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SPEECH BY SIR MICHAEL LATHAM DL, AT
CITB-CONSTRUCTIONSKILLS SPONSORED MBA,
MANCHESTER BUSINESS SCHOOL

28 NOVEMBER 2005

Thank you, and good afternoon. I’m very pleased to be here today at Manchester Business School, reviewing the progress of the CITB-ConstructionSkills sponsored distance-learning MBA for construction executives. Manchester Business School is a strong institution with an internationally renowned reputation, which does not recognise any academic-vocational divide. It will provide an excellent base for the CITB-ConstructionSkills MBA, and I wish the course every success, both students and academics.

The construction industry is going through a period of extraordinary growth. There is much discussion about the Olympics and their workload will be significant. £2.4bn will be invested in world class sporting venues, in homes, facilities and parks throughout the Lea Valley. However, the Olympic impact will not only be felt in London. National teams from many nations will be training for weeks in advance all over the country. Regionally, there are also major programmes throughout the North West on the horizon, including the 35-story tower block at Manchester’s Spinningfields and a massive regeneration programme in Liverpool.

And that is only part of the story. In fact the building boom will touch the entire country: 100 new hospitals by 2010, a massive school building programme, major new housing and infrastructure developments of the government’s Communities Plan – a million new homes by 2016. And that is just in Britain – we mustn’t forget that many of our MBA students work in practices across the world, with their own construction programmes.

Manchester, a great city, has much of which to be proud. It is a model of successful construction. The city centre building that took place after the IRA bomb in 1996 provides a beacon to us all on how partners and contractors can work together to create a built environment of which the community can be proud. The City Council understood the central way in which the rebuilding would affect what the city could become. And now, Manchester is building skyscrapers. When Will Hutton, a visiting professor here, talks about a city as an ‘ideopolis’, he fully understands the importance of the built assets in creating the ‘value’ of a city.

As we stand at the threshold of this massive period of construction, we need to ask ourselves if we will create a worthwhile legacy. The changes to the fabric of our communities that will take place over the next ten to fifteen years will leave their mark for generations. Most of the buildings will last for up to 50 years. Many may well be being used in 100 years time. And the infrastructure will shape the way that our communities live and work.

Partnership and working together are the foundation stones of the construction industry. At every stage of a new building there is a need for co-operation if we are to create the best buildings, which are right for their communities, which are sustainable and which are at the right cost. The client and the designers have to know what they want and work together to create it, with the central involvement of the integrated construction team to achieve best practice ‘buildability’ and value management. Integrated teams produce quality buildings, to time, specification and cost. It’s all about partnering – something increasingly demanded by top clients, but almost unknown in this country ten years ago.

Our industry faces demanding challenges, with the need for integrated teams and partnership, with massive growth and significant projects on the horizon. There’s a lot to do to close the productivity gap. Construction remains a fragmented industry. It needs to improve its performance significantly in areas such as health and safety, quality and cost over-runs if it is going to provide best value in the long term. The skills shortage we have to tackle is not only among craft, trade and technical workers but we also desperately need the management and leadership skills that the MBA here in Manchester is all about. The industry’s medium term skill requirements are significant – around 400,000 by 2007, of which 16,000 will be managerial roles. In fact the need for skilled managers in the industry is one of the biggest employment challenges we face.

We know that continual on-the-job training is key to raising the performance of companies. But we need to do more to achieve it. We need better managers to link up supply chains. They have good technical, practical and legal skills, but many still lack the soft skills they need for successful partnering. Such skills were widely regarded as alien or even threatening quite recently, and in some cases they still are. Continuous Professional Development and graduate training remains patchy, particularly in small companies. We need to develop the management and leadership skills of construction managers in supply chains.

The 1990s saw a 40% decline in university degree applications. After much work both by CITB-ConstructionSkills, professional institutions, and the industry to improve awareness of the excellent career opportunities available in construction, applications are starting to increase. But they are still 30% down on the level of the mid 1990s. The construction industry has more to do to work with Higher and Further Education to attract and train the leaders of construction and design of tomorrow.

