Briefing to ACIF Board Members and Executive
Melbourne – 3rd March 2015
Construction over the horizon
More of the same won’t work
David Chandler OAM - Constructor
acif.com.au
Construction’s new world
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Annual global construction will exceed
US $25 trillion by 2025,
60% of this will occur around the Pacific Rim
The US and China will be the major players with India
and Indonesia increasingly weighing in,
Australian + New Zealand Construction is expected to
reach about US$ 300 billion by 2025,
Today Australian Steel consumption only makes up
0.5% of global steel consumption, and
The use of steel, concrete, engineered timber and
plastic composites are becoming interchangeable.
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Global Construction Trends
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Construction is becoming industrialised,
Like other industries construction will increasingly be
defined by - “smarter, faster, better and cheaper,”
Indian Construction is adopting “German quality at Chinese prices” as a benchmark,
The construction supply chain is already global,
This will redefine the way the industry uses ICT’s, makes
progress payments & certifies its inputs, and
Construction processes are going off-site (and for
Australia increasingly off-shore including many jobs).
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Australian Construction snapshot
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Characterised by a federation of states and industry
organisations who fiercely defend their sovereignty,
Despite the importance of construction to build and
maintain the nation’s economic and social infrastructure
there is no national construction strategy,
Many Pacific Rim countries have national construction
strategies i.e. New Zealand, Singapore and Malaysia,
Australia’s construction conversations are constrained
by conflicts of interest and maintaining the status quo,
Australia’s public works and informed buyer capabilities
are all but dismantled.
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Who’s affected by this conversation?
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The 1 million Australian constructors who could witness
as many as 150,000 of their jobs going off-shore,
Over 205,000 Australian construction enterprises who
on average employ fewer than 5 people,
Clients and employees of the 25,000 construction
entities whose businesses fail in Australia each year,
Over 50,000 new constructors who will commence their
careers in Australia in 2015,
20,000 traditional (stick build) housing constructors
who will see their market halved within 10 years, and
Consultants affected by 60% of all current design inputs
becoming a free good in the new construction world.
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What is Australian Constructors up against?
Engineers and scientists are the key drivers of the global
construction economy. They underpin;
• Innovation and problem solving
• Design and built construction integrity
• New process and system integration
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Resetting the Construction deal
It’s time to refocus construction to be about the customer
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Construction procurement these days is mostly
governed by self-interest and defences which compete
with the client’s purpose for initiating a project,
There is little prospect that a consultant or designer will
offer a single point of “risk wrap” of the type sought in
the transaction between the client and contractor, and
Few members of the procurement chain have an eye to
the cross-over point of where tender documents are
quantified by a bidder and then “risk wrapped” by a
contractor to deliver the construction deal.
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Why the “risk wrap” is fundamental
It’s time to deliver more for less
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Achieving more for less through a better alignment
between the client and contractor is a critical
procurement success determinant,
But resolving this time old conundrum requires clients
to step up and become more engaged in the
procurement process than they have in recent times.
At stake;
- better value for money and project viability
- the key ingredient for construction finance
- a line of sight to the end product
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Themes that will drive change/1
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Real integration across computer technologies
(including robotics) with a focus on design for
manufacture and assembly,
A radical rewriting of traditional construction contracts:
to minimise avoidable risk transfer, to embrace the
changing relationships of off-site (and off-shore) in the
superintendence of work, to adopt automatic payment
of the major supply chain inputs to coincide with the
payment from client to head contractor, to incorporate
extended construction warranty options and to deal
with multi-jurisdictional construction standards and
certifications,
/2
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Themes that will drive change/2
It’s time to recalibrate!
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At least a 30% shift of trade based fabrication and
supervision currently on-site to off-site,
Repackaging of construction work with a focus on
elemental assemblies to achieve a 50% reduction of onsite project durations and waste,
New construction materials and methods including a
rethink of construction “givens” such as the role timber
will have as a growing equal to traditional uses of
concrete, steel and masonry, and
Redefinition of construction careers to match changing
work methods on and off site,
/3
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Themes that will drive change/3
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Real time gathering of construction performance data to
inform a continuous productivity improvement loop and
benchmarking with peers,
24/7 construction using quiet construction methods to
reduce expensive on-site overhead expenses, lower the
impact of construction materials movement during peak
hours and lowering the impact of construction project
durations on their immediate neighbourhoods.
Multi-cultural and multi-lingual construction organisations
will have the greatest business prospects if they offer the
best career networking around the Pacific Rim, and
The game changers will be better, faster, smarter and
cheaper. At least 20% cheaper.
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Old givens replaced by new ones
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Irrespective of what Australian politicians, policy
makers, industry associations and institutions do or
not do, the old will be replaced by the new,
Those at the centre of the problems facing Australia’s
construction future will not be part of the solution,
The new deal between constructors and their clients
will pave the way to a more viable industry,
Expect a new construction enterprise model to be the
game changer, and
Do not expect lawyers and generalist consultants to
have the main seat at the table in this transformation.
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How will you know?
No more group hugs as the old ship goes down
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Unless you measure it you will not know,
Industry strategies that do not have simple quantifiable
in-the-field goals will not work,
On-site is the best place to measure the accumulation of
productivity improvements off-site to achieve e.g.
- 30 % reduction in on-site labour
- 50 % reduction in on-site project duration
- 50 % reduction in waste and defects
Establishing industry wide pre-competitive performance
measures is the only way to smoke out the laggards.
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More of the same won’t work
“Construction’s on-site waste of material, labour, time and
variable quality would not be tolerated in any other industry”
Thank you - David Chandler
See: www.constructionedge.com.au
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