the social & economic value of construction - crisp

THE SOCIAL ANDECONOMIC VALUE

OF CONSTRUCTION

A Report by

Professor David Pearce OBE for

nCRISP the Construction Industry Research and Innovation Strategy Panel

The Construction Industry’sContribution toSustainable Development2003

David Pearce OBE is Professor of Environmental Economics atUniversity College London. His special interests are environmentaleconomics with special reference to European environmental policy,and environmental and economic development in less developedcountries. Professor Pearce is author or editor of the acclaimed‘Blueprint’ series, beginning with Blueprint for a Green Economy in1989 through to ‘Blueprint 6’: Blueprint for a Sustainable Economypublished in 2000. He is also author, co-author or editor of 50 otherbooks. He was awarded an OBE in 2000 for his services tosustainable development.

The Construction Research and Innovation Strategy Panel (CRISP)was established as a joint industry and government panel in July 1995to identify and develop priorities for research funders and help to setthe agenda for construction research and innovation. Until early 2002it operated as a panel of the Construction Industry Board.

In February 2002, Sir John Fairclough produced Rethinking ConstructionInnovation and Research, his review of government R&D policies andpractices. This recommended the development of CRISP under theaegis of the Strategic Forum. In October 2002 Michael Dicksonaccepted the chairmanship of new Crisp (nCRISP) and the firstmeeting of the new executive was held in December 2002.

nCRISP’s principal roles are to act as:

• a conduit between the research community and industry;

• a catalyst in developing and promoting research and innovation;

• a facilitator, linking and making connections among industry,government and the research community;

• an honest broker for the construction industry, government and theresearch community

This report has been printed on recycled paper.

The Author

nCRISP

THE SOCIAL ANDECONOMIC VALUEOF CONSTRUCTIONThe Construction Industry’sContribution toSustainable Development2003

A Report by

Professor David Pearce OBE for

nCRISPthe Construction Industry Research and Innovation Strategy Panel

© New Construction Research and Innovation Strategy Panel 2003

All rights reserved. No part of this publication may be reproduced,stored in a retrieval system, or transmitted, in any form or by anymeans except for the provisions given below, without the priorpermission, in writing, of the publishers:

nCRISP Management Support Unit

Davis Langdon ConsultancyMidCity Place71 High HolbornLondonWC1V 6QS

Tel: +44 (0)20 7061 7007Fax: +44(0)20 7061 7005E-mail: [email protected]

Although this work remains subject to copyright, permission is grantedfree of charge to reproduce extracts from the work. Unless otherwiseagreed with the publisher, all extracts must carry the following clause:‘From The Construction Industry’s Contribution to Sustainable Development byProfessor David Pearce OBE, published by nCRISP, the ConstructionIndustry Research and Innovation Strategy Panel’.

The views expressed in this work are the author’s own and may notnecessarily reflect those of nCRISP or the other funders of the work.

This report brings together in one place the key facts and data onthe UK construction industry. These describe an industry that ismaking an invaluable contribution to the country's economic andsocial welfare.

With this report, nCrisp and Professor Pearce have provided anexcellent basis for both a better understanding and futurecollaboration between the industry and its clients. I am delighted toprovide this Foreword.

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THE SOCIAL AND ECONOMIC VALUE OF CONSTRUCTION The Construction Industry’s Contribution to Sustainable Development

Foreword

Nigel Griffiths

Minister for Construction

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In first asking David Pearce to undertake this work, I was addressing aconcern of mine that the industry and its contribution to the UKeconomy and the health and wellbeing of UK society was neither fullyunderstood nor adequately valued. David was asked because he is aneminent economist well versed in the arguments of sustainabledevelopment – in its widest sense – and, not least, because he is notaffiliated to any construction industry special interest. David acceptedbecause he saw an interesting challenge but he was emphatic that,while good news would be highlighted, bad news would not be hidden.I am delighted with the outcome.

The report takes a wider than usual view of construction. It includesall construction materials and products, not just those used bycontractors, and construction professional services provided in-houseby public agencies, including local authorities, and commercialorganisations, including developers. The task group discussed whetherthe view should be even wider than that. Should it include land,property and facilities management, for example? The consensus wasthat it should not, although construction’s linkages with these activitiesare clear and strong. There are three main reasons for drawing theboundary where we did: it seemed sensible and relativelyuncontroversial; we had data; and we had to stop somewhere.Construction and its related activities are pervasive throughout theeconomy and society. It is after all an industry which, through its sizeand skills diversity is able to work across a wide range of projects –major infrastructure and building projects, general building, housebuilding, repair and heritage projects.

This report highlights the value of construction – both its aggregatevalue accumulated over time as the greater part of national fixedcapital assets and its real and potential value, in term of currentconstruction activity, to sustainable development and sustainablecommunities. It also presents us with some surprises, particularly interms of the industry’s productivity. We have grown accustomed tobeing criticised for poor performance and it is good to see that, at leastcompared to our principal European neighbours, we are doingreasonably well, although we can still learn from the Americans.

The report also confirms that we could do more to look after anddevelop our people and that we could be more prudent in our use ofresources. The evidence suggests that we are generally no worse thanother countries or industries and that, if anything, we are improving.But there are no grounds for complacency. I think the key messages Itake from this work are that:

• The industry is not significantly smaller than other Europeancountries, Germany apart.

• The labour productivity and total factor productivity records aregood not bad.

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Preface

Michael Dickson

Chairman, nCRISP

• The environmental record is debatable but improving (climateemissions excepted perhaps).

• The social record could be much better but the messages seem tobe understood.

• There is a crucial need to get work done on quantifying the socialand environmental benefits of good design etc.

• The health record looks bad but it has improved dramatically.

The longevity issue needs more work: I see it as problematic ratherthan as a benefit (the turnover rates for Japan are startling!).

The report provides a unique overview of UK construction for boththe industry and government. It also helps to underpin the work ofnCRISP. It is published at the same time as nCRISP’s first three-yearBusiness Plan and it provides a framework for the implementation ofthat plan. It is also published at a time of change in relationshipsbetween the various government departments and industry, andshould assist during these transitions.

This report is only the start of a process. The task group has agreedthat a colloquium should be held early in 2004 to discuss and debate itscontents. To that end, we welcome comments and criticisms. Theyshould be directed to me at:

Buro HappoldCamden MillLower Bristol RoadBath BA2 3DQ

Or by email: [email protected]

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Preface


Although I am the principal author of this report, I have beensupported and guided by a group of informed individuals from allsides of the industry. These include an nCRISP task group comprisingmyself as Chair and:

Michael Ankers

Chief Executive, Construction Products Association

John Brumwell

Construction Sector Unit, Department of Trade and Industry

Michael Dickson

Chairman of Buro Happold and Chairman, nCRISP

Rodger Evans

Head of Strategy, Construction Sector Unit,Department of Trade and Industry

David Gann

Professor of Technology and Innovation Management,Business School, Imperial College London

Kay Johnson

KAL Johnson Associates, Deputy Chairman nCRISP

Paul Morrell

Partner, Davis Langdon and Everest, and CABE Commissioner

Chris Nicholls

Construction Market Intelligence, Department of Trade and Industry(until June 2003)

Bernard Vogl

Construction Market Intelligence, Department of Trade and Industry(from July 2003)

Graham Watts

Chief Executive, Construction Industry Council

Chris Woods

Director of Innovation, Wates Construction

Research and technical advice was provided by Jim Meikle, GuyHazlehurst and David Crosthwaite of Davis Langdon Consultancy.Later drafts of the report were commented on by Graham Ive, BartlettSchool of Graduate Studies, University College London. The reportwas edited by Mary-Lou Nash and designed by Richard Tovell. Despiteall this help and advice, I take full responsibility for its contents and anyerrors and omissions remain my responsibility alone.

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Author’s Acknowledgements

Professor David Pearce

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Foreword

Preface

Author’s Acknowledgements

Executive Summary

1 The Issue

1.1 Sustainability and the construction industry

1.2 Structure of the report

Chapter 1: Key points

2 Sustainable Development

2.1 Defining sustainable development

2.2 The conditions for sustainability

2.3 Construction and sustainable development: a model


3 The Construction Industry:Definitions and Measures

3.1 The scope of the construction industry

3.2 How large is the construction industry?

3.3 International comparisons of size

3.4 Direct labour output

3.5 Do-it-yourself and self-build

3.6 The informal economy

3.7 The size distribution of the UK construction industry

3.8 The implications of small unit size


4 Manufactured Capital

4.1 The built environment as a capital stock

4.2 Construction and capital formation

4.3 Longevity of built wealth


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Contents

5 Human Capital

5.1 The relevance of human capital

5.2 The labour force in the construction industry

5.3 Training and skills structure

5.4 Labour productivity

5.5 The health of the construction labour force

5.6 Health and safety in the DIY sector


6 Construction and the Natural andSocial Environment

6.1 Introduction

6.2 The materials balance

6.3 The energy balance

6.4 Construction and pollution

6.5 The benefits of the built environment

6.6 Sustainable communities


7 Technical Progress

7.1 Total factor productivity

7.2 Comparative research and innovation

7.3 Design and whole-life costing

7.4 The technological challenge


8 Key Points and Next Steps

8.1 Summary of key points

8.2 Next steps

References

Glossary of Terms

Statistical Annex

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Contents


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Early in 2003 nCRISP established a Socio-Economic Task Group withthe aim of producing a report and other material which would paint apicture of the UK construction industry and the role it plays incontributing to the over-arching goal of sustainable development. Thisreport is the outcome of the deliberations of the Task Group.

The construction industry suffers a self-image problem. Those withinthe industry, and some outside it, criticise what they see as a pooreconomic performance relative to some other countries. They point toproblems of adapting to rapid technological change, and to the highlyskewed size structure of the industry with many thousands of smallfirms inhibiting the capture of economies of scale. They worry aboutthe social image of the industry’s workforce, about the health andsafety record of the industry, and about skills structures andinternational competitiveness. Numerous reports and committees havereported on all these issues and many valuable suggestions have beenmade for improvement. But how far is the critical image of theindustry justified? Surprisingly, few comprehensive descriptions of theindustry exist and those that have been produced do not try to embedthe description in the context of sustainable development.

In this report, nCRISP sets out to establish the broad facts, in asquantitative manner as possible. Indeed, the rule in writing the reporthas been to gather statistics first and to treat qualitative material assecondary. This evidence-based approach is not without its problems.Indeed, one major finding of the study is that the industry needs to bethe subject of more and better analysis. Data are not always consistentor reliable and there are special problems of gathering a detailedpicture of the broad industry beyond on-site construction. It isperhaps because of data problems that some of the poor image of theindustry has been generated – a popular image will multiply rapidly ifthe evidence is not there to counteract it.

This report does not set out to paint a favourable picture. But inseeking a fair and factual image of the industry, some of thepopular criticisms have been shown to be false or, at least, in needof serious qualification.

The aim of the report is to answer the question: just what isconstruction’s contribution to sustainable development and thedelivery of long-term quality of life improvement?

Sustainable development is a process of ensuring a rising per capitaquality of life over time. Improved quality of life reflects increases inper capita real incomes, better health and education, improved qualityof natural and built environments, and more social stability. Hence,quality of life is a multi-faceted goal for society and is regarded by theUK government as an over-arching objective for industry and thepopulation in general.

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The background

Executive Summary

Sustainable development

A rising quality of life is ensured by increasing the stock of productiveassets in the economy since it is these assets – the nation’s true wealth– that constitute the capacity to produce goods and services thatpeople need and want. These productive assets consist of man-made,human, social and environmental capital. Man-made capital refers tomachinery, buildings and infrastructure. Human capital refers to thestock of human knowledge and skills, and capacities. Social capitalrefers to the glue that holds society together, and loss of social capitalshows up in crime and family breakdown, and loss of community.Environmental capital refers to all environmental assets – rivers, theatmosphere, forests and wetlands, oceans and the soil. Theproductivity of these capital assets - their contribution to socialwellbeing - is enhanced by technological progress.

In the light of these definitions, the contribution of the constructionindustry to sustainable development can be gauged by assessing its rolein contributing to the capital stocks and to technological change. Thissets the structure of the report, which looks at each asset in turn.

Before assessing the role played by construction in sustainabledevelopment, it is necessary first to understand the nature of theindustry – its size and structure. The construction industry has narrowand broad definitions. The narrow definition confines attention to theon-site construction activity. The true extent of the industry isbroader, and includes the quarrying of construction raw materials, themanufacture of building materials, the sale of construction products,and the various associated professional services.

On the narrow definition there are probably some 170,000 firms in theconstruction sector. On the broad definition the number is closer to350,000. This doubling rule tends to carry over to many of theindicators of the size of the industry. On the narrow definition,construction contributes some 5% of UK GDP, comparable with thehealth and education sectors. Value added has grown by around 1.7%per annum in the last decade. On the broad definition the contributionto GDP doubles to some 10%.

Annual housing output has remained fairly constant in the last decade,but non-housing output has shown significant growth. Public sectoroutput has been constant for the last decade, while private sectoroutput has increased, albeit cyclically. These trends conceal variousfactors such as the Private Finance Initiative and privatisation of theutilities. Currently, output is shared equally between new work andrepair and maintenance. But new work has shown the faster growth inthe last decade.

Infrastructure is self-evidently vital for the working of the moderneconomy, but care needs to be taken in emphasising this feature ofconstruction. No economy can function without infrastructure. Theissue is the degree to which infrastructure contributes to fastereconomic growth and quality of life. There is some evidence of amodest growth effect.

Contrary to the perception of many, the narrow construction sectorin the UK is larger than in any other European country, apart from

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Executive Summary


The UK construction industry

Germany, when measured in terms of value-added. Estimating thetrue size is complicated by the fact that construction activity alsotakes place in the DIY sector and in the informal economy wheredata are extremely limited. The exact size of the DIY sector isdifficult to measure, but estimates suggest it is worth some £5 billionper annum in terms of product purchases. The size of the informalsector (the black economy) is also uncertain, but, together with theDIY sector, may be equal to a considerable proportion of grossconstruction output.

All sections of the broadly defined industry show a heavily skewed sizedistribution, with a large number of very small firms. While thisfeature of the industry raises concerns about the failure to captureefficiency through economies of scale and reduced transactions costs,much of the ‘smallness’ contributes to customer satisfaction throughclose communication. It is far from obvious that ‘small is bad’.

Construction’s contribution to man-made capital is substantial since amajor part of the human created wealth in a country comprisesbuildings and infrastructure. Built wealth – residences, workplaces,public buildings and infrastructure – has long accounted for the majorpart of manufactured wealth, from some 90% at the time of theIndustrial Revolution to around 70% now. In turn, dwellings accountfor about one-third of manufactured capital stock. Of non-residentialcapital, infrastructure accounts for nearly two-thirds, and machineryand other assets for one-third.

On a per capita basis, the UK generally lags behind other Europeancountries in the provision of transport infrastructure. Expressed persquare kilometre, however, the UK’s road and rail networks comparefavourably to other European countries. However, compared toEuropean countries, the UK has one of the lowest proportions of newbuild and overall construction activity investment relative to totalcapital investment of all kinds.

Much of the built environment is long-lived, with the UK havinglonger replacement rates than other comparable countries. This hasimplications for the structure of the industry (e.g. the demand forrepair and maintenance), for the chances of securing energy efficientbuildings, and for housing conditions. It is not obvious that capitallongevity contributes positively to sustainable development, and thearguments need more assessment. There is probably a trade offbetween long-lived building and the consequent reduced energy use innew construction, and reduced efficiency gains as a result of notreplacing the dwelling stock rapidly enough to capture the benefits oftechnological change.

The labour force is a critical ingredient of any industry, but especiallyso for the construction industry. Around 1.5 million people areemployed by the narrowly defined construction sector, and this isprobably closer to 3 million for the broader industry. Employment inthe narrow sector has been roughly constant over the past decade, butwith a 15 % fall in the first half of the 1990s.

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Executive Summary


Man-made capital

Human capital

The (narrow) construction labour force shows an ageing trend andthere are concerns about attracting young people into the industry. Theeducational standards in the industry compare favourably to transport,agriculture, and distribution, but unfavourably with publicadministration, finance, and energy/water. There are worryingdownward trends in entry to construction-related university degrees.

Contrary to general impressions, labour productivity in the narrowsector is comparable, though slightly less, to France and Germany, butaround 12 % lower than the USA.

The accident record of the (narrow) industry still gives cause forconcern. In comparison to other industries, construction has thehighest level of total fatalities and, by a very substantial margin, non-fatal injuries. . This is partly skewed by the comparatively large size ofthe industry, and in fact it has only the fourth highest fatalities andinjuries per member of the workforce. Using the UK government’smoney valuations of statistical lives, fatalities and non-fatal injuries inconstruction impose a social cost of some £2 billion per annum.However, while the data are imperfect, the industry’s accident rate hasimproved dramatically in the last 40 years.

Assessing the environmental impacts of the construction industryinvolves looking at the flows of materials and energy in theconstruction process, and the effect on pollution of the accumulatedbuilt wealth of the economy.

A materials balance analysis reveals that the (narrow) constructionsector receives around 360 million tonnes of raw materials of which90 million tonnes reappears as construction and demolition waste,implying a conversion efficiency of 75%. Of the 90 million tonnesconstruction and demolition waste, half is recycled. While thesenumbers are interesting, they cannot be used to argue that the industryis ‘good’ or ‘bad’ in terms of materials usage: time series or meaningfulinternational comparisons are required. Moreover, much of theconstruction industry’s waste is inert and non-toxic. While inert wastestill has to be disposed of, society’s relative valuation of inert and non-inert waste is revealed in the substantial differential in the UK landfill taxfor these two kinds of waste, with inert waste attracting a far lower tax.