To meet the challenges, we need to urge employers to see training as integral to a company’s business planning. Managers need to become more effective leaders. The industry must embrace a culture of continuous improvement so as to ensure our performance is improved and client needs are met. The skills imparted in an MBA course will be vital in that regard.

In today’s highly competitive market, successful organisations must be open to change if they are to maintain business advantage. Being forward looking and receptive to new ideas are essential elements of continuous improvement. The Olympics programme won’t be best practice if we just try and deliver more construction in the traditional way. What is required is a best value approach based on partnering and integrated teams, with higher standards of work, better contractual relationships, avoidance of adversarial relationships, and a greater commitment to training local people. Top class clients are insisting on such approaches now. I hope the Olympics clients will do the same. It is essential they do so. And the industry must respond.

Construction has long led the way in recognising the need for investment in training across the sector by supporting a training levy and a grant scheme which goes with it. These go back to the mid 1960s. As a new development this year, leading industry employers have supported ConstructionSkills in providing the first Inspire Scholarships for students undertaking construction-related degree courses, with shared financial support for the students. The development of ConstructionSkills, as a Sector Skills Council, is part of that story of the construction industry’s commitment to training. We are at the interface between industry, academia and the workforce, delivering skills and training.

ConstructionSkills is a powerful force in meeting the productivity and skills challenge. Since its inception as an SSC two years ago we have made progress in securing sufficient recruits of the right calibre, in ensuring that our existing workforce is trained to the necessary standard, and in helping the industry improve its performance and productivity. By hammering away at these challenges we will ensure that we achieve our ultimate goal – a world class construction industry across the whole perspective, not just a few stars.

On all fronts we are building the framework to support skills building. We are piloting GCSEs in Construction, addressing the task of increasing the industry’s existing skills base – with the goal of bringing 250,000 employees up to N/SVQ Level 2 by 2010, seeking to halt the decline in undergraduate applications with our Inspire Scholarships, and now the development of the MBA.

The Architect Sir Terry Farrell recently made a good point about the industry. He said “urban design is a funny thing because it can be done by so many people from different professions from different educational backgrounds.” That wise observation goes a long way to explain why we need a culture of continuous learning and improvement, and an embedded ethos of partnering. The industry holds within itself a wide range of skills. It is the central responsibility of ConstructionSkills to create the framework which will increase and maximise these skills. The industry needs the best people working to the best of their abilities.

We recognise and welcome the role that universities can play in delivering highly educated exceptionally bright and skilled graduates to our industry. The MBA here is central. It sits alongside other initiatives at this level such as our approved training schemes, and the Management and Leadership Framework that has been developed for the industry to benchmark industry and company management and leadership skills and their effect on performance.

CITB-ConstructionSkills saw the need for an MBA programme that prepared construction managers to provide leadership in an increasingly competitive environment. With Manchester Business School we set about creating it. Manchester Business School has all the right credentials –academic strength and a reputation for excellence, global reach and a long standing association with the construction industry. Together we now have a programme that meets the demands of the industry – it is world class, it facilitates networking throughout the supply chain, and it remains flexible enough to allow employees to continue their careers whilst they develop their skills. It is both practical and relevant to the particular needs of managers and their clients in the construction sector.

The MBA provides real career advantages for construction executives who are in or moving towards general management. Participants learn fresh management skills, build their critical faculties and grow in confidence. Everything they learn can be directly applied in practice, not just be in the pages of a text book. The programme equips managers with the skills to address the challenges facing the construction industry, whilst retaining the broad management focus of an MBA.

The MBA helps firms improve their competitiveness. Benefits, and return on investment, can be seen by individuals and corporate clients, through immediate application of new ideas, strategies and skills. Companies get managers who have international and organisational knowledge and awareness, and who are developing the skills, experience and tools to drive their companies forward. Because the MBA is tailored to meet the needs of each company – working around busy periods, focusing on the real skills needs, down on the ground – it has the right level of practicality for our industry.

I know that the CITB-ConstructionSkills and Manchester Business School MBA will act as a beacon of good practice to encourage further collaboration between Higher Education and industry. As with all the best things, its results will speak for themselves. And I wish all who are involved in it every possible success.

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