International collaboration gives competitive advantage, CIOB conference warns

International collaboration is essential for addressing the acute skills shortages and financial challenges of the UK construction sector, delegates at CIOB’s International Inspiring Construction Conference heard on Tuesday. Contractors were urged to overcome cultural barriers and contemplate new business models to adapt to an increasingly globalised marketplace.

This follows the Global Construction 2030 Report which predicts that the UK will become Europe’s largest construction market by 2030, fuelled by the $6.2 trillion demand for infrastructure and housing projects over the next 15 years. The majority of the work is likely to be funded by overseas investment.

Dr Jianxi Cheng, Project Manager for Wanda One UK which is building One Nine Elms, Europe’s largest residential tower in Battersea, said that Chinese contractors were keen to partner with European organisations and would be investing in subsidiary companies in order to grow their presence in the UK. He said:

“Over last ten years, China has invested up to £25 billion in the UK, but over the next decade expects to invest £105 billion on infrastructure alone. The trickle of investment is becoming a wave. There are opportunities for both sides. Chinese and British companies need to go through a learning curve to develop their joint innovative and management capabilities.”

He predicted international opportunities for local firms that formed long term relationships with Chinese partners.

“British consultants in particular have an excellent reputation worldwide. By going through the first wave of Chinese-funded projects in the UK, they can develop a joint force with their Chinese colleagues to export their expertise elsewhere. It’s a natural route to improving British competitiveness. The issue is how is each business going to adapt into each other’s style? It’s important to recognise the subtle cultural differences, and create a joint solution for success.” 

Arnaud Bekaert, Managing Director of Construction at Bouygues UK also stressed the importance of blending cultures and building new business models, for foreign businesses to thrive in the UK. He said: “We can bring people in from any part of the world, and whilst they are skilled and highly motivated, they lack a crucial understanding of the British market. So we need to have them working alongside people that have been in the UK a long time.”

But Bekaert warned that weaknesses in the UK supply chain were forcing French-owned Bouygues UK to look further afield for a growing list of subcontractors. “Like many of our competitors, we’ve been relying on importing expertise in specialist trades, such as high marble finishes and facade work, for several years.  But over the last few months we’ve been forced to bring over less complex trades, such as bricklaying and drywalling from abroad. It’s a difficult thing to do and companies can require a lot of support from us. It’s not easy for them to adapt to local regulations and codes. Language barriers can also be a problem.”

For contractors chasing work in the Gulf states, plunging oil prices are forcing a radical rethink of local funding models, and increasing opportunities for different kinds of partnerships, according to Thomas Philip Wilson, Managing Partner of law firm Squire Patton Boggs.

With oil prices slashed to below $50 dollars a barrel and unlikely to rise for some time to come, Wilson said that governments in the region were finding it increasingly challenging to fund their long term mega-infrastructure schemes. He warned that contractors working in the Gulf were increasingly being asked to redesign and scale back projects and were at higher risk of late or non-payment problems. 

But he added that Gulf countries were actively looking for alternative investment solutions. Several governments are introducing public private partnership (PPP) legislation and seeking partners that can finance projects at construction phase. Wilson said: “The move towards PPP and privately financed structures in the region will result in a more amenable market for contractors. It will create a more stable environment for better designed and better managed projects which will, if not lessen the risk for contractors, at least make risk more identifiable and predictable. But if you come to the Gulf, don’t come alone. Take advantage of the number of contractors that have already learned hard lessons, and form joint ventures with regional players.”

Chris Blythe Chief Executive at the CIOB said: “The increasingly globalised construction market is helping our industry seek new solutions to the skills shortages and financing restrictions that continue to hamper our sector. By blending working cultures and sharing best practice, international collaboration can help us find new approaches to age old problems.

“But, as we have heard from many speakers today, the need to attract new people and skills into the industry is more urgent than ever. Exciting developments in building information modelling, mobile technology and data capture will not only help us deliver better buildings and create smart cities, but should also help us attract a new generation of innovators into the sector. 

“Our industry is on the brink of exciting technological change. Collaboration and cooperation is essential to ensure that young people around the world hear our message, and understand the wealth of opportunities that are opening up in construction.”

Article edited on 30 November 2015 to correct inaccurate quote by Arnaud Bekaert, Managing Director of Construction at Bouygues UK.