CIOB urges reform to reshape ‘volatile’ construction landscape

The Chartered Institute of Building (CIOB) is calling for structural reforms to reduce volatility in the construction sector.

In a new report called Capacity Constraints in Construction: Rethinking the Business Environment, the industry body has warned that current conditions are undermining the industry’s ability to meet government housing and infrastructure targets.

The CIOB said the sector may have to expand by up to 40 per cent to deliver Labour’s 1.5 million homes pledge and support decarbonisation across the built environment.

But it argued that long-standing problems such as labour shortages, persistent insolvencies and fractured delivery models will prevent firms from scaling up unless the business environment is reshaped.

This morning’s report, compiled by economist and construction analyst Brian Green, aims to show policymakers how systemic volatility – rather than the behaviour of individual firms – is driving industry instability.

“Construction is regarded as the most volatile major sector of the economy,” he said. “Firms shape themselves to withstand swings between too much work and too little resource. It is inefficient and debilitating.”

Green added that the new report “takes a different tack” to previous studies, which he said tended to focus on symptoms such as poor training or adversarial contracts.

Lee Bryer, research strategy lead at the Construction Industry Training Board, said: “This report offers a different lens. Rather than seeing construction as dysfunctional, it presents the sector as rationally adapted to a dysfunctional environment.”

The CIOB report outlines five areas for reform: reducing volatility, improving data, enhancing policy effectiveness, aligning government objectives, and increasing innovation adoption (see boxout for more information).

But the industry body’s head of policy and public affairs David Barnes said the proposals will fall short unless the government tackles core issues such as fragmented pipelines and short-term policy cycles.

Green’s report said the institutional framework guiding construction is “bewilderingly complex”, with more than 20 government departments and agencies involved but no overarching strategy.

This lack of coordination fuels uncertainty in planning, slows delivery and perpetuates boom-bust cycles that leave contractors unable to plan or invest.

Labour pressures – especially an ageing workforce – compound the issues facing contractors, the report said.

It warned that without lasting reform, the industry risks repeating the failings of past booms.

“This does not deny the need for short-term fixes,” CIOB president Paul Gandy said in his foreword to the report.

“But the eyes of the industry and policy makers should be on the long-term… All too often the opportunities from construction upturns have been squandered or lost.”

Source: CIOB