Defining the industry to include on-site contractors, quarrying,transport of construction products, and transport of waste, theindustry uses around 8 million tonnes of oil equivalent energy eachyear. This is approximately 5% of UK final energy consumption, orsome 30% of industrial energy consumption. Construction and relatedindustries account for around 2% of all UK greenhouse gas emissionsand 2-4% of other air pollutants. Total air emissions, other thangreenhouse gases, have shown significant reductions in the last 30years. By and large, construction has shared equally in the nationaldecline in emissions, suggesting that construction fares no worse thanother industries.

Focusing on the stock of buildings, the picture is very different. Allbuildings – commercial, public, industrial and residential – account forhalf of energy use in the UK and half of carbon dioxide emissions.

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Executive Summary


The natural and social environment

This reinforces the view that energy use on existing buildings is a vitalenvironmental concern.

When well designed, the built environment generates significant but, asyet, largely unquantified benefits in terms of human wellbeing. Gooddesign contributes to physical and mental health, to a sense of identityand wellbeing, to good social relationships, reduced crime, and higherproductivity. Bad design and dilapidated capital stock has the oppositeeffect. There is an urgent need for more and better research into thisrelationship between buildings, infrastructure and human wellbeing.

The impact of poor past design and capital depreciation is the subjectof the government’s sustainable communities programme. Butwithout the committed cooperation of the broad construction sector,this programme cannot be delivered. Even then, there are someproblems with the continued focus on development in alreadycongested areas where infrastructure change may not be able to keeppace with the growth of employment and housing.

Technological change is one of the keys to UK competitiveness andwealth creation. One measure of technological change is total factorproductivity, an indicator of the ratio of output to the main inputs thatgo into construction activity (labour and man-made). Contrary to theimpression of many, the UK’s total factor productivity record is on apar with the USA or France, and appears to be significantly higher thanin Germany.

Despite this reasonable record on existing technological progress, theconstruction industry faces massive challenges in the next few decades.Failure to meet those challenges by embracing new technologies – newmaterials, IT, off-site manufacture etc. – will be at a considerable costto the UK economy.

This report has been produced in a relatively short period of time andwith limited resources. It is the start, not the end, of the process. Threeinter-related, near term, follow-on activities are outlined in the finalchapter: a colloquium to be held in early 2004; a review ofconstruction-related statistical data; and development of a researchagenda based on the report. The idea of a colloquium was agreed bythe report task group; its purpose will be to review the report andconsider what, if any, further work is required for greaterunderstanding of the socio-economic value of construction. It willalso address statistical shortcomings and set out research needs arisingfrom the report.

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Executive Summary


Technology

Next steps

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Sustainable development is the over-arching goal of governmentpolicy in the United Kingdom. Definitions of sustainable developmentabound. The UK Government’s definition is simple. Sustainabledevelopment is about:

‘ensuring a better quality of life for everyone,now and for generations to come’(UK Government, 1999, p8).

The significance of this definition is that it broadens the traditionalconcern with the sum of all marketed and publicly provided goods andservices (Gross National Product - GNP) to include the non-marketedgoods and services that make a significant contribution to the nationalquality of life. These include changes in the quantity and quality ofnatural resources and natural environments, social cohesion, heritage andculture, and reduced crime and threats to life. Sustainable development isabout enhancing all these factors, not just about increasing the measuredincomes of the population, despite its importance.

Sustainable development is not just a goal for the United Kingdom. Itis central to European Union policy as well. Sustainable developmentis enshrined as a goal for the European Union in the 1997 Treaty ofAmsterdam, expanding on the previous goal of ‘sustainable growthprotecting the environment’. Since so much of the policy context forthe UK is set in Brussels, the way the European Union interpretssustainable development matters for UK industry. The UKconstruction industry, however, operates well beyond Europe and ispart of a global industry. Even at this world level, sustainabledevelopment is increasingly being adopted as a policy goal with theUnited Nations confirming its goal of promoting sustainabledevelopment at the various Earth Summits since the Rio de JaneiroSummit of 1992.

The notion of sustainable development is leading to a fundamental re-evaluation of the contribution that industries and services make to thequality of life. It is no longer enough to focus on profits and sales. Therole that industry plays in contributing to the wider aspects of theeconomy and society also matter. This is the springboard for thecurrent report.

The construction industry has suffered an image problem in tworespects. First, it has not established itself as being at the forefront ofthe dynamic economic change that contributes to the traditional, butvitally important, goals of economic growth, employment, andtechnological change. In the words of one report: ‘there is a deepconcern that the industry as a whole is under-achieving’ (DTI, 1998).This problem has been identified and analysed in a number of reports(e.g. DTI, 1998; Strategic Forum for Construction, 2002). It is not thepurpose of this report to revisit these concerns in detail, but it isessential to comment on the industry’s achievements and problems in

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1.1Sustainability and theconstruction industry

1 The Issue

contributing to economic growth and the prospects for economicgrowth. Second, since the political agenda has changed with its focuson sustainable development, it is also necessary to identify the role thatconstruction plays in meeting this broader goal. This means looking atthe contribution of the industry to education and training, to researchand innovation, to the built and natural environment, to resourceconservation, and to social goals.

The end product of construction activity is the built environment, thestock of all built infrastructure, dwellings, and commercial, industrialand public buildings. That stock is a major part of the wealth of thenation. As that stock depreciates, it is either demolished and replaced,or renovated. New construction over and above depreciation levelsadds to the stock. The economic value of the built environment iswhat people are willing to pay for it, and an initial lower bound on thisvalue is the price paid in the market place for assets where ownershipcan be transferred, such as houses. The costs of providing built assetsthat remain in public ownership – most roads, for example – providean initial lower bound on the value of those assets. But willingness topay can exceed the market price or cost of provision, so that the trueeconomic value of the built environment can be considerably higherthan these approaches suggest. Willingness to pay also varies accordingto the quality of the built environment – its role in generating humanwellbeing. If the built environment contributes positively to wellbeing,willingness to pay is likely to exceed the ruling price. If it contributesnegatively, through bad design or pollution, say, then the economicvalue of that part of the built environment may be less than the rulingprice. Hence the notion of the economic value of the builtenvironment – the value of constructed wealth –is notstraightforward. Nonetheless, this concept of economic value is theone employed in this report, as far as possible. It justifies the focus onflows (construction activity), on the stock (the assets that compriseconstructed wealth), on unmarketed benefits (the wellbeing producedby the built environment) and on unmarketed costs (any pollution orloss of aesthetic quality).

The issue to be addressed, then, is one of the public and politicalprofile of UK construction. What is needed is a documentation of therole that the construction industry plays in contributing to sustainabledevelopment, i.e. what value construction adds to society. Its successesshould be brought to the attention of decision-makers, to the industryitself, and to the wider public. Where it is judged to fail, in that it coulddo more or better, those shortcomings must be pinpointed so thatfuture action can be taken to improve what can be called thesustainability profile of the industry. This is the purpose of this report.

The report is structured round the themes of added value andsustainability. To this end, Chapter 2 sets out a brief sketch of themeaning of sustainable development and the conditions for achievingit. The general requirement is that the stocks of all assets in theeconomy, expressed in per capita terms and, or, their productivityshould be rising on a consistent basis over time. These stocksconstitute the productive capacity of the economy and hence themeans of adding value for the UK economy in both the traditional

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1 The Issue


1.2Structure of the report

sense of rising real incomes per head, and in the more modern senseof contributing to a sustainable future. The forms of capital are man-made capital, human capital, natural (or environmental) capital, andsocial capital. The productivity of these forms of capital depends onhow they are combined and on technological change.

Chapter 3 focuses on the issue of defining the construction sector.Narrow and broad definitions are provided and the chapter looks atalternative indicators of the size and importance of construction.

Chapter 4 returns to the notion of capital structure, focuses on man-made, or manufactured, capital and notes the role that the builtenvironment plays in total capital wealth. It also takes note of a specialfeature of some parts of the built environment that distinguishes itfrom most other forms of capital: its longevity. The focus on longevityarises because of the potential gains and losses to the economy atlarge, to the environment, and to social conditions from having a builtstock with a high average age.

Chapter 5 looks at human capital in the construction sector – its labourforce, its embodied skills and knowledge, and the health of the labourforce. Problems of matching demand and supply for skills arehighlighted, and there is a special concern in the industry about theintake of younger people into the building sector.

Chapter 6 investigates the relationship between the construction sectorand the natural and social environment. A particular feature is thepositive link between good design and human wellbeing, a hithertoneglected issue but one of potentially great importance.

Chapter 7 looks at the relationship between construction andtechnological change and casts light on the overall productivity of thesector. Contrary to many commentaries, the record of construction isnot a bad one. The report ends with a summary of the highlightedissues that emerge from the previous chapters and outlines a series ofnext steps.

As far as possible, the approach taken in this report is a quantitativeone. Unfortunately, statistical sources are not always in agreement witheach other and some problems of definition also arise. Accordingly, anAnnex to the report assembles the statistical information used toconstruct the diagrams in the report.

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1 The Issue


The report is structured round the themes of added value and sustainability.

It outlines the contribution that the construction industry makes to the over-arching

goal of sustainable development.

The construction industry suffers from an image problem. There is a need to show its

positive and negative contributions to value and sustainability in a transparent manner.

The statistical data related to the construction industry need improvement.

Key points: Chapter 1

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In order to determine the part played by the construction industry insustainable development, it is necessary to be clear what sustainabledevelopment means, how it might be measured, and therefore how theconstruction sector’s role can be evaluated.

Sustainable development means that some indicator of quality of life(QOL) must be rising over time. How far into the future this sustainedrise has to persist is an open question. Certainly, sustainability forcesconsideration of a longer time horizon for policy concern than mighttraditionally be encompassed by, say, the electoral cycle. As globalconcerns about the long-term effects of actions taken now have grownin recent years, so political time horizons have changed to encompassthe longer term. Issues such as climate change, ozone layer depletion,and the loss of biological diversity have risen up the political agenda.Nonetheless, few would argue that today’s citizens should concernthemselves with what happens one million years hence, or even onehundred thousand years hence. The issue of how far into the future weshould look remains debatable.

The easiest way of thinking about sustainability is not to dwell ondefinitions of what it comprises, but to ask what needs to be done byeach generation to ensure a reasonable chance that succeedinggenerations will have a rising QOL. However the QOL is defined, themeans of generating it will lie in the possession of various capitalassets and in advancing their productivity through technologicalchange. Traditional economics focused on machinery andinfrastructure (man-made capital) as the main engine of economicgrowth. Later, the role of human capital – a trained and educatedlabour force – was found to be a vital ingredient of economic success.At the same time, technological change – an increase in theproductivity of capital assets – was emphasised. The wider notion ofQOL has recently brought to the fore two other capital notions: socialcapital and natural capital.

Social capital refers to interpersonal relationships, most oftensummarised as ‘trust’ between individuals (Fukuyama, 1995). Thegreater the degree of trust the lower the costs to society of enteringinto contracts, bargains and exchanges, and the greater the effort thatcan go into production or the provision of services. Social capitalreduces society’s need to engage in unproductive activities that arisebecause of the need to ensure that contracts, whether legalised orcustomary, are honoured.

Finally, natural capital refers to environmental assets. Allenvironmental assets generate flows of services to humankind. Thoseservices may take the form of direct amenities which facilitaterecreation or aesthetic appreciation, or they may take more subtleforms such as the cleansing of water or the air, or as a provider ofpersonal wellbeing through greater contentment.

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2.1Defining sustainable development


2.2The conditions for sustainability

The economic approach to sustainability therefore now focuses on allfour forms of capital asset – man-made, human, social andenvironmental – and on technological change as a means of raising theproductivity of each form of capital, the ability to generate more QOLper unit of capital asset. The resulting conditions for sustainability arethen fairly easy to derive. Future QOL depends on the assets availableto future generations, and on technological change. So sustainability is(reasonably) assured if this generation leaves a greater per capita stockof capital assets to future generations, and if it encouragestechnological innovation. This has come to be known as the ‘constantcapital’ rule for sustainable development (Atkinson et al. 1997).

Figure 2.1 shows how the various components of the capital approachto sustainable development interact. The requirement is that the realvalue of the total stock of assets must rise through time in order toensure that the QOL deriving from those assets is rising through time.If human population grows, then the strict requirement is that thevalue of per capita assets rises through time, so that the value of thetotal stock of assets needs to rise faster than population growth.Offsetting this to some degree, the scope for technological changewould, strictly speaking, permit a decline in the volume of assets iftheir productivity rises. In Figure 2.1, the wider notion of the qualityof life is captured by decomposing QOL into market outputs, andenvironmental and social impacts. The inputs into construction eachhave two dimensions: their scale and their productivity (i.e. theirquality). Materials and energy going into construction have as theirquality dimension the level of output they achieve per unit of input.Thus various notions of energy and materials efficiency can be used tomeasure the productivity of these inputs in much the same way aslabour productivity is measured by output per man-hour or employee.

Recent advances in economic accounting now enable the sustainabilityof the industry to be measured directly. Building on the idea of asavings rule, whereby no enterprise can be regarded as sustainable if itfails to save more than the level of depreciation on its assets, it shouldbe possible to look at the profitability of the industry and to ask if thisis greater than the depreciation on the industry's assets, and thedepreciation on environmental, social, and human assets. This requiresthat depreciation be measured in money terms, including environmentaldamage, workplace accidents etc. Again, advances in economics nowenable this to be done and a research project of this kind should requirefairly modest resources to complete. Any positive contribution theindustry makes to the environment and social wellbeing, e.g. via the builtheritage, can be regarded as additions to saving.

The remainder of this report is concerned with tracing the variouslinkages shown in Figure 2.1, building up a picture of the constructionindustry and its role in sustainable development, specifically:

• Chapter three defines and measures the scope of theconstruction industry.

• Chapter four addresses man-made capital.

• Chapter five is concerned with human and social capital.

6



2.3Construction and sustainabledevelopment: a model

• Chapter six considers the interaction between construction and thenatural and social environment.

• Chapter seven addresses technological change.

• Chapter eight summarises the key points in the preceding chaptersand suggests some next steps.

7



A schema for sustainable developmentFigure 2.1

8



Sustainable development is a process of ensuring a rising per capita quality of life

over time.

Quality of life reflects increases in per capita real incomes, better health and education,

improved quality of natural and built environments, and more social stability.

Rising quality of life is ensured by increasing the stock of productive assets in the economy.

Those assets consist of man-made, human, social and environmental capital.

The productivity of these capital assets - their contribution to social wellbeing - is

enhanced by technological progress.

The contribution of the construction industry to sustainable development can be gauged

by assessing its role in contributing to capital stocks and to technological change.

Economic accounting enables sustainability of the industry to be measured directly by

building on the idea of a savings rule whereby no enterprise can be regarded as

sustainable if it fails to save more than the level of depreciation on its assets.


Determining just how significant the construction industry is dependsin part on how the industry is defined. By and large, definitions varyaccording to the focus. One focus could be on contractors and speculativehousebuilders1 – those who construct, repair and maintain buildings orengineering works in situ. Alternatively, the focus could be oncontractors plus all those who quarry raw materials, plus those whomanufacture and sell the materials, products and assemblies used bycontractors, plus those who supply professional management, design,engineering and surveying services to the industry or its clients, plusconstruction and repair works undertaken by households and othernon-contracting organisations. More recently, land and facilitiesmanagement have also been included in some definitions although thisis not included here, primarily due to a lack of reliable data. Figure 3.1shows a summary schema of the structure of the industry. The boldline encloses the traditional narrow definition of construction value.

9


3.1The scope of the construction industry

Broad and narrow industry structuresFigure 3.1

1 Contractors generally build for clients.

Speculative housebuilders build first and then

seek a client. Both are part of Standard

Industrial Classification (SIC) 45. Housebuilding

developers are also part of SIC 45. Other

property developers are not part of SIC 45.

The alternative classifications can be termed ‘narrow’ and ‘broad’. Thenarrow sector is essentially the ‘contractors’ box in Figure 3.1 andrefers to on-site assembly and repair of buildings and infrastructure,including site preparation, construction of buildings and civilengineering works, building installation (e.g. electrical wiring,plumbing), building completion (e.g. painting, plastering) and rentingof construction or demolition equipment supplied with an operator.

3 The Construction Industry: Definitions and Measures

This narrow definition conforms to the SIC 45 category used inofficial statistics. In turn, ‘contractors’ tend to be defined to excludethose who engage in self-build, construction in the informal sector,and direct labour.

The broader sector can be seen to include the supply chain forconstruction materials, products and assemblies, and professionalservices such as management, architecture, engineering design andsurveying and, as noted above, perhaps land and facilitiesmanagement. The links between these various components of overallconstruction activity are explored shortly. The wider definition hasthe virtue of drawing attention to the economic activities that directlydepend on the narrower definition of the construction industry. Thefortunes of these activities are critically inter-dependent with thefortunes of the contractors.

Both the narrow and broad definitions are legitimate for the purposesof profiling the industry, and both are adopted in this report. Thelinkages between the narrow and broad definitions are captured inFigure 3.2 which shows the broad magnitudes of gross output of eachpart of the broadly defined sector (Dickson, 2003). Figure 3.2 showsthat significant construction activity takes place outside the narrowlydefined construction sector. (Care needs to be taken in interpretingthese figures. Gross output is not the same as contribution to GDP.The relevant figure is value added see Section 3.2, page 14).

Figure 3.2 attempts to illustrate the gross output of the broadly definedUK construction industry using a Venn diagram. It is based on workdone for nCRISP on the size structure of construction (CFR, 2003).The various components of output are represented by circles (and, inone case, an oval), indicative of their relative significance by value. Theoverlaps indicate the extent to which each component contributes tothe output of other components. The thick line around the diagram,therefore, encloses the gross output of all the components and excludesdouble counting. The figure is only indicative, the sizes of componentsand the extent of overlaps are not precise.

