Change approach to risk or fall behind, warns ICE
Companies who do not manage risk and innovation better face the prospect of becoming inherently uncompetitive. That’s the message from the Institution of Civil Engineers, in a recent short paper focused on the UK built environment sector.
Author, Martin Shapland, says the “perpetual nature of risk within projects” is restricting productivity and the ability to deliver projects more efficiently.
ICE says that while infrastructure and construction methods, by their very nature, are dangerous, built environment has a particularly risk-averse culture, motivated in part by low profit margins which “give rise to a preference for tried and true methods.”
Ironically, it seems, the real threat to efficient, productive and safe operations, is this instinct to minimise risk by passing it down the supply chain. ICE adds this standard transactional model only serves to increase project costs as each tier factors in its own costs and overheads.
The paper uses the emergence of 3D-printing technology to set the scene, describing how despite proof of concept that two bridges have been successfully 3D-printed in Spain and the Netherlands, there are no projects of comparable scale in the UK.
Shapland says: “A culture which prevents the deployment of technology proven elsewhere to be effective in cost, time and material terms is one which is inherently uncompetitive.”
Plus, the way the government handles project complications further deters the sector from trying new approaches. “Over-runs or overspends on infrastructure projects are often publicly criticised by government and other related agencies. This is despite the reality that sometimes both are necessary to ensure the safety and effectiveness of an asset…. The ‘blame culture’ that this creates supresses the willingness of the sector to try new things through fear of failure.”
What does ICE say needs to change?
- Infrastructure owners should take fresh approaches to procurement, seeking out partners carrying out innovative research who can share novel ideas and new approaches
- Built environment organisations should consider a move from transactional models to those based on the principles of enterprise — for example, ICE says a model that includes linking mitigating risk to reward for all parties would encourage participants to perform above baseline measures
- The sector must do more to build in funding to allow for testing and research of new methods outside active projects
What can government do?
- Evolve procurement, moving away from a lowest cost mindset and instead place an emphasis on assessing long-term outcomes and social impact, as well as greater investment in skills and innovation
- Establish a regulatory and fiscal environment that rewards companies investing in new approaches and technologies
- Provide greater vocal support for projects attempting pioneering approaches to foster a better environment for innovation
The short paper summarises the elements of ICE’s own Project 13 approach which, the organisation says, seeks to develop a new business model to support a more sustainable, innovative, highly skilled industry.