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ACT-UK: OFFICIAL LAUNCH 25 JANUARY 2007

SPEECH BY SIR MICHAEL LATHAM, DL,

CHAIRMAN, CONSTRUCTIONSKILLS

Good afternoon ladies and gentlemen. I’m delighted to be able to be here today, to witness the launch of this incredibly innovative training facility, and offer what I feel is a whole industry perspective on the impact that ACT-UK could have on site management training. Sadly, I can’t offer you visual fly-throughs or Virtual Reality 3-D during this particular speech, but what I do hope to be able to offer you is a vision for the future of the construction industry that these cutting edge developments can provide.

Before I start, I must confess a long-term interest in the whole idea of virtual construction simulations. When I was taking evidence for my report in 1993 I was asked to go to Reading University to look at their virtual reality experiments which were based on the work of Boeing in constructing aircraft. I was impressed by this and reported it to my assessors at the next meeting. The two assessors representing main contractors and professional consultants both said that this was the technology of the 21st century, that architects and engineers could not afford it, and clients would not pay for it. However, the two client assessors both said that they might very well be prepared for it if it improved the performance of their construction project and also because the software was certain to fall in price. So I put something in my report praising the whole concept. A few months after my report was published, in early 1995, I was in Cardiff and shown the virtual reality work being done by the County Schools architect and over the next two years I saw further examples, some of them done by very small firms of consultants at minimal cost to them. So something which was too expensive in 1993 had become quite normal by 1996. It is never a mistake to invest in technology. After all, when I left Parliament in 1992, no MPs received e-mails. Now they get dozens every day.

Perhaps naturally, this interest in the impact of technology on construction training comes out of the many years I have spent working within the industry, and the opportunity that both I and my colleagues at ConstructionSkills have had in that time to examine how the industry is changing, and where it needs to change even more to meet client demands.

As many of you may know, when I was commissioned by the UK government nearly 14 years ago to look into ways of working within the construction industry, the picture was a very different one. Relationships within the sector, whether between client, contractor or subcontractor were often adversarial, leading to frequent, damaging disputes over liabilities and large amounts of time and money being wasted on litigation. The outcome was a situation which benefited no-one – with clients not receiving the levels of service and delivery they had every right to expect, and issues such as cashflow and slow dispute resolution having potentially devastating results on businesses throughout the supply chain.

The key aims of my 1994 report, Constructing the Team, were to look at ways of reducing this adversarialism and increasing the spirit of co-operation within the construction industry, whether through legislative measures, or through rethinking the way that the industry had traditionally worked. And I’m pleased to say that much has changed since its publication – from improved guidance, to better communication with trade and professional bodies, to the introduction of laws to guarantee rapid interim adjudication of disputes and minimum standards for payment procedures.

The most important aspect to come out of the report, however, was the concept of partnering. No longer was a construction project to be a case of ‘every man for himself’ – the industry could only improve by working more effectively through the supply chain as a whole, and truly embracing collaborative working. The report recommended a specific duty for all parties to deal fairly with each other in an atmosphere of mutual co-operation and underlined a firm duty of teamwork for all partners involved.

Thankfully, the industry has embraced this concept, using it to great effect on many of the UK’s most successful construction projects to date. Indeed, the cultural shift has been such that we no longer need to convince the industry of the benefits of collaborative working, which are evidenced every day; the challenge now is to do it better and to cascade these practices further down the industry, to make them second nature in everything we do.

It’s partly because of this need to champion partnering that ACT-UK is so important – a beacon of partnership, collaboration and innovation. Not only does it champion partnership and collaboration as part of its make-up – working closely with the public sector, industry bodies, educational establishments and representatives from private companies – but through the innovative use of technology and a real understanding of the modern day industry, it will enable the current and future managers within the workforce to experience successful, collaborative working at first hand.

