CLC: COVID-19 Cost Assessment Toolkit launches
July 22, 2020.
The CLC’s latest toolkit provides a much needed methodology for assessing the cost implications due to the pandemic. Paul Beeston, RLB Partner and part of the working group driving the work for the CLC’s COVID-19 Taskforce, explains the impact of COVID-19 on productivity and the opportunity for reinvention.
Productivity in the construction sector was somewhat of a conundrum before COVID-19. It had stagnated for a prolonged period of time. Move on to 2020, and the pandemic has affected the site output that can be achieved. Compliance with Site Operating Procedures (SOP) has reduced the amount of workforce across most sites and impacted the efficiency with which they can safely work.
Affect on Costs
Productivity has a direct bearing on construction costs. However, the position is nuanced; the industry is concurrently reacting to the inflationary pressures of productivity and the deflationary impacts of market conditions.
Productivity manifests itself in three main areas of cost; preliminaries, labour cost per unit of output and risk. Preliminaries are impacted by both prolonged construction periods and the additional costs of SOP compliance (welfare, cleaning, PPE etc). Labour productivity results from disrupted working practices including social distancing and material supply chain disruption. Risk adjustments will be made by contractors in response to the allocation of COVID-19 related risks by clients.
Dynamic and Discriminating
To further compound the complexities, the productivity impacts are variable depending on external factors, the stage of a project and the typology of project. Consideration needs to be given to the “labour density” by trade and building type. This will inform the overall impact on a project, along with the nature of the work; lone working or multi-gang activities.
The Real Affect
The affect of productivity is not just on actual cost per unit of output (the cost of your project). The problem is often compounded as productivity also has a drag affect. It slows construction spend impacting financing costs, return on investment, and for public sector targeted investment spend – the pace at which the benefit of pound notes can be pushed into the Real Economy.
Restart and Reset
The Construction Leadership Council’s (CLC) Roadmap to recovery provides some useful guidance on a sector plan to recovery. Productivity is one of its “Reset” strands and I am really pleased to have been part of the working group, alongside other industry colleagues, driving this area of work forward for the CLC’s COVID-19 Task Force. So, what can be done to negate the impacts of COVID-19?
Firstly – understand the impacts. Measurement and forecasting will assist. The CLC has published a toolkit, one of the tools contained in it will give insight to the cost of productivity.
Secondly – design out constraints where possible; “designed out” both literally and in project processes. Understanding the productivity impacts of COVID-19 on an individual project should influence procurement decisions including risk allocations. Whilst two-stage procurement typically falls during recessions, now more than ever clients will see demonstrable benefits from early engagement on buildability. Savings generated through productivity gains are likely to yield better results than those wrung out of a broadened supply chain tender.
Modern Methods of Construction (MMC) can certainly help as part of the solution but recognise that some of the challenges of MMC are likely to be compounded in a COVID-19 era (investment requirements and supply chain resilience to name just two). MMC is a broad church, and don’t limit thinking to full on 3D structural units (Category 1). Principles of Design for Manufacture and Assembly (DfMA) can certainly help productivity as well.
Reinvention is a potential positive legacy of COVID-19. I have seen the industry respond with ingenuity and collaboration through the ‘Restart’ phase. As we move beyond this phase, there may be a positive legacy of the pandemic, and that is certainly a theme running through the CLC Roadmap. A focus on the root cause of productivity challenges for the industry will improve productivity in the long term.
To address this, I have three thoughts for the reinvention of the productivity dilemma:
- Engrain in teams the mantra that productivity directly impacts cost – understand why and by how much,
- Take time to consider how to build what is being designed – early and often,
- Embrace the creativity of construction – it should enhance, not dampen design intent.
The Construction Innovation Hub’s Value Toolkit – supported by the CLC and published last week – provides a methodology to help take out waste before it is created. When combined with a ‘reinvention’ of productivity challenges, we may finally help clients deliver more with less.
Such an achievement would have a positive impact on our economic recovery and allow us to deliver projects with greater value. I look forward to more productive times ahead.
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