The largest component is ‘contractors and public sector direct labouroutput’. This is what is commonly taken to be ‘construction output’. Alarge proportion of this output, however, is ‘construction materialsand products’; a smaller but significant proportion is provided by‘construction professional services’ (largely design work by privateconsultants on design, construction and Private Finance Initiative(PFI) schemes, etc, commissioned by contractors and charged by themto their clients); and ‘self build’ includes construction materials andproducts and work done by professional firms and contractors as wellas the efforts of ‘pure’ self builders. ‘Private sector direct labouroutput’ is construction work undertaken by employees of commercialand industrial organisations; this will normally be repair andmaintenance but could include some capital works. It should be notedthat ‘construction professional services’ relates only to work byconstruction professional firms; it does not include the output ofprofessionals working for public or private commercial organisations.

10



Construction Output

The output of ‘intermediaries’ (the oval) is included in constructionmaterials and products. Most materials and products purchased bynon-contractors are purchased via wholesalers or retailers. Thehatched area is a residual; it indicates construction materials andproducts not used by other categories. It will include materials andproducts purchased by individuals for do-it-yourself (DIY)installation. It is likely to be one of the less accurate components ofthe diagram. Informal construction output is indicated by a cloudshape because it is rather more uncertain than other kinds of output.It includes what is commonly called the black economy and otherconstruction work that, for one reason or another, is not included inany other category. Exports and imports are indicated only formaterials and products; in national economic statistics, the output ofcontracting or professional services is allocated to the country where itis undertaken.

Finally, a distinction is needed between construction – the act ofadding value to the existing stock through new build and repair andmaintenance – and the stock of constructed assets constituting the builtenvironment. The former is a positive flow that adds to the latter

11



Figure 3.2 The overall gross output of the UK construction industry

Construction Stock

stock, with natural depreciation being the negative flow. The activitiesof Repair and Maintenance (R & M) tend to offset at least some of thestock depreciation, and usually add value to the stock. The value of thestock also changes with real price2 movements regardless of anychange in physical assets. It follows that, measured solely in terms ofmaterials (e.g. weight) or value (money) we have:

where appreciation consists of physical additions to the stock and realprice rises, and depreciation refers to reductions in the physical stockand any price reductions. (For a detailed discussion of stock and flowconcepts, see Ive and Gruneberg, 2000, Ch.4). The stock at any pointin time is therefore the ‘built environment’. The built environment issometimes used interchangeably with the ‘built heritage’ or‘patrimony’, but the latter terms tend to be used to distinguishdifferent qualities of the stock. A Georgian mansion might be regardedas part of the built heritage on this latter interpretation, whereas a1960s high-rise block of apartments might not. Stocks are measured inmoney value terms, so that the value of the built environment shouldreflect both quantities and qualities of the stock, regardless of whetherthe stock is capable of being bought and sold on the open market. Thefinal value of a unit of the built stock embodies all the inputs fromconstructors and the other activities directly relevant to producingconstruction output.

Measuring the size of the construction sector is not straightforward.Definitional problems abound, and various indicators can be adopted.Foremost amongst these are:

• Number of firms

• Employment

• Gross output

• Value-added

Other than employment, which is discussed in more detail in Chapter5, these indicators are considered below. Each tells a story that isrelevant to any analysis of the role that the construction industry playsin sustainable development. The last two – output and value added –provide the traditional measures of scale, but, as Chapter 1 showed,sustainable development encompasses concerns that are wider thantraditional measures of production. Output and value added need tobe supplemented with indicators that reflect these wider social andenvironmental concerns.

For the exact scope, in terms of SIC codes, of the broad definitionused in this report, see the Statistical Annex at the end of the report.For the analysis in this section we primarily use data gathered from theAnnual Business Inquiry (ABI) as this is currently the mostcomprehensive and consistent source available. Figure 3.3 shows thedistribution of firms in the construction sector. The picture is fairly

12



Stock at time t = Stock at time t-1 + appreciation in time t – depreciation in time t

3.2How large is theconstruction industry?

Number of firms

2 Real price changes refer to rates of price

increase faster than the rate of general inflation.

clear. The ABI data suggest that contractors account for just over halfthe total number of firms in the broader definition of the industry, andthe sale of construction products accounts for a further quarter of thetotal number of firms.

13



Figure 3.3 Number of construction and construction related firms 2001

Source: ABI (2003)

The firms represented here – and their output, discussed later – arebroadly similar to the firms producing the output presented in Figure3.2, but there are differences. The most notably difference isprofessional services. The data for professional services in Figure 3.2is based on a survey undertaken for the Construction Industry Councilin 2000, and is specific to construction professional services; the datain Figure 3.3 are drawn from SIC data and include a range ofengineering and other consultancy not related to construction. Figure3.2 also includes output by individuals and non-construction firms.There are other more detailed comments on the SIC data in theStatistical Annex.

Figure 3.4 shows time series data for the number of contracting firmsduring the period 1995 to 2001. The series shows a steady decline inthe number of firms from 1995 to 1998 by some 4%. Between 1998and 2001, the number of firms expands by a modest 6%, indicatingthat the number of firms has remained fairly constant over the period.

There are at least two measures of industry output. The first – grossoutput - records the sum of the values of sales by all firms in anindustry and would normally correspond to notions of ‘turnover’ or‘sales’. The second definition records the value added by the firm tothe value of inputs received from suppliers. This is ‘value added’.Whereas this measure of output can be added across all firms toprovide a measure of aggregate output, it would amount to double(and multiple) counting to add up gross outputs. For example, if firmA supplies materials to firm B at a cost of, say, £2 million to firm B,and firm B produces output valued at £5 million, the total output of Aand B is not £7 million since A’s output is already embodied in B’soutput. Rather, the true combined output is £2 million for A(assuming, unrealistically, that A has purchased no inputs) plus£5-2 million = £3 million for B, or £5 million in all. While thegross output measure is useful for measuring the general level ofeconomic activity in a sector, value-added is the more relevantmeasure since it indicates the contribution that the sector makesto gross domestic product – i.e. GDP. This is because GDP is thesum of all value-added across all sectors in the economy. Figure3.5 records value-added for a single year, 2001. Again, contractorsaccount for just over half of the value-added (about £48 billion)in the broader definition of the industry (about £90 billion).

14



Figure 3.4 Time series for the number of contracting firms(SIC 45) 1995-2001

Source: ABI (2003)

Output and value added

15



Figure 3.5 Value-added in the construction sector 2001 (%)

Source: ABI (2003)

The comments made in the section on the number of firms on thedifferences between this data and the data referred to in Figure 3.2 alsoapply to the industry output data. The data for professional services inFigure 3.2 is specific to construction professional services; the data inFigure 3.5 include a range of engineering and other consultancy notrelated to construction. The wider definition of the industry implies anapproximate doubling (10%) of the contribution to GDP made by thenarrowly defined sector (5%). Figure 3.6 compares the contribution ofthe narrow construction sector’s contribution to GDP with thecontribution of other economic sectors for a single year.

Figure 3.6 Value-added as a proportion of UK GDP 2001

Source: ONS (2002), National Accounts

Figure 3.6 reveals that (narrow) construction is roughly equal in size tothe transport and communications sector, or the public administrationand defence sector. It exceeds in size all of the largest manufacturingsectors. Figure 3.7 traces the evolution of real output and real value-added for the past decade, both having grown at 1.7% per annum. Thiscan be compared to GDP growth of some 2.3% per annum during thesame period.

Figure 3.8 charts the change in gross construction output (narrowdefinition) from 1985 to 2001, showing the division between housingand non-housing output. Significantly, housing output has remainedconstant for the whole period apart from a cyclical upwards movementin the late 1980s mainly due to increases in private house construction.In contrast, non-housing output has grown and accounts for thehigher overall annual growth in output in the last half-decade (2.1%)compared to the rate for the whole period (1.1%). Figures 3.8 to 3.10show the composition of gross construction output as it is presentedin DTI’s Housing and Construction Statistics.

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Figure 3.7 Output and value-added by contractors 1993-2001(£ billion at constant 1995 prices)

Source: Value added from ONS (2002, Table 2.2 – value added at current prices - and

Table 2.4 – index numbers of real value added). Output from DTI (2003, Table 2.2).

Figure 3.9 shows the same output data as Figure 3.8, but revealing thepublic/private sector split. Public output has been constant over theperiod, while private output has grown, but in a cyclical manner.

However, some specific factors influencing the public/private split areconcealed by the data. First, privatisation of public utilities means thatinfrastructure previously classified as public has now become private

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Figure 3.8 Housing and non-housing output 1985-2001(£ million at constant 1995 prices, seasonally adjusted)

Source: DLC based on DTI Housing and Construction Statistics gross output data

Figure 3.9 Public and private output 1985-2001(£ million at constant 1995 prices, seasonally adjusted)

Source: DLC based on DTI Housing and Construction statistics gross

output data and assuming infrastructure is 50% private and 50% public

output. With the advent of privatisation, significant modernisation ofutilities has taken place, the modernisation under public ownershiphaving been limited by strict financial controls. The second factor is,the Private Finance Initiative (PFI) which began formally in 1992 butdid not really take off until 1994 (Grout, 1997). Under PFI, the privatesector funds, builds and owns the assets in question, with the publicsector purchasing the flow of services, so that some previouslyclassified as public output has shifted into the private sector. It shouldbe noted that public output is significantly less than the 40% usuallyassumed and currently stands at around 31% of total output.

Finally, figure 3.10 shows the division of output between new workand repair and maintenance (R&M). It can be seen that, currently, thetwo activities each account for roughly 50% of overall output.However, R&M output is currently about the same level as it was in1990, whereas new work has shown significant growth, most of itconcentrated in the second half of the 1990s.

This may well be an accurate picture for contractors’ constructionoutput but many other types of construction output – DIY, self build,direct labour and the black economy – are significant and very likely toinvolve work to existing buildings (mainly R&M).

New infrastructure output in 2002 was approximately £8 billion, orapproximately 10% of total construction output (CFR, 2003). Thecomposition of infrastructure output can be seen in Figure 3.11.Significantly, over half of all infrastructure output is accounted for byroad and rail. Without infrastructure, economic activity would largelycease in its current form. In this narrow sense, infrastructure is anessential ingredient of modern life, but this is true of other sectors,

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Figure 3.10 R&M and new output 1985-2001(£ million at constant 1995 prices, seasonally adjusted)

Source: DLC based on DTI Housing and Construction statistics gross output data and

assuming infrastructure is evenly split between new build and work to the existing stock.

Infrastructure output

goods and energy, water and waste disposal. Of more interest is thedifference in human wellbeing made by improved infrastructure systems.Care has to be taken when trying to measure this effect. What are oftencited as external benefits of infrastructure are, in fact, already reflectedin the price paid. For example, better road transport lowerstransportation costs, but these effects show up in the market place. Itwould be incorrect to add these alleged external benefits to the marketvalue of the transportation system (Verhoef, 1996). Nonetheless, thereis an argument that, by stimulating competitiveness, especially throughcost reductions, improved infrastructure generates dynamic change inthe economy which benefits everyone. These growth effects werestudied by SACTRA (1999) who concluded that they are importantwhen an economy is under-developed with a limited transportinfrastructure (see also Creightney, 1993), but they are small foreconomies with developed transport systems. Other assessments reachsimilar conclusions – e.g. T&E (1996). Therefore, while infrastructureis clearly essential for the operation of any economy, the value ofimproving an already well-developed system is largely captured in thebenefits that are traditionally estimated, e.g. time-savings. Adding inbenefits for dynamic growth affects is legitimate, but those affects arelikely to be modest.

International comparisons of sector size are complex due to differingdefinitions and because of the need to convert national currencies toa common base. Table 3.1 reports comparisons of relative size basedon value added3 using Purchasing Power Parities (PPPs) for the UK,Germany, France and the USA. In value-added terms, the UKindustry is some 25% smaller than German construction, but 30%larger than the French industry. All European sectors are small relativeto the USA.

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Figure 3.11 The composition of UK infrastructure expenditure 2002

Source: CFR (2003)

3.3International comparisons of size

3 The same source reports comparisons of

gross output but doubts have been cast on the

reliability and comparability of these estimates.

Eurostat (2002) provides data on comparative value-added for SIC 45(the narrow definition). Unfortunately, data for Germany are notavailable. Table 3.2 reports some of the available data. The sizecomparison with France shown in Table 3.1 is confirmed, with theFrench industry being about 75% of the size of the UK sector. TheUK sector is also larger than any other European country (other thanGermany) although in per capita terms the Netherlands is larger.

Looking at the relative sizes of the workforces, we can make somefurther comparison, although even here there are quite extensivedata problems. Experian (2003) has a preferred estimate of 1.83million people employed in the sector in the UK compared to: 1.44million in France, 2.77 million in Germany and 8.6 million in theUSA. The figure for France is consistent with the value-addedcomparison. The figure for Germany suggests a 50% larger sectorthan the UK, compared to 30% on the value added comparison.Overall, the available data suggest that the UK sector is smaller thanthe German sector but larger than the French sector. All Europeanindustries are substantially smaller than the industry in the USA, aswould be expected.

Figure 3.6 above indicated that value-added by the narrowconstruction sector was some 5.4% of UK GDP. This is confirmed byEurostat National Accounts (Eurostat, 2002) which also show acomparison with other countries. The UK share is equal to the averagefor EU-15. The lowest share is Sweden at 4.5% and the highest isIreland at 6.0%.

Direct labour output can be either public or private. Public sectordirect labour organisations (DLOs) have an output, value-added, andproductivity profile that is very different from that of privatecontractors. They mainly engage in works to existing structures,especially repair and maintenance. Official statistics recogniseconstruction output by public sector direct labour organisations

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Table 3.1 Relative size of construction industry [SIC 45]in four countries 1999 (UK = 100)

Source: Experian Business Strategies (2003), Table 10

Value added

UK 100Germany 131France 76USA 651

Table 3.2 Relative size of construction activity in Europe 1999

UK France Netherlands Belgium Italy

Total value-added ( bn) 58.31 44.01 15.64 8.25 34.06Population (000s) 59,623 59,226 15,864 10,239 57,680VA/capita ( ) 977.8 742.9 983.4 810.6 589.5Source: Eurostat (2002)

3.4Direct labour output

(£2.7 billion at current prices in 2001). Public direct labour output isless than half of the value it was in real terms a decade ago.

Private sector direct labour construction output (construction activityundertaken in-house by non-construction firms) is estimated to be ofthe order of £2 billion (CFR, 2003). It comprises construction workundertaken by private commercial and industrial organisations usingtheir own employees.

Do-it-yourself building is a common and legitimate activity ofsubstantial market size. For quantitative estimates, DIY and theinformal sector (see Section 3.6) are considered together simplybecause of the availability of data. Euroconstruct has producedestimates of the combined ‘DIY/other services and informaleconomy’ for several European countries. These data are shown inTable 3.3 below. The data suggest that these activities are equal inoutput to 11-19% of all construction activity, with the UK being at thehigher end of this range. Davis Langdon and Everest (2000) suggeststhat the UK DIY market is at least £5 billion.

Self-build housing includes housing built by contractors for privateindividuals, housing built entirely by individuals, and a range ofalternatives in between. Some of this output will be included incontractors’ output but some will not. It is estimated that around£1 billion of self-build is not included in conventional measures ofconstruction output.

The informal, or black, sector of an economy refers to economicactivity that is unrecorded by design (illegal activities) or default andwhich, if recorded, would contribute to a nation’s GDP. Estimation ofthe size of the informal sector is complex and controversial and thereare competing figures in the available literature (for a review, seeSchneider and Enste, 2000). Nonetheless, there are indications that,globally, the informal sector has grown rather than diminished, despitenumerous policies aimed to capture the sector’s potential tax and socialsecurity contributions. Schneider (2002) suggests that the informaleconomy may amount to 18% of GDP in European OECD countries,compared to 29% in Asia and over 40% in Africa and South America.Within Western Europe, the UK has one of the lowest fractions – 13%– compared to 29% in Greece, 27% in Italy, and 23% in Spain, Belgiumand Portugal. Only Austria (10%) and Switzerland (9%) have smallerinformal sectors than the UK, relative to their GDP. The UK informal

21



3.5Do-it-yourself and self-build

Table 3.3 Estimates of the DIY and informal construction sector in variousEuropean countries (Euros/capita and %)

Source: Davis Langdon and Everest (2000) based on Euroconstruct data.

Denmark France Netherlands UK

DIY+informal output 388 400 292 318DIY/informal output 11% 19% 12% 17%as % of total output

3.6The informal economy

sector also appears to have grown, from just under 10% in 1989/90 to12.5% in 2001/2, with a peak of 13% in 1997/8. Using data on labourforces, Schneider (2002) shows that informal economy participantsmay constitute as much as 20-48% of the ‘official’ labour force in Italy,8-23% in Germany, and 13-20% in Sweden. Unfortunately, noestimates are given for the UK. Nor is detail offered of the sectoraldistribution of informal GDP and employment. It is widely believedthat construction (narrow definition) has one of the largest informalsectors, probably not less than £10 billion in terms of gross output.

The vast majority of construction firms tend to be small. Figure 3.12shows the size distribution of contractors and building materialsproducers. In 1991, 94% of all contracting firms employed 7 personsor less. Almost half of firms had a single employee. By 2001, there wasa slight shift away from very small firms, with 90% of all firmsemploying 7 persons or less (CFR, 2003), and 46% of firms having asingle employee. At the other end of the distribution, about half of1% of firms had 80 or more employees in 1991, and this fraction hadincreased just slightly by 2001. Large firms employing over 1200people in 2001 produced some 12% of all contractor output (CFR,2003). Similar skewed distributions exist for the non-contractor sectorsof the wider definition of the construction industry. Figure 3.12 showsthat in the building materials sector, 80% of materials are beingproduced by the largest 15-20% of firms.

Similarly over 80% of professional service firms have fewer than tenemployees (24% of all firms have just one employee), and only 3% offirms have over 50 employees. The distribution is similar regardless ofthe discipline.