All of this is vital, because the need for the construction industry to be at the top of its game has never been greater. We have a large number of high profile projects we need to deliver on time and to budget – from the Olympics and the Thames Gateway, to major ports developments at Shellhaven, Felixstowe and Harwich, to mention but a few.

These projects will need to be delivered by an industry that is still highly fragmented – made up almost entirely of small and medium sized businesses that only come together on major projects. And all of this has to be done at a time when the industry is under increasing pressure to deliver on sustainable, environmental and social challenges - from the £60,000 house, to the zero-carbon home.

In an industry where the smooth flow of the workforce has always been as much of a success factor as the smooth flow of cash, as the clients demands change, so does our need for high-quality, skilled employees. The Blueprint for UK Construction Skills, published by our own Construction Skills Network last year, predicts that the industry needs 348,000 new recruits by 2010 – an average of 87,000 new recruits every year. What’s more, those recruits will not just have to be at trade level – our research predicts that almost half of the workforce requirement will be made up by managers, architects, engineers and other design and technical professions.

This clearly means we need to be thinking now about the real need for new entrants to the industry, and up-skilling the work-force we already have. Migrant labour should only be seen as a short-term option – we need home grown recruits to ensure a successful construction industry in the future. Those recruits in turn need to be offered some form of site-based practice to ensure they become fully qualified. In particular, those already in the industry where there is a high demand for new skills – such as the requirement for project and site managers to understand the growing sustainable, environmental and social challenges faced by complex developments – need to be offered the chance to improve their skill set now.

There are lots of good examples of this type of work already in progress, and I refer here to some of initiatives managed by CITB-ConstructionSkills, and now even more so, in our role as the Sector Skills Council for the industry. Indeed, there is now widespread support for site and project based training: the National Skills Academy for Construction is built around this concept, providing site-based training up to Level 3, on major construction projects around the country.

With such high recruitment targets to meet, we’re also looking at new routes to get people into the industry at entry level. One of the issues I highlighted in Constructing the Team was the fact that women and ethnic minority recruits were seriously under-represented in the industry, potentially exacerbating our existing skills problem. I’m delighted to say that since then, thanks to a range of programmes and publicity such as our Positive Image campaign, this issue has begun to be addressed, and numbers from these target groups are rising all the time. Though in an industry of some 2.4 million people, major change will take place over a long period of time.

However, as construction becomes a more popular career, we need to make sure that every suitable young person who wants an apprenticeship has access to these vital on-site placements. That’s why we’ve also developed a supplementary route to the traditional apprenticeship – the Programme Led Apprenticeship – which provides a new way to give young people on-site practice by placing them through the supply chain of major projects. It also enables businesses who may not be able to make a three year commitment to take on an apprentice for a shorter period of time.

For our existing workforce, it is also now widely recognised that many construction managers may have excellent technical or practical skills, but lack the ‘soft skills’ they need for successful partnering – and that training is the best way to overcome this. Not only have we responded to the needs of the industry by offering extremely popular courses in management, leadership and sustainability at our own training facility, the National Construction College, but ConstructionSkills has also established a fund of two million pounds per year to provide additional relevant management and supervisory training, supported by federations such as the National Federation of Builders.

All of these developments are laudable, and lead us on to the role of ACT-UK could play within the industry. To date, it has always been on site where our managers have developed their skills, guided by experienced senior managers. Whilst this can and does produce some outstanding managers, especially within the context of a supportive HR policy, as a process it has many shortcomings – not least the health and safety implications, and impact on profit margins of any mistakes made as part of the learning process.

The proposed Building Management Simulation Centre at ACT-UK will be able to take this approach to training into the 21st century, by re-creating the very best of site training conditions, in safe, controlled and repeatable conditions. Trainees will be able to take on realistic problems in a realistic environment, and test their management, decision making, communication and partnering skills in a controlled situation where performance is measured and supervision is by the best site managers. And from the experience of the Simulation Centre in Leeuwarden we know that the approach not only works very well, but at a profit.

