A succession of governments and Prime Ministers have to date been unable to unlock one of the biggest societal problems facing the UK currently – there are vastly insufficient numbers of suitable houses for the existing population, and with immigration also increasing the problem is getting worse. The incoming government has identified a target of delivering 1.5m new homes. How can the industry help make this a reality?

The average number of homes constructed per year varies, but for any set 4 quarters it appears to average out at around 175,000 – 200,000 per year. The majority of these are constructed for private enterprise though – the number of houses constructed by local authorities or housing associations and by conclusion available to the less well off in society in the 23/24 financial year was only 45,000. The government’s target is 300,000 houses per year, so as a starting point we require and immediate 50% increase in completions. However this still does not address the fundamental problem of providing affordable housing – and with house prices and construction costs ever increasing the affordability issue is going to become even trickier to solve.

Finding land is of course the first challenge in terms of solving this problem, and there must be a drive to focus on brownfield sites rather than develop on new land for sustainability reasons. However, a recent analysis by CPRE has shown that there is potentially land available in England for 1.2m new homes currently, and with additional brownfield land becoming available every year it is feasible that the government’s targets could be met without requiring any greenfield land at all. Of course this is a simplistic analysis in that the available land may not be in areas where demand is the greatest, but it should be the start of an urgent discussion – how much of this land can immediately be designated for urgent housing? A crisis by its very nature demands urgent action and we in the construction industry are ready to mobilise quickly – by urgently unlocking large amounts of available land the government can potentially push the button on a sizeable percentage of their 1.5m target while discussions progress on finding land for the remainder. 

Financing is another major obstacle towards allowing the government to achieve their goal. Construction cost for social housing in particular will of course vary depending on geography, but a 2024 report by the Centre for Economics and Business Research suggested an average construction cost of £120,000. However, the report also indicated that the cost of the construction is in fact lower than the socioeconomic benefits generated from housebuilding significantly outweigh the costs. The issue therefore is finding the capital to fund the necessary build programme, and this is where the private sector may be the most efficient way to solve the problem – if the private sector funds the build repaid in rental income over a number of years, this will allow local and central government to enjoy the benefits – rather than wait for central government funding streams, private sector finance will also allow construction to start immediately.

Finally, the quality of housing must be addressed – with the government having a legislative target to achieve net zero by 2050 any new housing stock simply must be carbon neutral as a starting point otherwise this target will become increasingly impossible to achieve. This is where the industry comes into its own – the innovation in this sector over the past years has been substantial, with proven technology allowing carbon neutral homes to be mass produced on the scale demanded by the government’s challenge. This will also help the government solve a second problem – using this technology the costs of heating homes will be close to zero, so the current political challenges relating to winter fuel payments could potentially be a thing of the past.

In short, the government has set a challenging but also essential target in relation to the housing crisis. To achieve this target, challenges in relation to  land use, finance and sustainability must urgently be resolved. The good news is that the solutions are available in the current market though. To use an analogy suitable for a successful Olympic year – the construction industry has done all the training needed and is waiting at the starting line, just waiting for the gun to be fired.

When the Latham Report was published, the intention was to move away from the more confrontational attitude of the construction industry where contracts were largely characterised by dispute and move to a more collaborative approach. There were 15 recommendations made in the report which ultimately sought to use partnering  to bring significant benefits by improving quality and timeliness of completion whilst reducing cost. Thirty years on, has this been achieved?

The advent of the NEC form of contract has certainly been a step in the right direction in terms of establishing the basis for collaboration – it is written in plain English and intended to clearly set out the obligations on both sides with clear dispute resolution processes should the need arise. However, in major projects there has been a tendency to look to significantly amend the contract with multiple “z” clauses to protect either party’s interest from a risk perspective. For example, contractors have looked to include additional compensation events for project related events, or clients have looked to reduce their liability in areas of the Scope. While it is certainly beneficial to agree these terms in advance, are they really necessary? If the Scope is not clear, is it not incumbent on the client to rectify this pre contract, and looking objectively are the additional compensation events not generally covered by those already stated in clause 60? The trend towards using z clauses appears to be a step back to a more legal approach, regularly causing delay in signing contracts and maybe using the NEC contract on its merits and relying on clause 10.2 would get projects to site quicker.