22



3.7The size distribution of the UKconstruction industry

Figure 3.12 Percentage distribution of turnover and enterprises forUK contractors and building materials producers 1999

Source: Davis Langdon & Everest (2000)

Firms with a fee income over £7.5 million p.a. generate around60% of all professional services fee income, but account for just1% of the number of firms. A third of firms have fee revenues ofunder £150,000 p.a. Nearly 80% of firms have revenues of lessthan £750,000.

The size distribution of the broader industry is heavily skewed towardssmall firms. This size structure poses special problems for adding valueand contributing to sustainable development.

First, the preponderance of small companies precludes theexploitation of economies of scale and hence cost reductions, with allthe implications for competitiveness. The norm for many jobs is forsmall units to combine in consortia, resulting in considerabletransaction costs in ensuring consistent work patterns and effectivecommunication among participants, and low levels of investment in ITand R&D. There is widespread consensus that the fragmented natureof the industry is not conducive to efficiency (e.g. DTI, 1999; StrategicForum for Construction, 2002; Sorrell, 2003; Be and CIRIA, 2003).The consortium nature of construction projects places major demandson communication between the relevant components. It is estimatedthat forms of communication are still very traditional: personalmeetings still dominate, followed by telephone and fax, but with onlya few, although increasing, percentage points of communication beingaccounted for by electronic sources (Byfors, 2002). Industryfragmentation is also problematic for sustainability, which is not aspontaneous activity. It requires persuasion and encouragement, andfragmentation means that messages about sustainability and corporatesocial responsibility will be more difficult to diffuse among manythousands of small firms. Indeed, the evidence is that wider notions ofsocial responsibility have filtered through only to large firms.

Second, some aspects of social responsibility and sustainability mayinvolve financial sacrifices being made, at least in the short run. It isextremely unlikely that the ‘triple bottom line’ of profitability, andenvironmental and social responsibility comes without a cost to thefirm (Pearce, 2003). If so, this cost is less likely to be affordable tosmall firms working to low margins.

But there are positive features of smallness. Small units can and docompete with each other for smaller tasks, and they can offer tailor-made job specifications for customers. Customer-firm relationshipscan be closer than if large ‘anonymous’ firms are involved. Qualityassurance may also be higher where there are strong links betweencustomer and firm. Moreover, the size distribution in construction issimilar to that for many other industries, so that construction does notface a unique problem in this respect. Furthermore, it is worthreflecting on the fact that the current structure of the industry has not,contrary to much comment, prevented the industry securing areasonable productivity record, as Chapters 5 and 7 show.

Overall, there is a balance to be struck between the potentially higherproductivity that could ensue from increasing the average size of firms,and the closeness of customer-firm relationships for small firm tasks.

23



3.8The implications of small unit size

24



The purpose of this chapter is to paint a statistical picture of the UK construction sector.

The construction industry has narrow and broad definitions. The narrow definition

confines attention to the on-site construction activity by contractors.

The true extent of the industry is broader than this and includes the extraction of

construction raw materials, the manufacture and sale of building materials, products

and assemblies, the sale of construction products, and the various related

professional services.

On the narrow definition there are probably some 170,000 contracting firms in the

construction sector. On the broad definition the number is closer to 350,000.

The number of contractors (i.e. the narrow definition) has fallen in the last decade by

around 15% but there was some expansion of numbers in the second half of the 1990s.

On the narrow definition, construction contributes around 5% of UK GDP,

comparable with the health and education sectors. Value added has grown by around

1.7% per annum in the last decade.

On the broad definition, the contribution to GDP doubles to some 10%.

Annual housing output by contractors has remained fairly constant in the last decade

but non-housing output has shown significant growth.

Public sector output by contractors has been constant for the last decade, while

private sector output has increased, albeit cyclically. These trends conceal various

factors such as the Private Finance Initiative and privatisation of utilities.

Currently, contractors’ output is shared more or less equally between new work and

repair and maintenance. New work has shown the faster growth in the last decade.

Contrary to the perception of many, the narrow construction sector is larger in size

than any other European sector, apart from Germany, when measured in terms of

value-added.

The exact size of the DIY sector is difficult to measure but estimates suggest it is

worth approximately £5 billion per annum in terms of materials and products.

The size of the informal construction sector (the black economy) is also uncertain

but may be around £10 billion.

All sections of the broadly defined industry show a heavily skewed size distribution

with a large number of very small firms. While this feature of the industry raises

concerns about efficiency through economies of scale and reduced transaction

costs, much of the ‘smallness’ contributes to customer satisfaction through close

communication.


The schema presented in Chapter 2 showed that the sustainability ofeconomic activity rests on four pillars of capital stock: man-made ormanufactured capital, human capital, natural capital and social capital.This chapter looks at manufactured capital and shows how importantconstruction is in terms of accounting for a significant part of thenation’s wealth (the stock of manufactured assets), and in terms ofadding to that wealth each year (investment).

A nation’s true wealth comprises the sum of all its capital assets: man-made, human, environmental and social. Time series of total wealthfor recent years, excluding social capital, have been computed by theWorld Bank for over 100 countries (World Bank, 1997). These datasuggest that human capital dominates the total wealth of advancedEuropean economies, accounting for some 75% of the value of allassets, and with man-made capital accounting for most of theremainder. Environmental capital accounts for a small fraction of totalwealth. The exact contribution of the built environment to thesefractions is difficult to estimate. Nonetheless, focusing on man-madewealth alone, the built environment has always comprised the majorpart of that component of total wealth. Figure 4.1 records the datafrom 1760 to 1980.

25



4.1The built environment asa capital stock

Figure 4.1 The built environment and man-made wealth(£ million at constant 1958 prices)

Source: adapted from Mitchell (1988)

Figure 4.1 indicates that, from the Industrial Revolution to thepresent day, built assets have accounted for around 66-90% of allman-made wealth. If, in turn, the World Bank estimates of thecomposition of total wealth could be extrapolated historically, builtwealth would comprise around 16-22% of all wealth. While the dataare uncertain, there is also a suggestion that built wealth, while risingsubstantially over time, has fallen as a fraction of all man-madewealth. This would be consistent with the rise of machinery andplant as industrialisation advanced.

The historical data even permit an approximate breakdown of builtwealth into dwellings, and other buildings and infrastructure. In 1920,dwellings accounted for nearly 25% of the total (net) capital stock, andother buildings/infrastructure for a further 55%. By 1948 the dwellingsfraction had risen to 37% and the other buildings/infrastructurefraction had fallen to 41%, i.e. the values of dwelling stock and otherconstructed capital were approximately equal. By 1980, the fractionshad further changed to 32% and 41% respectively. Maddison (1995)provides further estimates of non-residential built capital for 1992. Of the$1,650 billion of this stock (at 1990 prices), infrastructure accountedfor 62%, or some $1, 000 billion.

Some idea of the infrastructure stock can be obtained from Table 4.1which shows the comparative length of road and rail tracks per headof the population and per square kilometre for selected countries.Since road and rail are jointly supplied goods (provision to one persondoes not exclude others up to the point of congestion), the indicatorsin Table 4.1 are not ideal: for example, more road length per capitadoes not necessarily reflect more ease of travel. Nonetheless, the datagive some idea of relative capital stocks. By and large, the UK lagsbehind other European countries in the transport infrastructureavailable to the population. However when the comparison is made byarea the relative position of the UK is improved.

Construction adds to the stock of built wealth and is therefore a formof investment. There is a view that, compared to its internationalcompetitors, the broad UK construction sector lacks a sufficient sharein total UK investment to allow modernisation and upgrading of theUK built stock to keep pace with that of the stock of machinery,equipment and vehicles. Davis Langdon and Everest (2000) suggests

26



Table 4.1 Roads and railway tracks in Europe: kilometres per 1000 peopleand kilometres per 1000 square km

Source: Eurostat NewCronos (2003); World Bank (2003)

Rail Road

Km/000 pop Km/000sq km Km/000 pop Km/000sq km

UK 0.58 0.14 7 1.7Germany 0.91 0.21 na naFrance 0.82 0.09 16.4 1.8Italy 0.39 0.08 na naAustria 0.68 0.07 12.8 1.3Norway 0.92 0.01 20.2 0.3

4.2Construction and capital formation

that there is an element of truth in this observation. Table 4.2 showsthe ratio of new build construction to gross capital investment, and theratio of all construction output to gross capital investment in severalcountries. The data suggest that the UK construction industry securesmuch lower fractions of total new investment than other countries,with the exception of France.

Construction investment flows occur internationally. In 1999, for SIC45 activities, the UK invested 4.3 billion Euros abroad, with 68% of itgoing to the USA, compared to an inward investment by othercountries of 0.9 billion Euros (Eurostat, 2002). This pattern holds forthe European Union as a whole, but with the UK having a larger ratioof balance of investment surplus compared to the EU4.

The physical stock of constructed assets changes according to the rateof new construction and the rate of asset depreciation. So long as theformer exceeds the latter, built wealth increases in physical terms. Inmonetary terms the net change in total wealth is made up of the valueof the new stock plus real price appreciation on the existing stock plusappreciation due to repair and maintenance, less the value ofconsumption of assets and any real price depreciation that mightoccur. The data in Figure 4.1 strongly indicate that the real marketvalue of the built environment has increased rapidly through time, andespecially so in the 20th Century.

Part of the built stock is the stock of dwellings, and one feature ofdwellings in the UK is that they tend to last a long time. Put anotherway, the rate of depreciation of the dwelling stock is very low. Meikleand Connaughton (1994) estimate that for the second half of the1980s, average annual losses of houses accounted for just 0.08% of thetotal housing stock. The effect is that the stock is steadily getting olderin the sense that the proportion of old houses in the total stock isincreasing. Figure 4.2 summarises the data and shows a steady declinein the net gains to the dwelling stock from the mid 1960s. Over the 40years from 1960, the average loss rate was about 0.2% of the finalstock, but with a variation between 0.4% in the late 1960s and under0.1% in the late 1980s.

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Table 4.2 Construction as a share of total man-made capital formation:selected countries 1998 (%)

Source: Davis Langdon and Everest (2000)

Belgium Denmark Finland France Germany Neths UK

New build/GDFCF 43 28 36 23 35 29 24All constructionoutput/GDFCF 68 50 59 46 53 53 46

4.3Longevity of built wealth

4 Interestingly, for real estate activities (SIC70)

the UK also has a surplus of outflow over inflow,

but the EU has an overall deficit.

Figure 4.3 highlights the growth rate of the (physical) stock inEngland. Average annual growth has been just under 1% per annum(from 14.9 million dwellings in 1961 to 21.1 million dwellings in 2000).The data suggest, in crude terms, that just over 7 million dwellingswere built, while just over 1 million were demolished during the period.

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Figure 4.2 Gains and losses to the housing stock 1961-2000 (thousands)

Source: adapted from Meikle and Connaughton (1994)

Figure 4.3 Housing stock development 1965-2000 (million)

Source: adapted from Meikle and Connaughton (1994); ODPM (2003)

The replacement rate of the UK housing stock is lower thancomparable European countries. Potter and Meikle (2002) report early1990s new dwellings completions as a proportion of the stock ofdwellings as follows: UK 0.83%; West Germany 0.96%; France 1.18%;Netherlands 1.64%; Spain 1.60% and Italy 1.20%. Self evidently, lowreplacement rates have implications for the construction industry sincenew build will be restricted and hence the size of the domestic industryconstrained. Offsetting this, the repair, maintenance and conversionsectors of the industry are likely to face greater demand than wouldotherwise be the case, as would the DIY industry. This will beespecially true if the age-profile of the housing stock changes in favourof older houses. Meikle and Connaughton (1994) show that theaverage age of the housing stock has increased since 1960. In 1971 theaverage age of the stock was not below 46 years, and in 1991 it wasnot less than 53 years. In 1970, 60% of the housing stock was lessthan 50 years old, and less than 10% was over 100 years old. In 1990those proportions had changed to 50% and 15% respectively. Thehousing stock is ageing.

Another way of thinking about the longevity issue is to calculate acrude replacement rate – how long each dwelling would have to lastif each new dwelling replaced a unit of the existing stock, andassuming no growth in demand. For the UK this replacement rate isaround 133 years, compared to 103 years in France, 78 years in theUSA, and just 28 years in Japan (Meikle, 2000). Yet another way ofviewing the same issue is to consider house-building rates per unit ofpopulation. The lower the rate, the more the population isoccupying existing rather than new properties. Meikle (2000)estimates that in the mid 1990s, the UK completed only 3 newdwellings per 1000 persons. This compares to 5.2 for the EU as awhole, 5.3 for the USA, and a staggering 13.0 for Japan.

At first sight, the longevity of the housing stock would appear to be agood thing. The more durable an asset is, the less likely it is to bereplaced in any given year, reducing the quantity of natural resourcesused in construction activity and so also reducing the level of pollutionassociated with that activity. Indeed, product durability has long beenone of the measures advocated by those concerned withenvironmental damage. Formally, product life extension is equivalentto source reduction – the reduction of wastes at source by reducingoutput. However, the issues are more complex and there is a finebalance between the environmental gains in extending product life andthe potential environmental losses from doing so. First, longevity locksin the prevailing technology and design of the building, making itmore, rather than less, difficult to adapt for newer technologies,whether energy-saving, more productive organisation of space, etc.The older the stock the more likely it is to be energy-inefficient so that,without aggressive energy-saving policies, even the available energyefficiency measures may not be taken up. Older dwellings occupied bythe older generations also present problems of fuel poverty and risk tohealth and life. Meikle and Connaughton (1994) show that a significantfraction of the housing stock remains in a state of poor maintenanceand repair, and this may be correlated to the ageing of the stock. Therecan be no guarantee that the reduced resource use and emissions fromreduced new build is greater than the environmental impacts of

29



increased conversion and repair, although it seems likely. Even healthand safety can be an issue. If low new build is compensated for byextra repair and maintenance, much of it will be carried out by houseowners and tenants as DIY. It is suggested that expenditure on DIYmay be roughly the same as total recorded output on housingmaintenance and repair. Accident rates from DIY are likely to be farhigher as result.

What at first sight appears to be an environmentally and socially benignfeature of the UK housing sector – the longevity of its assets – mayturn out to be an inhibitor of technological change in the housingstock and a barrier to energy efficiency. Policies to reduce asset life donot appear to be sensible – current asset lives must, to some extent,reflect property owners’ preferences. On the other hand, other factorsoperate to keep older properties in existence. As properties age, ratesof return to repair and maintenance tend to fall. With normal marketforces, this should provide an incentive for owners to sell propertiesfor redevelopment. But if asset values fall because of growingdisrepair, owners could find themselves with negative equity and theoption to sell for redevelopment appears unfavourable compared toremaining in the property. Moreover, the planning system tends todiscriminate against piecemeal redevelopments so that the demolitionof old properties tends to occur mainly under official regenerationschemes only. Overall, then, the systems of mortgage finance and landuse planning and, to some extent, owners’ preferences sustain anageing dwelling stock which may not be socially the best thing.

One suggestion is for a fresh look at building design. Here there maybe a need to follow trends that have taken place in, for example, theautomobile industry where legislation (such as the ‘End of Life’Vehicles Directive) has prompted design for easier recycling and re-useof vehicle components. Again, however, such measures can only affectnew properties, with little impact on the average age of the dwellingstock. Such measures could be more effective for industrial andcommercial buildings where lives are shorter. Otherwise, the focusneeds to be on the planning regulations and on systems of propertyfinance to see how they might be changed to secure a better age-profileof buildings.

But there are alternative views of the longevity issue. Some arguethat older buildings can generally be retrofitted for energy efficiency,and that this process is itself less polluting than the production ofnew buildings:

‘In global environmental terms, the balance of advantage stronglyfavours the retention of existing building stock, particularly whenperformance in terms of energy consumption in use can be improved’(BS 7913: 1998 – Building Regulations and Historic Buildings).

It appears, then, to be a matter of balance as to how far longevity offixed assets is a good thing, and an issue that can be resolved only bydetailed analysis of environmental and social gains and losses.

30



31



Built wealth – residences, workplaces, public buildings and infrastructure – has long

accounted for the major part of manufactured wealth, from some 90% at the time of the

Industrial Revolution to around 70% now.

Dwellings account for about one-third of manufactured capital stock.

Of non-residential capital, infrastructure and non-residential building accounts for

nearly two-thirds and machinery and other assets for one-third.

On a per capita basis, the UK generally lags behind other European countries in the

provision of transport infrastructure, however when the comparison is made by area the

relative position of the UK is improved.

The UK has one of the lowest proportions of European capital investment in new build

and overall construction activity relative to total capital investment of all kinds.

Much of the built environment is long-lived, with the UK having longer replacement

rates than other comparable countries. This has implications for the structure of the

industry (e.g. the demand for repair and maintenance) but also for the chances of

securing energy efficient buildings and for housing conditions. It is not obvious that

capital longevity contributes positively to sustainable development.


32


Human capital refers to the stock of knowledge embodied in therelevant labour force, and the health status of that labour force. Theavailable data on the wealth of nations strongly suggest that humancapital comprises the largest part of total wealth, accounting forperhaps three-quarters of wealth in advanced economies (World Bank,1997). The stock of human capital can only be increased by a) havinga larger labour force, b) a better trained and educated labour force, andc) a labour force that keeps pace with technological change.

Figure 5.1 shows a snapshot of employment in 2001 in the broaddefinition of the construction sector. The data are drawn from the ABIand include an estimate for working proprietors. However it is likelythat the data understate the total construction workforce, particularlythe self-employed. Figure 5.1 indicates that around 3 million people areemployed in the broader definition of the industry. Since totalemployment in the UK is approximately 27.9 million, constructionaccounts for 10.7% of employment on the broader definition5.

