Simon Toplass is group CEO of Pagabo and The 55 Group
The move into a new year is always a time for reflection, but equally for a look to the future, and 2024 is shaping up to have a great deal of changes impacting the construction sector through political, economic and legislative changes.
Procurement and politics
The obvious thing to look out for in procurement is the new Procurement Act (2023), which has received Royal Assent and will come into force fully in October 2024. With around a third of all public sector spending (£300bn) going into the procurement of goods, services and works every year, the core aim of the act is to make the process simpler, faster, more transparent and less bureaucratic.
“The return to a flourish point will be slower and steadier, but things are moving along the right trajectory”
In the six-month period ahead of the go-live in October 2024, the government will share further information, helping those procuring and those being procured to get up to speed with the new regulations.
Elsewhere in politics, we can see that there will be a level of uncertainty. The year is set to see significant changes, with an upcoming general election, local elections and progression in various devolution deals. It will be essential to navigate this well, especially as campaigning ramps up and promises begin to be made on all sides. Staying close to key players and analysing announcements carefully will be key to understanding and implementing the right path to take in order to maximise the opportunities that will be presented.
Steadying of turbulent economic waters
Another round of turbulence will be no surprise – the economy over the past year especially has been a key focus for the media. In recent years, we have seen fast economic dips. The return to a flourish point will be slower and steadier, but things are moving along the right trajectory.
Statistics from the Insolvency Service show that 4,317 construction firms went out of business in the year to 31 October 2023. This was a 9 per cent rise on the previous year, and 36 per cent higher than pre-pandemic.
This isn’t to say it’s all doom and gloom. The construction industry relies on collaboration and innovation more than ever before – and we’re truly seeing this come through at the moment. Whether it’s the growing focus on social value or coming together with cross-industry initiatives for research & development, the collective will is alive and kicking.
Frameworks have a role in protecting businesses and keeping the industry alive, but only when they are developed in the right way, structured to ensure fair payment and aim to give back in turn.
Technology also has a role here, allowing people to manage various processes – such as contract management and social value forecasting and measurement – quickly and easily.
The drive for net zero
There is no doubt that sustainability remains front of mind for the sector, and when people think about ‘the most sustainable building’, in reality that’s a building that hasn’t yet been built. But it’s important to remember it’s not all about new buildings. In fact, the Future Homes and Building Standards – which recently launched for consultation – will ensure that new homes and buildings are fit for the future, with all new-builds being zero-carbon-ready from 2025.
New buildings will always be at the forefront of sustainable development, but there are organisations with huge estates and infrastructure that will be in need of regeneration. Retrofit and refurbishment holds great potential for managing and reducing carbon emissions on this journey.
This in turn ties in with wide social value objectives, which will only continue to grow in focus for the construction industry, while also trickling into other sectors too. The understanding of social value is growing, and is becoming a much bigger part of people’s everyday roles – but the opportunity for inaccuracy to creep in is also increasing due to a large spectrum of understanding and application.
Making sure there is an accurate approach to measuring outcomes – sustainability included – will need to be a focus for the industry, as will increasing the understanding of what social value is. It remains different to ESG, which is much more introspective. Social value encapsulates all the various elements and communicates the impacts being felt by real people and communities – and it’s where the real results of any built environment project will lie.
