations are a concern for just 13.8% of architects, while digital transformation was cited by 11.2% and carbon neutral goals 10.2%.

Commenting on the findings, SpecifiedBy’s CEO, Darren Lester, said: “While the balance is fairly even, it’s still good to see that, overall, there are more architect firms with a positive outlook for the coming months than there are otherwise, demonstrating a buoyancy in the industry. We expect that this positivity will have increased too with promising talk of a new vaccine.

“Being able to operate digitally, whether sourcing and comparing products or attending CPDs online, has certainly helped our industry to weather the storm. While lots of industries are looking at digital transformation as something new, however, the truth is that architects and specifiers are already online and have been for some time – digitalised processes are more a way of life than a transformation.”

Opportunities for newly qualified architects

With economic conditions proving to be extremely challenging, the appetite for making new hires in the next three to six months is low. 40.9% of those surveyed responded that they intend to make no new hires in this period.

There was hope, however, for the next generation of architects. Almost a third of respondents (29.7%) said that they intended to invest in talent of the future by hiring either graduates or those with 2-5 years’ experience during this period, much more than any other experience category. This also represented 77.5% of all planned new hires.

Darren Lester commented: “The industry’s appetite for hiring graduates or those starting out in their career is incredibly reassuring. Our research gives hope not just to budding architects who, like millions of other graduates right now are facing one of the toughest job markets in decades, but also to the wider economy and ancillary trades the architecture industry supports.”

Competency testing

An area that gave rise to a lot of debate came when the architects were asked about new competency testing.

Two thirds of those surveyed stated that they did agree with the announced increase in mandatory competency testing (64%). Many noted that competency tests were important for evolving knowledge and keeping up to date with industry standards, especially in the light of Grenfell. Others suggested that the competency tests were not an adequate reflection of the professional proficiencies achieved in practice, and so were ‘a waste of time’.

41% of the architects surveyed felt that the RIBA was not the right organisation to be policing competency tests. Several respondents noted that ‘testing should be by an independent body’, with ARB mentioned on numerous occasions, as ‘not all architects are RIBA members’. One user wrote that ‘there should be a clear distinction between the licensing entity and any professional entity. RIBA can administer ARB’s requirements.’ Comments in support of RIBA included that they are ‘well positioned to monitor standards of professional practice’ and that they were ‘doing the right thing’.

On this issue, Darren commented: “It is clear from the split of opinion that there needs to be an approach to training and development that works for the whole industry, not just a portion.  Ultimately this needs to be of benefit to practitioners in their daily professional lives too. The positive take is that there are so many opportunities to engage in CPD programmes, not only from the various industry bodies but also directly with manufacturers. These are increasingly accessible through online learning too, making them more time efficient. Providing this choice and accessibility is the best way forward, and anything defined as mandatory should uphold this level of flexibility.”

The SpecifiedBy Architects Industry Barometer surveyed 903 architects.

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Brexit Challenges and Opportunities for Construction

Emlyn Hudson is a partner and national head of construction at Gateley Legal.  He deals with a full range of complex construction and surety work. In this feature, he takes a look at the challenges and opportunities the UK construction industry may face when it leaves the EU.

A construction project depends on a number of parties coming together to deliver the finished result.  Without doubt, Brexit will put additional pressure on these parties and any slippage on time, cost or quality could give rise to potential disputes.  There is also concern that Brexit could stretch companies’ cash flow to breaking point, in what is already a challenging market. It is therefore important to be proactive in assessing the implications that Brexit could have on a particular project and what contractual safeguards can be used to mitigate these effects.

Most standard form contracts have a change of law mechanism within them.  JCT Design and Build 2016 entitles the Contractor to a Change for any variation to Statutory Requirements after the Base Date that necessitates an alteration or modification to the Works. NEC4 ECC has the optional secondary clause X2 which allows the Contractor to claim a compensation event for a change in law.  In respect of any claim, there is always an obligation on the Contractor to notify these changes in accordance with the contract, and most importantly to mitigate their loss.  As such, it is important for Contractors to be proactive in managing these risks upfront and doing what they can to work around these changes.

Fluctuation provisions may also assist a Contractor in making a claim for additional monies. JCT Design and Build 2016 contains options for fluctuations, that apply if selected in the Contract Data.  If these provisions are included, this may allow the Contractor to recover increased levies, taxes or costs that are imposed.  NEC ECC allows price adjustments for inflation through the optional secondary clause X1.

The difficulty with these existing contractual mechanisms is that they do not fully address all of the risks that may potentially arise from Brexit (and are not always agreed to by the Employer).  A lot of the effects of Brexit are indirect, such as a shortage of labour and the potential for this to give rise to delay and additional labour costs.  This would not necessarily be caught by a change of law provision.  Similarly, Brexit may lead to the lack of availability of key products and delay at border checks, which would not be covered by a fluctuation provision.

Due to the potentially widescale implications of Brexit, it is common for Contractors to seek a “Brexit clause”, to address their specific concerns.  There is no standard wording in relation to this in the marketplace.  Much depends on the particular risks within the project, its commercial implications and also the bargaining powers of each party.  The difficulty with Brexit is that the practical implications are still uncertain and neither party wants to take the risk of something that they cannot control or predict.

As such, a range of possible approaches have emerged in negotiations. Some parties may agree to an extension of time for Brexit-related delays; or there could be a trigger event that could give rise to a right for either party to renegotiate key terms.  If the project is dependent on tight timescales or a specific product, there may even be a right to terminate arising from specific events.  This is important, as it is considered that the common law rights of frustration and force majeure will not be available for events directly arising from Brexit.  All these matters are likely to be hotly debated in negotiation and will not always be possible to agree upon.

It is prudent for Contractors to consider what other options are available to them in addition to their negotiation of key legal terms. Contractors should consider factoring additional time to their programmes and including any charges, taxes, quotas and tariffs in their tenders and pricings.  This requires careful due diligence from Contractors when scoping their work on projects. Also, Contractors are probably better placed in contractual negotiations if they can expressly identify upfront what their key risks are.  This allows them to be discussed and addressed in a more measured way within negotiations, before they arise in practice.  It is also more important than ever for Contractors to proactively manage changes, so that they do not escalate into disputes.  The parties are well advised to establish key points of contact to resolve or take action on issues rather than allow them to build up.

There are challenging times ahead and the uncertainties arising from Brexit will no doubt continue until new processes have been established and working practices have adapted.  The resilience of the UK construction market is yet again being tested but has shown its capability to adapt in the past and no doubt will continue to do so.

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