One general perception of the process is that contractors are always looking for variations in order to improve their returns, and clients are looking to minimise variations in order to minimise the risk of overspend. This is potentially unfair on both sides – clients have a fixed budget that they must adhere to and manage, and it cannot be disputed that contractors are due to be paid for any additional work which is carried out on a project. However, the process under NEC to manage variations is time consuming (takes 6 weeks to implement a compensation event) and still somewhat confrontational as the Project Manager who is generally employed by the Client under the contract makes the final decision on whether a CE exists and can also unilaterally define the cost of the CE. While the Contractor then has recourse to seek adjudication under the contract, there is a cost to this to be paid by one party and that would add a further 4 weeks to the programme. 

The intent to clarify the situation for both parties post-Latham is clear, but in reality this does not always occur. For example where a CE is notified based on a change in Scope instructed by the Project Manager – if an architect provides an amended drawing which alters construction details, is this a CE as defined by clause 60.1(1)? Under the contract, it could be at least 6 weeks before the CE process is confirmed – in reality decisions are often made to continue with works in lieu of following the defined process, but this leaves contractors at risk as they are asked to continue with works with costs undefined, and following a process where the Project Manager working for the Client can decide the costs of this work.

While the industry has made great strides towards collaboration, there is still work to be done to fully achieve the aims of clause 10.2, although with intent there from both sides to look for solutions hopefully progress will continue in the coming years.

Unfortunately, the reputation of the construction industry in the wider public sphere is often defined by perceived failures – for example in the transport sector in Scotland  considerably more airtime was devoted to Edinburgh Trams rather than the Queensferry Crossing. All projects are judged by the trifecta of time, cost and quality, but very rarely when targets are set for all three at the strategic phase are all met at the end of construction. There is a myriad of reasons for this, but are there any common themes which recur and could potentially provide lessons learned for the future?

One crucial factor which must be considered is realism at the strategic phase – for example cost plans will make allowances for contingency, inflation and optimism bias but these tend to be based on simple industry standard percentages. Also, the initial strategic programme is generally founded on a project manager’s experience of previous delivery timescales for design, approval, tender and statutory consents. There may be significant benefit in a much more significant analysis of both even before the first line is drawn on a Revit model – how complicated is the design going to be? Will there be areas of the building which will take longer to construct or fit out than a standard construction delivery model? 

Change control is another major reason why projects go over budget and behind schedule. Every project has a change control process, but the simple fact is that the suggestion of a change causes potential delay as there is uncertainty as to instruction. Often change control becomes necessary due to errors in the brief – maybe existing building information or site information was found to be incorrect, or assumptions made in terms of client requirements are found to be erroneous. Would there be a benefit, for example in having a “change control phase” before the sign off for the brief i.e. a full analysis of any gaps and decisions made as to where any potential change may occur? This is often captured within a risk register, but by simply listing it on the register that is deferring any action into the next phase – where possible decisions should be made before the brief is agreed so there is no lack of clarity from any party on what is to be designed or constructed. 

The main other aspect where change control can impact a project is client change, which can be harder to control for the professional disciplines. However, it may be worth looking at the lessons learned stage for projects as to whether any of the client change could have been avoided or whether it was simply due to external circumstances e.g. COVID 19. In the event that more time had been allocated to the briefing phase, would this have reduced the likelihood of change? Of course every project is different, but it may be a question that is worth asking.

In fact, lack of clarity tends to be the underlying theme for the majority of issues relating to projects being delayed or running over budget – if designers are not 100% certain of the client’s requirements or the conditions on site, they require to make assumptions which may be incorrect and lea to redesign and/or delay. If there is a lack of clarity on the construction drawings or the formal site information, the contractor is obliged to make decisions at tender stage, either pricing for risk or allowing for potential delay. 

Given the fluid nature of projects it may be a utopian solution to have a project brief which to 100% clear, defined and signed off followed by a set of design drawings and site information which is in the same condition. However, every step that is taken to increase the percentage towards 100% will pay benefits later in the project by reducing unknowns and potential impacts on programme and budget, so it may be worth considering that a small amount of extra time in weeks 1-4 may indeed prevent the need for weeks 80-100 at all.