Figure 5.2 shows employment trends for contractors only. The datareveal the impact of the declining economic conditions in the early1990s. Whereas the number of firms fell by only 6% 1991-5,employment fell by nearly 15 %. The data also suggest a decline in theproportion of self-employed relative to employees. This may reflect thechanges in Inland Revenue definitions and treatment of ‘labour onlysub-contractors’ (from treating them as unregistered small enterprisesto treating them as employees of firms) at about this time.

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5.1The relevance of human capital

5 Human Capital

5.2The labour force in theconstruction industry

Figure 5.1 The labour force in the construction industry 2001 (all manpower)

Source: ABI (2003)

5 As at July 2003.

The narrow construction industry faces a serious problem in matchingthe supply of available skills and its demand for labour. In essence,there is a skills mismatch that shows up in various ways.

As far as employed workers are concerned, and based on CITB data:

• Since 1990 there has been a sharp reduction in the numbers ofmanual workers employed in the age group 16-29.

• Numbers employed of manual workers in the age group 30-39 haveincreased slightly.

• Numbers of manual workers employed in the 40+ age group showa variable picture, with some age groups increasing in employmentand others decreasing.

• This declining employment pattern also holds for non-manualworkers in the 16-29 age group, and the 30-39 group also showsan increase.

• The 40-49 group shows a decline for non-manual employment.

• The 50+ age group shows a significant increase.

The extent to which this pattern holds for the self-employed is not easyto gauge.

Overall, the employed labour force in the narrow sector shows anageing trend, partly due to non-recruitment in the 1990s recession butalso due to educational changes whereby young people who wouldotherwise have entered the industry stay on at school and college, thenenter other industries.

34

5 Human Capital


Figure 5.2 Time series for employees, self-employed and all manpower inthe construction industry 1991-2001 (thousands, based on lastquarter of the year)

Source: DTI (2002)

5.3Training and skills structure

Age structure

The problems of matching the demand for, and supply of, skills arisespartly because of the declining employment of younger people in theindustry, but also because narrow construction has to compete withother sectors for the skills that it needs. More constructionprofessionals (engineers, architects, surveyors etc.) are employedoutside the narrow industry than in it (CITB, 2002). The picture is lessdramatic for building services but even here only half the supply ofelectricians is employed in construction.

The prevailing skill structure can be summarised. Only 13% ofemployees (all occupations, and taking the broader definition of theindustry) have an NVQ-equivalent level above 4, but 46% have a levelof 3 or above (CITB, 2002). This compares favourably to fractions inthe range 31-37% for transport, agriculture and distribution, butunfavourable to fractions of 57-61% in public administration, bankingand energy and water. Just over 40% of employees have gone throughan apprenticeship.

In terms of available skills, therefore, there is a fairly strong profile.The concern is with the future and whether the industry will becompetitive without some improvement in the skills base. Varioussurveys suggest difficulties already exist in recruitment, i.e. a ‘tight’labour market, especially carpentry/joinery and bricklaying (CITB,2002). CITB (2000) estimates that the period to 2006 will require76,000 new recruits each year, with special focus oncarpenters/joiners, managers, electricians, clerical workers, bricklayersand plumbers.

Increasing human capital implies increasing numbers of workersand their skill levels. CITB’s Trainee Numbers Survey provides aninsight into these two dimensions. The trend in first-year starters onconstruction courses at Further Education Colleges and TrainingCentres was fairly constant up to 1996, fell to a low point of justover 29,000 in 1997, and has risen since. However, training intake isnot the same as entry to the industry and there is significant fall-out,with perhaps 20-40% of intake leaving the industry (CITB, 2002,p60). Figure 5.3 shows the picture at the level of university degrees,and the figures suggest a downward trend in entry to construction-related degrees.

University construction-related degree entry has fallen in recent yearsand is a cause for concern within the industry. Only degrees inenvironmental technology, town and country planning, andarchitecture show any signs of constancy or increase. Civil engineeringand building and construction show quite marked falls (DTI, 2003).

35

5 Human Capital


Skills, occupations and industries

Skills structure

Training

Bringing the supply and demand sides together, CITB (2002) estimatesthat the supply of bricklayers (fully plus partially qualified) may justmatch the demand up to 2006, but that there will be significantshortfalls of supply for plasterers, painters and carpenters (theseestimates assume the higher level of fall-out from training schemes).The picture is worse still for civil engineering and specialist buildingtrades (glaziers, roofers, floorers etc.), and uneven but still problematicfor building services (electricians etc). Manual skills are attractingsignificant wage differentials relative to the rest of the economy, a clearsign of labour shortages.

Overall, the mismatch of skills supply and demand could prove tobe serious for the construction industry and there is anacknowledged need to invest more substantially in the human capitalaspects of the sector.

Central to the competitiveness of the construction sector is labourproductivity (LP) and overall total factor productivity (TFP). Since thelatter is a proxy for the contribution of technological change it isdiscussed in Chapter 7. This section looks at the available evidence onlabour productivity.

Table 5.1 shows measures of labour productivity for the UK, the USA,France and Germany, and for the total economy, manufacturing andconstruction separately. The striking feature of Table 5.1 is that UKlabour productivity lags behind productivity in other countriesregardless of the sector analysed or whether it is the total economythat is of concern. However, construction shows a much smaller UK‘deficit’ compared to France and Germany which are, respectively, only8 % and 1% higher than the UK, and these differences are probably

36

5 Human Capital


Figure 5.3 Applications and acceptances to undergraduate courses in builtenvironment subjects 1994-2000

Source: UCAS (2002)

5.4Labour productivity

Skills shortages

within the relevant margins of errors of the statistics (Ive et al. 2003).Nonetheless, construction as a sector has low productivity relative toother sectors, as typified by manufacturing.

Analysis of rates of change in labour productivity shows theconstruction sector in a better light. From 1973-1995 UK constructionlabour productivity grew at around 2.6% per annum, higher thanFrance (2.4%) and substantially higher than Germany (1%) and theUSA (minus 0.8%). For 1995 – 1999 the rate of change slows downdramatically in the UK (to 0.6%), rises in Germany (to 1.4%), remainsnegative in the USA (minus 0.2%), and becomes dramatically negativein France (minus 2.8%). The UK rates of change mirror those inmanufacturing and in the economy as a whole. Not too much can beread into these comparisons because of formidable data problems,but, taken at face value, they suggest that the UK construction sectormay be catching up on the productivity levels of continental Europe.Indeed, given the data problems, the UK could be ahead in terms oflevels. Moreover, as Ive et al. (2003) note, the comparatively goodperformance of UK labour productivity in construction is all the moresurprising given evidence of low capital-to-labour ratios.

Construction is by nature a dangerous industry. Heavy materials beingmoved about on and off site pose risks to workers and others.Contracting work is also an all-weather activity, adding to risks, and agood deal of work involves activities at heights where further risks areinvolved. Table 5.2 shows injuries in the contracting sector, expressedboth in absolute numbers and relative to output. By and large, overallinjuries appear to have increased slightly, although changes in datacollection make comparisons with years before 1996 difficult.Certainly, employee injuries appear to have risen by around 15%between 1996 and 2001. Expressed relative to output, however, theaggregate injury rate has been constant and possibly declining slightly.

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5 Human Capital


Table 5.1 Comparative labour productivity levels 1999(output per hour worked) UK=100

Source: O’Mahoney and de Boer (2002)

UK US France Germany

Economy 100 126 124 129Manufacturing 100 155 132 129Construction 100 114 108 101

5.5The health of the constructionlabour force

Table 5.2 Contracting sector injuries

Source: accident data from DTI (2002, Table 12.21). Output data from DTI (2002) Table 2.2. Note: 1. Change in data collection makes comparison

with earlier years difficult. The changes involved RIDDOR - Reporting of Injuries, Diseases and Dangerous Occurrences Regulations. Injuries refer

to fatal injuries, non-fatal major injuries and all other injuries requiring absence from work of 3 days or more.

1993/4 1996/71 2000/1

Employees 11,378 11,930 13,767Self employed 2,360 1,880 863Public 122 408 320Total all injuries 13,860 14,218 14,950Injuries per £10moutput (current prices) 2.7 2.6 2.6

Table 5.3 shows how construction (contractors only) fares comparedto other high-risk sectors in terms of injuries and illness in the UK.

Construction has the worst record for number of fatalities and majorinjuries. When expressed as a percentage of the labour force,construction is ranked fourth worst for fatalities behind quarrying,agriculture and energy resource extraction. Construction also has thefourth worst record in terms of major injuries expressed relative tothe workforce. Some idea of the economic cost of these figures canbe derived by multiplying fatalities and injuries by the ‘average valueof prevention’6 per casualty as used by the UK Department forTransport (DfT, 2000). For 2000 these values are £1,144,890 for afatality and £128,650 for a serious injury. The results of this exerciseare that construction fatalities have a social cost of £365 million and

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5 Human Capital


Table 5.3 Construction injuries relative to other sectors in the UK,1998/9 to 2000/1 combined

Source: HSE (2001, Tables 1,19 and 1.20). ‘Worst’ performance shown in bold for each measure of impact. N.e.c = not elsewhere classified.

Industry Fatalities Rate per Non-fatal Major injuries

worker major per worker

(fatalities injuries (injuries

per 100,000 per 100,000

workers) workers)

Quarrying 9 10.4 363 449.7

Agriculture 128 9.0 1,850 212.2

Fossil fuel extraction 12 8.9 511 392.6

Construction 252 4.8 12,943 392.1

Metal manufacture 58 3.4 4,690 297.7

Wood manufacture 9 3.2 1,023 420.5

Manufacture of other 12 2.7 1,247 302.8non-metal productsManufacturing n.e.c. 17 2.3 – –

Transport 80 2.0 8,710 258.9

Electricity, gas, water 6 1.6 – –

Manufacture of rubber 12 1.6 1,898 274.4and plastic productsManufacturing of food – – 4,353 306.9and beverages

Total 595 – 37,588

National all industries 764 0.9 83,567 112.8

6 In the case of fatalities, also known as the

‘value of a statistical life’.

serious injuries have a cost of £1,665 million, a grand total of justover £2 billion in a year.

To a considerable extent this social cost reflects the intrinsicallyhazardous nature of construction. But high-risk levels clearly havemajor social consequences: not only are lives lost and individualsinjured, but families and friends are affected as well. There are alsoother implications since high risks deter workers from entering thelabour force. Technological change should help to reduce on-site risks,for example through pre-fabrication off-site. Table 5.3 shows that thewood and wood product manufacturing sector has a lower risk ratethan the construction sector, although the difference is not dramatic.

The negative story implied by the accident figures should not beexaggerated, although it remains a source of concern for the industryand for commentators. An historical look at the accident rates givessome perspective. Table 5.4 shows fatality and non-fatal injury rates for1961 to 1996. There are problems with the data (see notes to table 5.4)but taking the data in Table 5.4 to be measuring the same categories ofaccident, the long-run trend is very clearly downwards.

Chapter 2 noted that the UK do-it-yourself sector is sizeable and canlegitimately be regarded as being part of the construction sector.Accident rates from DIY are not known with accuracy since many aretreated at home and visits to GPs are not always recorded by cause.There are 84,800 DIY accidents (excluding ladder accidents) each yearnecessitating a visit to Accident and Emergency facilities. It is thoughtthat there is at least an equal number involving visits to GPs (DTI,1999). Ladder-related incidents, not all of which are associated withDIY as such, account for around 50 deaths each year and the total non-fatal falls amount to 16,000.

39

5 Human Capital


Table 5.4 Long run accident rates in UK construction

Source: HSE (1998). Notes: 1 – 1990 to 1996 only. 2- some caution is needed when interpreting these figures since definitions and scope change

over time. 3 – non-fatal injuries are consistent with the data in 5.3 but the fatalities data are well below those in Table 5.3. It is not clear why the

discrepancy occurs. 4-excludes 1983-5 for which data on injuries requiring more than 3 days absence are not available.

Average 1960s Average 1970s Average 1980s Average 1990s

Per annum Per annum Per annum Per annum1

Fatalities 257 170 106 733

Non-fatal injuries2 40,598 35,496 27,7984 12,7873

5.6Health and safety in the DIY sector

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5 Human Capital


The labour force is a critical ingredient of the construction industry.

Around 1.5 million people are employed by the narrow construction sector and

probably closer to 3 million for the broadly defined industry.

Employment in the narrow sector has been roughly constant over the past decade but

with a 15% fall in the first half of the 1990s.

The (narrow) construction labour force shows an ageing trend and there are concerns

about attracting young people into the industry.

The educational standards in the industry compare favourably to transport, agriculture

and distribution, but unfavourably with public administration, finance, and

energy/water.

There are worrying downward trends in entry to construction-related university degrees.

Contrary to general impressions, labour productivity in the narrow sector is comparable

to France and Germany, if perhaps slightly less, but somewhat lower than the USA.

The accident record of the (narrow) industry still gives cause for concern. The industry

has the highest level of total fatalities of all industries but is fourth worst when

computed as a rate per member of the workforce.

Similarly, non-fatal injuries are highest in (narrow) construction by a very substantial

margin but, per member of the workforce, the industry is fourth worst.

Fatalities and non-fatal injuries in construction impose a social cost of some £2 billion

per annum.

However, while the data are imperfect, the industry’s accident rate has improved

dramatically in the last 40 years.


The beginning of this report emphasised that a true measure of theimpact of the construction sector can only be appreciated bybroadening the traditional indicators of success – GNP, productivityetc.- to include environmental and social impacts. This chapter reportson the contributions that the sector makes to these wider concerns.

Construction activity affects the environment in several ways. Bycreating additions to the built environment, construction can add tothe built stock, raising the aesthetic profile of towns and cities. Therole of the professional services, and especially architecture, plays aleading role in this beneficial environmental effect.

Construction utilises materials and energy, the extraction,processing and transportation of which creates environmentalimpacts. For example, the quarrying of materials gives rise tonegative local impacts e.g. visual amenity; produces noise and dust;and the transportation of the resulting materials adds to congestion,noise, and air pollution. The energy used in the on-site constructionsector is largely fossil fuel energy, and the extraction of oil, coal andnatural gas creates environmental impacts e.g. particulate matter,sulphur and nitrogen oxides, volatile organic compounds, throughgeneration and distribution.

Construction also creates waste at the design, construction anddemolition stages. These waste arisings have to be disposed of tolandfill if not recycled for further use. Construction waste arisingsaccount for 90 million tonnes of materials per annum of which some44 million tonnes per annum typically goes to landfill sites, the subjectof increasingly strict legislation.

The first law of thermodynamics dictates that whatever materials andenergy are removed from the environment must reappear in equalweight at the end of the life of the product in which they areembedded. Materials and energy cannot be created or destroyed, butare simply rearranged by economic activity. Accordingly, the lessefficient industry is at using materials and energy, not only the morematerials and energy are used, but also the more waste is disposed ofto the environment. Two causes for concern arise. Resources are finiteand hence the faster they are used, the faster the existing stock willdeplete. Fewer resources are then available to future generations.Second, the capacity of natural environments to receive waste is alsofinite: either in the physical sense (e.g. landfill space), or in a qualitativesense in that waste can affect the quality of the receiving environment.While both these resource and environmental issues figureprominently in the environmental literature, the latter is almostcertainly more important. Few materials or energy sources show signsof running out, but receiving environments are under serious threat.Examples include local air quality, global warming, landfill space andthe disposal of materials to the sea.

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6.1Introduction

6 Construction and the Natural and Social Environment

6.2The materials balance

The recent UK Construction Industry Mass Balance Study hasdocumented the materials and energy balance for the UK constructionsector (Smith et al, 2002). Figure 6.1 shows a simplified form of thebalance for materials only for the year 2000. Data are in millions ofmetric tonnes.

On the basis of the numbers available, some 364 million tonnes ofmaterials flow into the built environment in a given year. Of this, about80% comes from primary materials, mainly quarry products (126 mt)and cement, plaster etc. (98 mt). A further 21 mt comes fromsecondary materials such as road planings, coastal dredged material,and mineral wastes including pulverised fuel ash from power stations.A further 46 mt enters as recycled material, primarily recycledaggregates and construction and demolition waste (C&DW), and thismay be an underestimate since recycling on site was not included.Finally, there is a modest 3 mt of reclaimed materials (salvagedmaterials, architectural antiques). Of the 364 mt of materials beingadded to the built environment, some 90 mt reappear as waste, the vastpart of which is C&DW and soil. Of this 90 mt, about 46 mt (around50%) is recycled, completing the loop to the recycled input.

These data can be utilised to derive some crude indicators of resourceefficiency. The construction sector operates at a gross conversionefficiency of 75% (274/364) i.e. every tonne of material consumedproduces 0.75 tonnes of useful material input to the construction

42



Figure 6.1 Materials balance for construction

sector. Thus, some 25% of the inputs into the built environmentsector reappear as waste (90/364), but the net waste figure is 12%because roughly half the waste is recycled ([90-46]/364).

While materials balances of this kind are interesting, the numbers asthey stand have little policy import. Nothing can be said, for example,about the changes in efficiency (for better or worse) over time untilsimilar balances are constructed for other years. While the numbersmay appear large there is no benchmark against which to judge them.Thus it is not possible to say whether, for example, the 75% overallinput-output ratio is low or high. Obvious bases for comparison wouldbe (a) past years, the data for which are not available, or (b)international data, which are also not available on the same basis.Moreover, the materials waste emanating from construction isdominated by inert waste. As such, this waste does not generatepollution of the kind associated with organic (bio-degradable waste) –especially carbon dioxide and methane. Its transport is obviouslyassociated with air pollution, noise and dust, and other environmentalimpacts. That society places a lower negative value on inert wastecompared to organic waste is reflected in the current structure of theUK Landfill Tax which is £2 per tonne of inert waste but £14 pertonne, and rising, for organic waste.