ACT-UK is not just about virtual reality simulations, however. In a move that I’m particularly delighted to see, there will be a Collaboration Centre, bringing together researchers, designers, planning professionals and supplier organisations to work on building design, new technologies and use of materials in the collaborative environment recommended in Constructing the Team. The proposed Construction Industry Showcase and Business Centres, as well as the excellent emphasis on continued training through the CPD centre are also admirable developments, that I’m sure will continue to help the industry in its drive to become ever more professional and effective.

And everyone does have a role to play in supporting this drive – the change has begun, but momentum must be maintained, and more is required. Our leading national and regional companies, supported by the Client side, must take a lead by building on the type of activity proposed by ACT-UK and currently being developed by CITB-ConstructionSkills to continue to improve both their own practices and those of their supply chains.

In the audience here today, we have representatives of a range of commercial construction companies, such as Balfour Beatty, Wilmott Dixon, Shaylor Construction, GAJ Construction, Arup and Pettifer Construction; the education and training sector, from Walsall College and Coventry University to the National Construction College and the LSC; clients, such as Birmingham and Coventry City Councils and the Department of Health; and trade federations and potential partners, including Constructing Excellence, the NHBC, the Chartered Institute of Building, the NFB and the Home Builders Federation.

All of these groups have a vital role to play in driving best practice forward, whether by implementing it through their own supply chains, developing training best suited to industry, insisting on high standards of training as part of the procurement process or disseminating information to members.

Indeed, as is appropriate for an initiative that could bring such vital benefits to the whole sector, the ACT-UK Board will be comprised of representatives from all of these sectors - the public sector, industry bodies, educational establishments and private companies – to make sure it acts in all of their interests. Private companies in particular will be involved in course development to ensure that ACT-UK products are what industry requires, and that course delivery also matches their expectations.

I know I speak for CITB-ConstructionSkills as a whole when I say that we’re delighted to be involved with ACT-UK, and I’m also very pleased that so many organisations have already come on board – from public sector representatives such as Advantage West Midlands and the Learning and Skills Council for Coventry and Warwickshire, to industry trade bodies such as the Chartered Institute of Building, to private companies such as KB Benfield Group and Haslam Homes.

However, this is not enough to guarantee security for ACT-UK and to allow it to bring all of the benefits to industry that I’ve spoken about. To show its support for training, for collaborative working, and for effective site management and leadership, the industry must demonstrate its commitment to ACT-UK in two ways.

Firstly, by committing to invest in ACT-UK. This could be through financial investment or sponsorship, or through support in kind, such as working with companies to develop detailed case studies to be worked upon in the Building Management Simulation Centre. The impact of virtual reality simulation upon the industry could be substantial – with companies using the system benefiting from better site management without risk of injury, error, delay or tying up senior staff in training – but without financial commitment from the industry to top up the initial Government funding, it will not go ahead.

Secondly, once ACT-UK is up and running, as I have every confidence it will be, the industry will need to once again show its commitment to better working practices by using the centre to train their site managers. This will not only help make the centre as much of a success as its partner in Holland, but help ACT-UK to ensure that the courses it develops are fit for purpose for the industry – and most importantly, raise the standards of management and partnering skills on site.

Since the reports of both Sir John Egan and myself, much has changed within the industry. Clients and contractors alike have been instrumental in changing the entire way that projects are constructed and run, and raising standards across the industry as a whole. The incidence of projects being dogged by financial, legal and quality problems has been reduced and the reputation of the industry itself has increased amongst both clients and potential recruits – helping us provide an excellent foundation for a collaborative, professional, effective construction sector.

At ACT-UK, we’ve all been lucky enough to see today a vision of how we might be able to take that next step, and the sorts of creative solutions to client and training needs that the industry needs to be embracing. I’d ask everyone here to consider what role you may able to play in that next step, and look forward to seeing you all at the official opening.

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