Regardless of the exact nature of the materials balance, theconstruction industry does have significant potential for movingtowards higher levels of recycling, and more sustainable wastemanagement practices. In the European Union as a whole, around25% of construction and demolition waste is recycled. In someMember States, however, this fraction is very much higher, and it is notclear why success rates vary. Part of the problem in raising recyclinglevels is the need for certainty about the quality of the recycledproducts. The consistency of quality tends to favour primary oversecondary materials. Secondary materials may carry contaminants thatare not easy to identify on all occasions and may result in positive risksof structural failure at a later date (Powell and Craighill, 2001). Wasteexchanges can help to reduce informational problems by labellingmaterials and indicating location and quantity available. In the UK,these issues of market failures to inhibit the increased use ofsecondary and recycled materials, are being addressed by the Waste andResources Action Programme (WRAP, www.wrap.org.uk). Howeverthe economics of recycling can be disadvantageous with high volume,low value materials in the wrong place leading to high transport costs.Furthermore the need for cleaning of some materials, e.g. reclaimedbricks, tends to make costs very high.

The notion of waste, and the use of recycled and reclaimed materialsin construction, is changing within the UK. Some designers and clientsemphasise the process of deconstruction rather than demolition, theformer having a focus on re-use of existing materials. For example, inthe UK, the recycling of pre-1940 bricks has increased (the use of limemortars making it possible to reclaim whole bricks, whereas cementmortars are more difficult to remove), partly in response to consumerpreferences for the decorative effect they produce. Similar increasesare being recorded for paving, tiles, wood, glass, and whole productssuch as chimneys and fireplaces (BRE, 2003). Construction waste (as

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opposed to demolition waste) presents greater problems for recyclingsince small quantities of waste are generated over long periods of time,and the waste is likely to be commingled. Around one quarter ofconstruction waste is packaging materials, followed by approximately10% each for timber, concrete, ceramic material, plaster and cement,and insulation.

Smith et al (2002) compute estimates of the energy used inconstruction. Table 6.1 shows the data for energy. These data excludeany estimates of energy use in buildings once constructed, an issueaddressed below.

Some 50% of energy consumed in construction is accounted for bymineral extraction and product manufacture. A further 39% of energyuse is accounted for by transport of materials, waste, and products.

How significant is the energy consumption figure? The total of justunder 8 mtoe is a little less than 5% of UK final consumption of energy,but around 22% of UK industrial energy use. The 5% figure is close tothat for the share of (narrow) construction value-added in UK GDP.

Since construction is a major energy user (see Section 6.3) it isunsurprising that it is also a significant emitter of energy-relatedpollutants. Two considerations are relevant. First, pollution associatedwith construction activity, then pollution associated with the stock ofbuilt assets.

Table 6.2 shows the emissions of various air pollutants fromconstruction activity and the share of construction-related emissions intotal emissions. With two exceptions, construction contributes only atiny fraction of total air emissions. The two exceptions are particulatematter and volatile organic compounds. The contribution to totalemissions becomes greater, however, once other related sectors areincluded. In this case, Table 6.2 adds in the manufacture of cement, limeand plaster. In all cases other than VOCs, the addition of this sectorsignificantly increases emissions.

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6.3The energy balance

Table 6.1 Energy use in the construction sector (millions of metric tonnes)

Source: Smith et al. (2002)

Activity Energy consumed

Mtoe %

Mineral extraction, product and material manufacture 3.93 50Transport of products and materials 1.63 21Transport of secondary and recycled materials 0.43 5Construction and demolition site activity 0.87 11Transport relating to construction and demolition site activity 0.83 11Transport of wastes from product and material manufacture 0.01 negTransport of construction and demolition waste 0.14 2Total 7.84 100

6.4Construction and pollution

Air pollution and construction activity

Of more importance is the change in emissions over time since this reflectsthe environmental performance of the industry. Table 6.3 shows thesechanges for total emissions and for emissions from construction (only).

Table 6.3 suggests that (narrow) construction has generally mirrored thenational decline in air pollutants, reflecting national, EU, and UNECEpolicies for the control of air pollution. While construction has perhapsslightly under-performed relative to the total economy in particulate matter,VOCs and greenhouse gas reductions, it has over-performed in nitrogenand sulphur oxides reduction.

Unsurprisingly, when pollution is related to final users, the stock of builtassets is a major emitter.

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Table 6.2 Air pollution emissions from construction activity 2001

Source: data from www.statistics.gov.uk/environmentalaccounts. Notes: GHGs = greenhouse gases in million tCO2 equivalent.

PM10 = particulate matter of less than 10 microns diameter in 000 tonnes, SOX = sulphur oxides in 000 tonnes, NOX = nitrogen

oxides in 000 tonnes, VOCs = volatile organic compounds in 000 tonnes.

All GHGs CO2 only PM10 SOX NOX VOCs

Construction 3.9 3.8 5.5 1.5 17.4 58.6(narrow definition)All sectors 713.7 613.5 200.0 1296.0 2190.0 1565.0Construction 0.5 0.6 2.3 neg 0.8 3.7(narrow definition) as % of all emissions Construction (narrow 2.1 2.4 4.4 2.4 3.0 3.9definition), plusmanufacture of cement,lime and plasteras % of all emissions

Table 6.3 Changes in emissions over time

Source: estimated from data in www.statistics.gov.uk/environmentalaccounts

Pollutant Change in UK total Change in construction

emissions 1970-2000 emissions 1970-2000

PM10 -68% - 50%Change in total emissions Change in construction

1990-2000 emissions 1990-2000

GHGs -8% -1%SOx -67% -80%NOx -28% -33%VOCs -42% -31%

Pollution, energy use and thebuilt environment

Table 6.4 shows energy use and carbon dioxide emissions. The total, allbuildings – commercial, industrial and domestic – accounts for justunder half of final energy used and similarly for carbon emissions.Significantly, while domestic buildings are the greater source of carbonemissions, non-domestic buildings account for just under 20% of allemissions. Some commentators have noted that, while energyefficiency has a strong focus in the design of domestic dwellings, farless attention has been paid to non-domestic buildings (Sorrell, 2003).

As far as the new housing stock is concerned, thermal insulation in useor set by standards has increased in England during the last twentyyears (Ecofys, 2002). Nonetheless, within Europe, the UK lags behindthe Scandinavian countries, France and the Netherlands. Ecofys (2002)estimate that, since 1975, European countries have reduced thedwelling stock’s energy consumption and CO2 emissions by 43%because of thermal insulation measures introduced since that date. Anadditional 8% reduction could be achieved by 2010 by furtherretrofitting of the existing stock.

The built environment is the outcome of the entire history ofconstruction activity. Our understanding of the interaction betweenthe built environment and human wellbeing has changed over time. Itis increasingly, but perhaps still not widely, recognised that the natureof the built environment affects human health, social behaviourincluding crime, and a general sense of cultural identity and civicpride. In terms of the capital concepts introduced in Chapter 2, thebuilt environment is the major part of man-made capital, but it affectshuman and social capital as well. Of course, not any built environment

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Table 6.4 Final energy consumption and carbon dioxide emissionsby final user

Sector Final energy use Carbon emissions

PJ % total MtC % total

Commercial andpublic buildings 880 13.1 21.2 15.1

Industrial buildings 282 4.2 5.6 4.0

Domestic buildings 1960 29.3 39.2 27.8

Total buildings 3122 46.6 66.0 46.9

Industrial processes 1231 18.4 27.7 19.7

Transport 2294 34.3 46.0 32.7

Agriculture 49 0.7 1.1 0.8

Total 6696 100.0 140.8 100.0

Source: Sorrell (2003), based on data from Building Research Establishment

6.5The benefits of the built environment

is beneficial in this respect. It is easy to cite examples of unplanned,poorly designed, built structures that have the opposite effect onhuman wellbeing. But this underlines the point that good design canbe beneficial.

Lorch (2003) provides a useful list of built environment benefits which,he argues, should be the basis of the industry’s mission statement:

• Economic productivity, quality of life, health, safety, education, asense of identity, accessibility to services etc

• Long-lived assets with a capacity to accommodate changes of use inits lifetime

• Reinforcing shared social values, and continuity of form and fabric.

A number of studies have shown that careful design of hospital andother healthcare units help to speed patient recovery, reduce patientabuse of staff, and raise staff morale. By and large, modern unitsfared far better than older units and design issues, such as thepresence of accessible windows, improved patient health (CABE,2002). Indeed patient treatment times in new hospitals compared toold hospitals have been reduced significantly, resulting in financialsavings of £2,000 to £7,000 per bed year in two sample cases (Lawson& Phiri, 2003). Human health is known to be affected by poorhousing. Barrow and Bachan (1997) estimate that the 7.6% of publichousing considered unfit for habitation produces poor health thatcosts the nation £3 billion, crime that costs £1.8 billion, and a further£0.1 billion in increased fire service costs. The British MedicalAssociation has urged public action on poor housing because of theclose link between the condition of properties and human health(BMA, 2003).

Schools with higher levels of capital investment in the physicalenvironment have better learning and achievement records. Similarassociations have been found between educational performance andper capita floor space and natural lighting (CABE, 2002). As many asone in five schools in England have unsatisfactory accommodation tothe extent that delivery of the curriculum is affected (DfES, 2003).

To a considerable extent, better design is capitalised into the price ofhousing, the price premium reflecting society’s willingness to pay forhigher levels of design. It is not just the design of houses themselvesthat matters, but the layout and impression of the wholeneighbourhood. Similar premia have been identified for commercialproperties that meet higher architectural standards (Vandell andLane, 1989).

Design also influences social capital by fostering a sense of civic prideand involvement in the neighbourhood. Careful use of open land forrecreational purposes produces higher property values and a bettersense of social responsibility. Integrating cultural features, such asmuseums and art galleries, into urban and rural developments canimprove local incomes through tourism, and can improve educationalachievement (Heilbrun and Gray, 2001). Finally, good neighbourhooddesign - for example, the use of open spaces, minimising cul-de-sacsand obscure areas - has been shown to reduce the incidence of crime(CABE, 2002).

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While these interactions between design and human health andwellbeing are often subtle, the direct relevance of the built heritage forhuman wellbeing is more obvious. Fine buildings, especially those withhistorical features, attract many visitors, are admired by those whoreside in them or just occasionally visit, and are valued by those whomay never visit them but wish them to be preserved. As yet, there areno sets of monetary accounts for the built environment as there arefor, say, agriculture, but the research necessary to begin theconstruction of ‘heritage accounts’ has now started in earnest (Pearceet al, 2002). More than a third of overseas visitors to England citedheritage sites as being a significant influence on their decision to visit.Annually, some 16 million visits are made by overseas visitors to thetop ten most visited English cities and towns. Annually, over 1.2 billionvisitor-days were spent in the English countryside, generating spendingof over £11 billion. A quarter of these visits were to heritage sites.Some of the economic value embodied in heritage buildings can begauged from estimates of the financial rate of return to listed officebuildings compared to unlisted ones. In the last five years a premiumof 1.5% per annum has been calculated (all data from EnglishHeritage, 2002).

Some 380,000 buildings and scheduled ancient monuments in Englandalone are listed and around 8% of those are ‘at risk’. The surest way ofguaranteeing the future of listed buildings is to convert them in asympathetic manner. A significant part of the heritage industryconcerns planning, development, and repair and maintenance. It istherefore the skills of the modern-day construction sector that help tomaintain the built heritage.

The UK Government is committed to the development of socialcapital through the improvement of communities and relationshipswithin communities. The goal is:

‘..to create communities that can stand ontheir own feet and adapt to changing demandsof modern life. Places where people want tolive and will continue to want to live’(ODPM, 2002)

The built environment is crucial to this goal. Run-down anddilapidated town centres and housing estates contribute to crime, illhealth and mistrust. Well-designed and planned land use, andstructures with open spaces and facilities for recreation help tomaintain and enhance the community. Transport links are crucial.Government acknowledges the central role played by buildings andinfrastructure. Buildings should ‘meet different needs over time’ and‘minimise the use of resources’, while housing should be diverse inorder to ‘support a range of household sizes, ages and income’(ODPM, 2002, p.3). The resulting sustainable communitiesinvestment programme comprises around £5.5 billion in 2002-3,rising to £7.7 billion in 2005-6.

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6.6Sustainable communities

One of the most problematic concepts within the notion ofsustainable communities is that of the affordable home. Market forces,combined with restrictions on the supply of land for development viathe land use planning system, result in houses prices in some areas thatare beyond the means of first-time buyers and other lower incomegroups. In other areas, houses stand empty and abandoned. Whilemarkets can be expected to equilibrate to some extent, with differentgroups buying houses in different areas according to price, one effect(both rural and urban) is to price out of markets key workers andpublic servants needed for any vibrant community. Governmentpolicy, through the planning system, is to ensure developers providesocial housing. The policy is not without risks. Housing prices willremain low only if substantial additions to supply are made. Otherwise,targeted subsidies or restrictions on who can purchase such propertieswill be needed to ensure that properties remain affordable. Withoutsuch measures, market forces will again force the prices of thoseproperties upwards, as some have warned (for example, the House ofCommons Select Committee on ODPM, 2002). Clearly, as the policydevelops, the construction sector has the major role to play in theprovision of affordable homes.

The second risk in developing the sustainable communitiesprogramme is that supply will be managed to respond to demandmainly in those areas where demand appears highest. Rather thanreducing regional imbalances, policy could enhance the disparities. Itmakes more sense from a social standpoint to direct investment of allkinds to areas where the various capital stocks, and especiallyinfrastructure, housing and labour, are under-utilised. One response tothis concern is that restricting demand in high demand areas, such asthe Southeast, could result in investment not taking place at all, ortaking place abroad. There is clearly a balance of risks – the social andenvironmental costs of allowing demand to expand in areas whereinfrastructure is already congested, and the risk of lost investment. Ifsupply is to be mainly demand-led, a substantial responsibility falls onplanners, architects and designers to meet that demand in the leastenvironmentally destructive manner. Government is aware of theserequirements – see, for example, ODPM (2003). It remains to be seenhow the balance between the competing interests of environment,social inclusion, and housing and infrastructure demand will be struck.

A third risk is identified by Young (2000). The drive for affordableproperties means that far more houses must be built per hectare tokeep unit prices down. A minimum density of 30 houses per hectare isrecommended by the government but Young suggests that this level ofdensity may still be insufficient to justify the necessary investment inassociated infrastructure, especially public transport.

Given the potential for increasing travel speeds on rail journeys, it can bequestioned whether better use could not be made of existing under-utilised infrastructure outside the Southeast, combining propertydevelopment there with high-speed links to workplaces in the Southeast.

One other feature of the link between social capital and constructiondeserves mention. If social capital declines – and indicators such ascrime, family break up, terrorism and vandalism are measures of suchloss – then society has to invest more and more in unproductive

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construction activities. Buildings such as courts of justice, policestations and prisons remind us that a significant fraction ofconstruction activity goes into structures the purpose of which is tocompensate for the decline in social capital. From a national incomeaccounts standpoint, the resulting buildings and institutions stillconstitute real output. From a social standpoint, they are defensiveexpenditures designed to counteract the failure to invest incommunities and trust.

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A materials balance analysis reveals that the construction sector receives around

360 million tonnes of raw materials of which 90 million tonnes reappears as

construction and demolition waste, implying a conversion efficiency of 75%.

Of the 90 million tonnes of construction and demolition waste, half is recycled.

While these numbers are interesting, they cannot be used to argue that the industry is

‘good’ or ‘bad’ in terms of materials usage: time series or international comparisons are

required. However, this snapshot provides a basis for future assessment of change.

Defining the industry to include on-site contractors, quarrying, transport of

construction products, and transport of waste, the industry uses some 8 million tonnes

of oil equivalent energy each year. This is around 5% of UK final energy consumption,

or some 30% of industrial energy consumption.

Construction and related industries account for around 2% of all UK greenhouse gas

emissions and 2-4% of other air pollutants. Total air emissions, other than greenhouse

gases, have shown significant falls in the last 30 years. By and large, construction has

shared equally in the national decline in emissions.

Focusing on the stock of buildings, the picture is very different. All buildings –

commercial/public, industrial and residential – account for half of energy use in the

UK and half of carbon dioxide emissions. This reinforces the view that energy use in

existing buildings is a vital environmental concern.

When well designed, the built environment generates large, but as yet largely

unquantified, benefits in terms of human wellbeing. Good design contributes to

physical and mental health, to a sense of identity and wellbeing, to good social

relationships, reduced crime, and higher productivity. Bad design and dilapidated

capital stock has the opposite effect.

The impact of poor past design and capital depreciation is the subject of the

government’s sustainable communities programme. Without the committed

cooperation of the broad construction sector, this programme cannot be delivered.

Even then, there are problems with the continued focus on development in congested

areas where infrastructure change may not be able to keep pace with the growth of

employment and housing.


Total factor productivity (TFP) refers to the change in output thatensues when all inputs (labour, capital etc.) are varied. It is widely usedas an approximate measure of technological progress. Table 7.1 showsmeasures of TFP for the UK, USA, Germany and France for the totaleconomy, manufacturing and construction.

The table suggests that the UK lags behind the USA in respect oflevels of TFP at the economy level, but that the UK has about thesame productivity level as France and Germany. However, the pictureis far worse when the focus is on manufacturing, with the UK laggingbehind by 10%, 20% and over 40% compared to the other countries.Interestingly, the picture is reversed for construction, with the UKhaving very similar TFP levels compared to the USA and France andbeing over 15% ahead of Germany.

Overall, for whatever reason, and despite the fragmented nature ofconstruction, the UK’s total factor productivity record isremarkably good.

Research and Innovation (Research and Development) expenditures inthe UK construction industry amounted to some £140 million p.a. inthe late 1990s (Clark and Simmonds, 2001). Nearly all of this isaccounted for by expenditures by higher education institutions (55% in1999) and research/trade associations (33%). Adding in R&I for firmswhose output is mainly supplied to construction brings the total to£236 million in 1999, but with a downward trend since 1996 whenexpressed in real terms. The reduction is entirely accounted for by theallied industries. Adding in R&I for all other suppliers whose productsbenefit the performance of buildings and structures, brings the 1999total to approximately £337 million. Two thirds of this grand total isfinanced by the private sector and one third by the public sector. Ofthis £337 million, just over 60% is conducted by private sectororganisations and around 20% by higher education institutions.

Figure 7.2 gives an indication of construction R&D as a proportion ofconstruction output for various countries. The relative position of theUK appears poor. The construction industry has been addressing thispoor record, for example via involvement with HM Treasury’sconsultation on the tax treatment of R&I (Be & CIRIA, 2003).

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7.1Total factor productivity


Table 7.1 Total factor productivity levels: four countries (1999) UK=100

Source: O’Mahoney and de Boer (2002)

UK US France Germany

Economy 100 115 102 100Manufacturing 100 143 110 121Construction 100 102 98 85

7.2Comparative research and innovation

Whole life costing refers to the costs of constructing, maintaining andoperating a building or works, and operating the business or activityhoused in that building or works. For commercial buildings anapproximate rule of thumb is that over the building’s whole life thecost of operating the business in the building is 200 times the cost ofconstruction and 40 times the costs of maintaining and operating thebuilding (the 1:5:200 rule) (Evans et al. 1998). The significance of theratios, however approximate, is that substantial levels of economicactivity are affected by relatively small design, construction andmaintenance inputs. Failure to think ahead when designing andconstructing buildings could condemn the businesses occupying thebuildings to productivity levels lower than they otherwise could be. Inother words, labour and factor productivity reflect buildingproductivity. It is not only original designs that matter for buildingproductivity, but the nature of the materials used, and the manner inwhich buildings are monitored, maintained, and re-evaluated over thewhole life cycle. Good design and construction does not, therefore, endat the erection of the building – it involves the provision of buildingservices over the product lifetime. In terms of the capital assetsapproach adopted in this report, buildings need to be seen as the focalpoint at which the various capital stocks are congregated and combined.

Notable factors affecting labour productivity within buildings are levelsof floor space, layout, noise, indoor air quality, ventilation, light, naturalfeatures (e.g. views from windows), most of which can be variedthrough design and choice of building materials. Flexible design canalso allow buildings designed initially for one form of occupation to beconverted fairly readily to alternative uses thus reducing whole-lifecosts. To some extent these are issues of R&M, but in another respectthey reflect issues of education and the culture of the industry since theperspective required is a longer term one than is currently adopted.

Section 7.1 showed that, contrary to the expectations of many, the UKconstruction sector does not lag behind other countries in terms oftechnological progress (as measured by total factor productivity). Butthis cannot be used to disguise the huge technological challenge theindustry will face in the next few decades. Numerous committees andorganisations have started to address these issues (see, for example,Technology Foresight, 2002). The real cost of construction must fall ifUK construction is to improve its competitive position. The kinds ofimprovements needed include:

• standardisation of building components

• development of lighter weight and super-strength materials

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Table 7.2 Construction R&D as a proportion of construction output 1999 (%)

Source: adapted from Manseau, A & Seaden, G (2001)

Netherlands Finland Denmark UK France Japan USA

R&D as ashare of 1.0 2.5 0.7 0.1 0.1 0.3 0.2output (%)

7.3Design and whole-life cost costing

7.4The technological challenge

• wider use of information technology

• increased use of off-site manufacture

• improved design for occupants’ health and wellbeing

• flexibility of design for changing uses over time

• more customer-centric thinking

• an holistic view of construction focusing on integrating thesupply chain and thinking ahead to the management of the builtenvironment

• stronger investment in education and training

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Technological change is one of the keys to UK competitiveness and wealth creation.

Contrary to the impression of many, the UK’s total factor productivity record – a

measure of technological change – is no worse than the USA or France, and appears to

be significantly higher than in Germany.

However the UK construction industry has a relatively poor record in terms of R&D as

a proportion of output.

A longer term perspective is required - for instance consideration should be given to

flexible design which can allow buildings designed initially for one form of occupation

to be converted fairly readily to alternative uses thus reducing whole-life costs.

Despite a reasonable record on existing technological progress, the construction

industry faces massive challenges in the next few decades. Failure to meet those

challenges by embracing new technologies – new materials, IT, off-site manufacture

etc. – will be at a considerable cost to the UK economy.

This chapter has been the most difficult to collect data for, and draw conclusions on. It

is important that understanding of technological change in the construction sector is

better understood and measured.


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This section brings together the key points at the end of each of theprevious chapters.

• The report is structured round the themes of added valueand sustainability.

• It outlines the contribution that the construction industry makes tothe over-arching goal of sustainable development.

• The construction industry suffers from an image problem. There isa need to show its positive and negative contributions to value andsustainability in a transparent manner.

• The statistical data related to the construction industry needssome improvement.

• Sustainable development is a process of ensuring a rising per capitaquality of life over time.

• Quality of life reflects increases in per capita real incomes, betterhealth and education, improved quality of natural and builtenvironments, and more social stability.

• Rising quality of life is ensured by increasing the stock ofproductive assets in the economy.

• Those assets consist of man-made, human, social andenvironmental capital.

• The productivity of these capital assets - their contribution to socialwellbeing - is enhanced by technological progress.

• The contribution of the construction industry to sustainabledevelopment can be gauged by assessing its role in contributing tocapital stocks and to technological change.

• Economic accounting enables sustainability of the industry to bemeasured directly by building on the idea of a savings rule wherebyno enterprise can be regarded as sustainable if it fails to save morethan the level of depreciation on its assets.

• The purpose of this chapter is to paint a statistical picture of theUK construction sector.

• The construction industry has narrow and broad definitions. Thenarrow definition confines attention to the on-site constructionactivity by contractors.

• The true extent of the industry is broader than this and includes theextraction of construction raw materials, the manufacture and saleof building materials, products and assemblies, the sale ofconstruction products, and the various related professional services.

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8.1Summary of key points

8 Summary of Key Points and Next Steps

The Issues (Chapter 1)

Sustainable Development (Chapter 2)

The Construction Industry:Definitions and Measures (Chapter 3)

• On the narrow definition there are probably some 170,000contracting firms in the construction sector. On the broaddefinition the number is closer to 350,000.

• The number of contractors (i.e. the narrow definition) has fallen inthe last decade by around 15% but there was some expansion ofnumbers in the second half of the 1990s.

• On the narrow definition, construction contributes around 5% ofUK GDP, comparable with the health and education sectors. Valueadded has grown by around 1.7% per annum in the last decade.

• On the broad definition, the contribution to GDP doubles tosome 10%.

• Annual housing output by contractors has remained fairly constant inthe last decade but non-housing output has shown significant growth.

• Public sector output by contractors has been constant for the lastdecade, while private sector output has increased, albeit cyclically.These trends conceal various factors such as the Private FinanceInitiative and privatisation of utilities.

• Currently, contractors’ output is shared more or less equallybetween new work and repair and maintenance. New work hasshown the faster growth in the last decade.

• Contrary to the perception of many, the narrow construction sectoris larger in size than any other European sector, apart fromGermany, when measured in terms of value-added.

• The exact size of the DIY sector is difficult to measure butestimates suggest it is worth approximately £5 billion per annum interms of materials and products.

• The size of the informal construction sector (the black economy) isalso uncertain but may be around £10 billion.

• All sections of the broadly defined industry show a heavily skewedsize distribution with a large number of very small firms. Whilethis feature of the industry raises concerns about efficiencythrough economies of scale and reduced transaction costs, muchof the ‘smallness’ contributes to customer satisfaction throughclose communication.

• Built wealth – residences, workplaces, public buildings andinfrastructure – has long accounted for the major part ofmanufactured wealth, from some 90% at the time of the IndustrialRevolution to around 70% now.

• Dwellings account for about one-third of manufactured capital stock.

• Of non-residential capital, infrastructure and non-residentialbuilding accounts for nearly two-thirds and machinery and otherassets for one-third.

• On a per capita basis, the UK generally lags behind other Europeancountries in the provision of transport infrastructure, howeverwhen the comparison is made by area the relative position of theUK is improved.

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Manufactured Capital (Chapter 4)

• The UK has one of the lowest proportions of European capitalinvestment in new build and overall construction activity relative tototal capital investment of all kinds.

• Much of the built environment is long-lived, with the UK havinglonger replacement rates than other comparable countries. This hasimplications for the structure of the industry (e.g. the demand forrepair and maintenance) but also for the chances of securing energyefficient buildings and for housing conditions. It is not obvious thatcapital longevity contributes positively to sustainable development.

• The labour force is a critical ingredient of the construction industry.

• Around 1.5 million people are employed by the narrowconstruction sector and probably closer to 3 million for the broadlydefined industry.

• Employment in the narrow sector has been roughly constant overthe past decade but with a 15% fall in the first half of the 1990s.

• The (narrow) construction labour force shows an ageing trend andthere are concerns about attracting young people into the industry.

• The educational standards in the industry compare favourably totransport, agriculture and distribution, but unfavourably with publicadministration, finance, and energy/water.

• There are worrying downward trends in entry to construction-related university degrees.

• Contrary to general impressions, labour productivity in the narrowsector is comparable to France and Germany, if perhaps slightlyless, but somewhat lower than the USA.

• The accident record of the (narrow) industry still gives cause forconcern. The industry has the highest level of total fatalities of allindustries but is fourth worst when computed as a rate per memberof the workforce.

• Similarly, non-fatal injuries are highest in (narrow) construction by avery substantial margin but, per member of the workforce, theindustry is fourth worst.

• Fatalities and non-fatal injuries in construction impose a social costof some £2 billion per annum.

• However, while the data are imperfect, the industry’s accident ratehas improved dramatically in the last 40 years.

• A materials balance analysis reveals that the construction sectorreceives around 360 million tonnes of raw materials of which 90million tonnes reappears as construction and demolition waste,implying a conversion efficiency of 75%.

• Of the 90 million tonnes of construction and demolition waste, halfis recycled.

• While these numbers are interesting, they cannot be used to arguethat the industry is ‘good’ or ‘bad’ in terms of materials usage: time

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Human Capital (Chapter 5)

Construction and the Natural andSocial Environment (Chapter 6)

series or international comparisons are required. However, thissnapshot provides a basis for future assessment of change.

• Defining the industry to include on-site contractors, quarrying,transport of construction products, and transport of waste, theindustry uses some 8 million tonnes of oil equivalent energy eachyear. This is around 5% of UK final energy consumption, or some30% of industrial energy consumption.

• Construction and related industries account for around 2% of allUK greenhouse gas emissions and 2-4% of other air pollutants.Total air emissions, other than greenhouse gases, have shownsignificant falls in the last 30 years. By and large, construction hasshared equally in the national decline in emissions.

• Focusing on the stock of buildings, the picture is very different. Allbuildings – commercial/public, industrial and residential – accountfor half of energy use in the UK and half of carbon dioxideemissions. This reinforces the view that energy use in existingbuildings is a vital environmental concern.

• When well designed, the built environment generates large, but asyet largely unquantified, benefits in terms of human wellbeing.Good design contributes to physical and mental health, to a sense ofidentity and wellbeing, to good social relationships, reduced crime,and higher productivity. Bad design and dilapidated capital stock hasthe opposite effect.

• The impact of poor past design and capital depreciation is thesubject of the government’s sustainable communities programme.Without the committed cooperation of the broad constructionsector, this programme cannot be delivered. Even then, there areproblems with the continued focus on development in congestedareas where infrastructure change may not be able to keep pace withthe growth of employment and housing.

• Technological change is one of the keys to UK competitiveness andwealth creation.

• Contrary to the impression of many, the UK’s total factorproductivity record – a measure of technological change – is noworse than the USA or France, and appears to be significantlyhigher than in Germany.

• However the UK construction industry has a relatively poor recordin terms of R&D as a proportion of output.

• A longer term perspective is required - for instance considerationshould be given to flexible design which can allow buildingsdesigned initially for one form of occupation to be converted fairlyreadily to alternative uses thus reducing whole-life costs.

• Despite a reasonable record on existing technological progress, theconstruction industry faces massive challenges in the next fewdecades. Failure to meet those challenges by embracing newtechnologies – new materials, IT, off-site manufacture etc. – will beat a considerable cost to the UK economy.

58



Technical Progress (Chapter 7)

• This chapter has been the most difficult to collect data for, anddraw conclusions on. It is important that understanding oftechnological change in the construction sector is betterunderstood and measured.

This section outlines three sets of near term activities designed to takeforward some of the issues highlighted by this report.

This report has been produced in a relatively short period of time andwith limited resources. The author and the task group see it as the start,not the end, of a process. It should be circulated as widely as possible;it should then be subject to rigorous discussion and review.

The task group believe that a colloquium should be held in early 2004to review the report, consider what, if any, revisions are needed, anddecide on a plan of action – for nCRISP and others.

Following publication of this report, a number of individuals will beasked to undertake review papers both on the report generally and onspecific topics arising from it. These papers will contribute to thecolloquium which will consider whether further editions of the reportare necessary and, if so, in what timescale.

This report uses a number of sources for construction output,employment and other data including DTI Housing and ConstructionStatistics, the ONS Annual Business Inquiry and different, sectorspecific, studies. In each case the most appropriate source is used, forexample, because it is complete or consistent or allows disaggregation.It is clear, however, that different sources produce different results andcan generate, at best, uncertainty and, at worst, confusion. The mainreason for this is that construction is not a tidy industrial sector; it doesnot fit comfortably into the three basic industrial categories ofprimary/extraction, secondary/manufacturing and tertiary/services.Construction is an assembly industry. It takes goods and services fromother industries to produce its product, the built environment.

It is not possible to change the national statistical system for theconvenience of the construction industry. It is possible, however, forthe industry to influence how data from official, industry, and othersources is collected, analysed and presented. This should be a topic ofdiscussion at the colloquium.

This report identifies a number of topics needing further research,including but not limited to, the issue of improved data discussedabove. The colloquium will help to clarify research needs but they arelikely to include:

• widening and deepening understanding of the socio-economicvalue of construction. This report is one of the first attempts atthis; it is an increasingly important topic and includes both positiveand negative contributions to value.

59



8.2Next steps

Colloquium

Improved data

Research agenda

• the size structure of the industry. This is partly a statistical topic but,beyond that, it includes the costs and benefits of the structure andoperation of the industry for the size of firms.

• the implication of longevity of built assets for capital investment andthe value of the stock. We need to understand better when to buildfor long or short lives and when to retain or replace built assets.

• employment, skills and training issues. Human resources are key toa successful construction industry.

• construction productivity and, particularly, its implications forinternational competitiveness.

• the environmental impact of construction- on site and in-use –including issues of resource use, transport and pollution.

• the impact of design on the built environment. It is clear that gooddesign can produce significant benefits and, conversely, that baddesign can significantly reduce the value of built assets. Research isneeded on this issue as it affects new works and the existing stock.

• the extent and nature of construction R&I activity. Formal,recorded, R&I is low by the standards of other industries. Thereasons for this should be investigated.

Finally, the industry cannot assess its performance if it does not havebenchmarks to measure improvement. Many of the issues discussedhere could be selected and used by industry in the form ofsustainability indicators to allow time series analysis and to furtherfacilitate international comparisons.

60



Atkinson, G., Munasinghe, M., Hamilton, K., Pearce, D.W., Dubourg,R and Young, C. 1997. Measuring Sustainable Development: Macroeconomicsand the Environment. Cheltenham: Edward Elgar

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Be and CIRIA. 2003. HM Treasury Consultation on the Definition of R&Dfor Tax Purposes: Construction Industry Response. Be and CIRIA,Reading & London.

BMA (British Medical Association). 2003. Health and Housing.London: BMA

BRE (Building Research Establishment). 2003. Good Building Guide 57:Construction and Demolition Waste, Parts 1&2, Garston: BRE

Byfors, J. 2002. Building and design: benefits to the constructionindustry of new developments in the field. Presentation to conferenceon Priorities for Construction Research, ECCREDI-E-CORE, October 2,Brussels

CABE 2002. The Value of Good Design. London: CABE. Full report onwww.cabe.org.uk

CITB. 2002. CITB Skills Foresight Report. February 2002. London: CITB

Clark, J and Simmonds, P. 2001. The Funding and Provision of Research andDevelopment in the UK Construction Sector. Brighton: Technopolis

Construction Forecasting and Research (CFR), 2003. A Review of theSize and Structure of the UK Construction Industry. Report to nCRISP.London: nCRISP.

Creightney, C. 1993. Transport and Economic Performance: A survey ofdeveloping countries. Washington DC: World Bank

Davis Langdon and Everest, 2000. A Study of the UK Building MaterialsSector. Report to DETR and the Construction Products Association

Davis Langdon Consultancy and Construction Forecasting andResearch, 2002. Survey of UK Construction Professional Services 2001/2.Construction Industry Council and DTI

DfES (Department for Education and Science). 2003. Building Schoolsfor the Future. London: DfES

DfT (Department for Transport). 2000. Highway Economics Note No 1:2000. London: DfT atwww.dft.gov.uk/stellent/groups/dft_rdsafety/documents/source/f1

Dickson, M. 2003. Modern Construction – Achieving a Step Change inPerformance. Presentation to nCRISP Awayday, London March 11, 2003.

DTI (Department of Trade and Industry), 1999a. RethinkingConstruction (the ‘Egan Report’. London: DTI.www.dti.gov.uk/construction/rethink/index.htm

61


References

DTI (Department of Trade and Industry), 1999b. Research on the Patternand Trends in Home Accidents. London: DTI

DTI (Department of Trade and Industry), 2002. ConstructionStatistics Annual. 2002 Edition. www.dti.gov.uk/construction/stats

DTI (Department of Trade and Industry), 2003. State of the ConstructionIndustry Report – Winter 2002/3. London: DTI

Ecofys. 2002. The Contribution of Mineral Wool and other Thermal InsulationMaterials to Energy Saving and Climate Protection in Europe. Cologne: Ecofys

English Heritage. 2002. The State of the Historic Environment Report 2002.English Heritage

Eurostat. 2002. European Business: Facts and Figures. 2002 edition.Luxembourg: Eurostat

Eurostat. 2003. NewCronos database. www.europa.eu.int/newcronos

Experian Business Services, 2003. Sector Competitiveness Analysis for theConstruction Industry. (Draft). London: Department of Trade and Industry.

Evans, R., Haryott, R., Haste, N and Jones, A. 1998. The Long-term Costsof Owning and Using Buildings. London: Royal Academy of Engineering

Fukuyama, F. 1995. Trust: The Social Virtues and the Creation of Prosperity.London: Penguin Books

Grout, P. 1997. The economics of the private finance initiative. OxfordReview of Economic Policy, 13, 4, 53-66

Heilbrun, J and Gray, C. 2001. The Economics of Art and Culture.Cambridge: Cambridge University Press

House of Commons Select Committee on the ODPM. 2002. 8thReport. Planning for Sustainable Housing and Communities: SustainableCommunities in the South East. HC 77-1. London: UK Parliament

HSE (Health and Safety Executive). 1998. Key Facts: Injuries in theConstruction Industry 1961 to 1996/6. Bootle: HSE.

HSE (Health and Safety Executive), Health and Safety Statistics 2000/1.London: Health and Safety Commission.

Ive, G and Gruneberg, S. 2000. The Economics of the Modern ConstructionSector. Basingstoke: Macmillan.

Ive, G., Gruneberg, S., Meikle, J and Crosthwaite, D. 2003. SectorCompetitiveness Analysis of the UK Construction Industry. London:Department of Trade and Industry

Lawson, B & Phiri, M. 2003. Architectural Healthcare Environment and itsEffects on Patient Health Outcomes. London: The Stationery Office.

Lorch, R. 2003. A research strategy for the built environment? Paperto nCRISP Workshop on What Kind of Research and Innovation Strategy doesthe UK Construction Industry Need? London: nCRISP

Maddison, A. 1995. Monitoring the World Economy 1820-1992. Paris: OECD

Manseau, A & Seaden, G. 2001. Innovation in Construction: an internationalreview of public policies. London: Spon Press

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Meikle, J. (2000) Do we Build Enough Houses? A Review of the Adequacyof UK Investment in Housing. Discussion Paper. London: JosephRowntree Foundation.

Meikle, J and Connaughton, J. 1994. How long should housing last?Some implications of the age and probable life of housing in England.Construction Management and Economics, 12, 315-321

Mitchell, B. 1988. British Historical Statistics. Cambridge: CambridgeUniversity Press

Office of the Deputy Prime Minister (ODPM). 2002. SustainableCommunities; Building for the Future. London: ODPM

Office of the Deputy Prime Minister (ODPM). 2003. Planning forSustainable Communities in the South East – Government Response (to Houseof Commons Select Committee on ODPM). London: ODPM

Office of National Statistics (ONS), 2002. The United Kingdom NationalAccounts. 2002 edition. London: ONS

Office of National Statistics (ONS), 2003. Annual Business Inquiry.London: ONS. www.statistics.gov.uk/abi

Office of National Statistics (ONS), 2003. UK Standard IndustrialClassification of Economic Activities 2003. London: TSO.www.statistics.gov.uk/methods_quality/sic/download/uk_SIC_vol2(2003).pdf

O’Mahoney, M and de Boer,W. 2002. Britain’s Relative ProductivityPerformance: Updates to 1999. Report to HM Treasury, DTI and ONS.London: NIESR

Pearce, D.W., Mourato, S., Navrud, S and Ready, R. 2002. Review ofexisting studies, their policy use and future research needs, in S Navrudand R Ready (eds), Valuing Cultural Heritage: Applying EnvironmentalValuation Techniques to Historic Buildings, Monuments and Artifacts.Cheltenham: Edward Elgar. 257-270

Pearce, D.W. 2003. Environment and business: socially responsible butprivately profitable? In J.Hirst (ed), The Challenge of Change: Fifty Years ofBusiness Economics, London: Profile Books. 54-65

Potter, M and Meikle, J. (2002) Homes for today and tomorrow: acomparative review in the European context. In K.Bartlett., M.Potter,J.Meikle, F.Duffy, R.Ozaki, J.Hakes, R.Young and A.Hooper. ConsumerChoice in House Buying. Joseph Rowntree Foundation, London. 1-20.

Powell, J and Craighill, A. 2001. Information: the key to sustainabilityin the building sector. Paper to OECD Workshop on the Design ofSustainable Building Policies, June, 2001. Paris: OECD

SACTRA (Standing Advisory Committee on Trunk RoadAssessment), 1999. Transport and Economy. London: DETR

Schneider, F. 2002. Size and Measurement of the Informal Economy in 100Countries Around the World. Department of Economics, JohannesKepler University of Linz, Austria. Mimeo.

Schneider, F and Enste, D. 2000. Informal economies: size, causes andconsequences. Journal of Economic Literature, 38/1, 77-114

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References


Smith, R.A., Kersey, J and Griffiths, P. 2002. The Construction IndustryMass Balance: Resource Use, Wastes and Emissions. Viridis Report No. 4.Crowthorne: Viridis

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Strategic Forum for Construction, 2002. Accelerating Change (the second‘Egan Report’). London: DTI

T & E (European Federation for Transport and Environment). 1996.Transport and the Economy. Brussels: T & E

Technology Foresight. 2002. Progress through Partnership: Construction.London: Technology Foresight. www.foresight.gov.uk

UCAS. 2002. Applications and acceptances to undergraduate coursesin built environment subjects. www.ucas.com/figures/sas/index

UK Government, 1999. A Better Quality of Life: A Strategy for SustainableDevelopment for the UK. Cm 4345. London: HMSO

Vandell, K and Lane, J. 1989. The economics of architecture and urbandesign: some preliminary findings. Journal of Urban Economics, 17, 2, 1-10.

Verhoef, E. 1996. The Economics of Regulating Road Transport.Cheltenham: Edward Elgar

Young, R. (2000) Facilitating Sustainable Development in Europe.Workshop on Easing Housing Shortages. Joseph RowntreeFoundation. London.

World Bank, 1997. Expanding the Measure of Wealth: Indicators ofEnvironmentally Sustainable Development. Washington DC: World Bank

World Bank. 2003. World Development Indicators, OUP, Oxford.

64

References


ABI Annual Business Inquiry, an integrated survey ofemployment and financial information from businesses in most sectors of the economy

Be Collaborating for the Built Environment, known as Be, an independent construction supply chain grouping

billion one thousand million

BMA British Medical Association

BRE Building Research Establishment

CABE Commission for Architecture and the Built Environment, an executive non-departmental public body funded by the Department of Culture, Media and Sport and the Office of the Deputy Prime Minister

C&DW Construction and demolition waste

CIC Construction Industry Council

CIRIA Construction Industry Research and Information Association, a member based organisation

CITB Construction Industry Training Board

Contractors Enterprises that undertake on-site assembly / construction of buildings and infrastructure for clients

Constructors Includes contractors, housebuilders, and other organisations and individuals undertaking construction work

CO2 Carbon dioxide, the main greenhouse gas giving rise to global warming

CPA Construction Products Association, the representative organisation for material and product manufacturers and suppliers

DfES Department for Education and Skills

Direct labour Construction work undertaken by organisations usingtheir own employees

DIY Do-it-yourself, construction related activity undertaken by individuals / households. The value typically includes only the materials and products used

DTI Department of Trade and Industry

Economic A measure of human preference for a good, as value expressed in money terms through measures of the

willingness to pay for that good

65


Glossary of Terms

Environmental The stock of natural resources and capital environmental receiving capacities

EU European Union

GDFCF Gross domestic fixed capital formation, a measure ofinvestment in man-made capital assets

GDP Gross Domestic Product, a measure of UK nationaleconomic output

GHGs Greenhouse gases, of which the main ones are carbondioxide, methane and nitrous oxides

HSE Health and Safety Executive

Human capital The skills, knowledge and education embodied in individuals

Intermediaries Builders’ merchants, DIY stores and other wholesale,retail and distribution enterprises

LFS Labour Force Survey, a continuous household surveyconducted by the Office of National Statistics

LP Labour productivity, a measure of output divided by the labour force. The output measure can be gross output or ‘value-added’

Man-made Buildings, infrastructure, machinery etc.capital

Manufactured See man-made capitalcapital

million one thousand thousand

Mt Million tonnes

MtC Million tonnes of carbon

Mtoe Million tonnes of oil equivalent

Natural capital See environmental capital

nCRISP (new) Construction Research and Innovation StrategyPanel, a joint industry, research community and government body that helps to set the agenda for construction research and innovation

NOX Nitrogen oxides

ODPM Office of the Deputy Prime Minister

ONS Office of National Statistics, the UK national statistical organisation

PJ Petajoule

PM Particulate matter

PPPs Purchasing Power Parities, currency conversion ratesthat both convert to a common currency and equalisethe purchasing power of different currencies

QOL Quality of life: a measure of human wellbeing

66

Glossary of Terms


R&D Research and development, an alternative term for R&I

R&I Research and innovation

R&M Repair and maintenance

RM&I Repair, maintenance and improvement

SACTRA Standing Advisory Committee on Trunk Road Assessment

Social capital The set of trusting relationships between individuals,and between individuals and institutions

SOX Sulphur oxides

SIC Standard Industrial Classification, internationally recognised listing of industries

Sustainable Rising per capita wellbeing over timedevelopment

T&E European Federation for Transport and Environment

TFP Total Factor Productivity, a measure of the overallproductivity of man-made capital and labour combined. TFP is widely used as an approximate measure of technological change since it reflects the efficiency (ratio of output to inputs) of all inputs to construction

UCAS University and Colleges Admissions Service

UNECE United Nations Economic Commission for Europe

VA Value-added

Value The worth of something – see economic value

Value-added Gross output minus the value of all inputs purchasedfrom outside the construction industry.

VOCs Volatile organic compounds

WRAP Waste Resourses Action Programme

67

Glossary of Terms


68


This table presents the data used to compile Figure 3.2. All amountsare for 2001 in current prices. The table lists sources and, whereappropriate, describes how the amounts for each category of outputhave been arrived at. DTI Construction output data are based on adeclared definition of construction and this understates gross industryoutput. It embraces contractors and public sector direct works only; itis for Great Britain only (and therefore excludes Northern Ireland); itexcludes private sector direct works output and constructionconsultancy services; it makes an allowance for the informal blackeconomy in construction that is lower than the ONS estimate; and itexcludes the materials and labour consumed in DIY activity.

This table presents the data used to compile Figure 3.3. The data aretaken from the Annual Business Inquiry, ABI (2003), as reported by CFR(2003). As noted elsewhere, ABI data for construction-related industriesincludes firms that may not provide goods or services for construction,particularly in the manufacture of construction products andprofessional services. For example, producers of glass will all be includedin SIC 26.1 but not all will produce glass for construction. Fuller notes areprovided at Table 16, although the data here and Table 16 differ in detail– due to different assumptions and different dates of extraction.

69


Table 1 The overall output of the UK construction industry

Construction output Amount Source

DTI Housing and ConstructionContractors' output (minus £70bn Statistics, 2002 (Table 2.4). Plus public sector direct labour) estimate of £1bn for Northern IrelandConstruction materials and products £44bn ABI 2003Wholesale and retail trade £24bn ABI 2003Construction professional services £12.3bn CIC Professional Services Survey,2002Self-build £2.4bn Homes to DIY For, 2001Direct labour £4.7bn Public sector direct labour = £2.7bn

(DTI Housing and Construction Statistics, 2002 Table 2.6) Private sectordirect labour = £2bn (CFR, 2003)

The black economy £10bn Various

Statistical Annex

Table 2 Numbers of construction and construction-related firms 2001

Sector ABI

Mining and quarrying of construction materials 2,248Manufacture of construction products 20,863Contractors 192,404Sale of construction products 81,997Professional services 57,636Total 355,148

This table presents the data used to compile Figure 3.4. The data aretaken from ABI (2003).

This table presents the data used to compile Figure 3.5. The data are,again, taken from ABI (2003) as reported by CFR (2003). Again, thereare differences in detail between this table and Table 16 – again,presumably due to different assumptions and different dates ofextraction. A fuller listing of the value-added for these sectorgroupings is provided in Table 16. As discussed in the notes to table 16and in the main text, this excludes double counting but it includes arange of non-construction activity particularly in the manufacture ofproducts and professional services. It is, therefore, a high estimate ofconstruction value-added.

This table presents the data used to compile Figure 3.6. The data aretaken from the National Accounts, ONS 2002. The total sums to100%. National GDP in 2001 was £874 billion.

70

Statistical Annex


Table 3 Numbers of construction and construction-related firms 2001

1995 1996 1997 1998 1999 2000 2001

Construction (SIC 45) 186,962 180,470 178,937 179,868 188,304 190,832 193,084

Table 4 Value-added in the construction sector 2001 (£ billion)

Sector Value-added

Mining and quarrying of construction materials 1.6Manufacture of construction products 13.3Contractors 47.6Sale of construction products 13.9Professional services 14.6TOTAL 91.1

% of UK GDP

- contractors only 5.4%- wider sector 10.4%

Table 5 Value added as a proportion of UK GDP 2001

2001 (%)

Agriculture, forestry, and fishing 1Electricity, gas, and water supply 2Mining and quarrying 3Public administration and defence 4Adjustment for financial services 4Construction 5Other services 5Transport & communications 7Education, health, and social work 12Distribution, hotels, and catering 14Manufacturing 16Business services and finance 27

This table presents the data used to compile Figure 3.7. Value-addeddata are taken from ONS (2002, Table 2.2 – Value-added at currentprices, and Table 2.4 – index numbers of real value-added). Outputdata are taken from DTI (2003, Table 2.2). Note that the value-addedfigure of £37.5 billion in 2001 is consistent with the figure of £47.6billion in Table 4, the former being at constant prices, the latter atcurrent prices.

This table presents the data used to compile Figure 3.8. Data are takenfrom DTI Housing and Construction Statistics (2002). They refer toGreat Britain (ie, Northern Ireland is excluded) and includecontractors’ and public sector direct labour output.

71

Statistical Annex


Table 6 Output and value-added by contractors 1993-2001(£ billion at 1995 prices)

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Value added(UK) 31.8 33.0 33.0 33.9 34.9 35.3 35.6 36.2 37.5 n.aGross output(Gt Britain) 51.0 52.7 52.6 53.9 55.5 56.4 57.2 58.1 60.1 n.a

Table 7 Housing and non-housing output 1985-2001(£ million at 1995 prices)

Housing Non-housing

1985 30036 233951986 31690 236881987 35323 261761988 38801 285261989 38615 321691990 35868 347611991 31901 334011992 30640 316201993 30721 301271994 32260 305681995 31854 309131996 31717 323331997 33159 329851998 33086 341321999 32089 358622000 32502 362602001 32748 38431

This table presents the data used to compile Figure 3.9. Data, again, aretaken from DTI Housing and Construction Statistics (2002). As above,they refer to Great Britain and include contractors’ and public sectordirect labour output. In the DTI data, infrastructure is not divided intoprivate and public work; the assumption here is that the split is 50:50.

This table presents the data used to compile Figure 3.10. The data,again, are taken from DTI Housing and Construction Statistics (2002).As above, they refer to Great Britain and include contractors’ andpublic sector direct labour output. Again, in the DTI data,infrastructure is not divided into new work and R&M; the assumptionhere is that the split is 50:50. It should also be noted that, whilehousing R&M includes refurbishment/improvement work, non-residential building R&M does not. Refurbishment/ improvementwork to non-residential building is included in new work. This tableand Figure 7.10, therefore, understate work to existing buildings.

72

Statistical Annex


Private work Public work1985 26295 177391986 28195 173301987 32568 180601988 36785 186521989 38605 195321990 37957 204191991 34615 195181992 31769 201581993 30455 205251994 31528 211651995 31628 210141996 33532 203331997 36609 188601998 38114 182551999 38782 184092000 39791 182592001 41438 18663

Table 8 Public and private output 1985-2001 (£ million at 1995 prices)

Table 9 R&M and new output 1985-2001 (£ million at 1995 prices)

R&M New work1985 24651 193831986 25280 202451987 27614 230141988 29926 255111989 31839 262971990 32224 261511991 29748 243841992 28174 237521993 27649 233301994 28364 243281995 28801 238421996 29691 241731997 30032 254371998 29814 265561999 29389 278012000 29710 283402001 31088 29013

This table presents the data used to compile Figure 4.1. The data aretaken from British Historical Statistics, Mitchell (1988). Some heroicassumptions have been made to link the series and price levels in orderto construct the figure.

This table presents the data used to compile Figure 4.2. The data aretaken from Meikle and Connaughton (1994) up to 1990 and, thereafterfrom ODPM Housing Statistics, 2002, ODPM (2003).

This table presents the data used to compile Figure 4.3. The sources ofthe data are as for the previous table.

73

Statistical Annex


Table 10 The built environment and man-made wealth

Year Man-made wealth Built wealth Built wealth as

£ million £ million fraction of man-made

1851-60 prices 1851-60 prices wealth %

1760 248 221 891850 1037 860 83

1900 prices 1900 prices

1850 1229 1052 861900 3515 2784 791920 4475 3257 73

1958 replacement cost 1958 replacement cost

1950 37000 26000 701962 57400 37800 66

1978 replacement cost 1978 replacement cost

1962 165400 110300 671980 389400 286900 74

Table 11 Gains and losses to the housing stock 1961-2000 (thousands)

thousands

Gains Losses Net gains

1961-65 284.3 -58.8 225.51966-70 324.8 -66.9 257.91971-75 261.5 -61.3 200.31976-80 245 -45 2001981-85 185.4 -24 161.41986-90 191.3 -15.9 175.41991-95 160.9 -8.2 152.71996-00 156.9 -15.4 141.5

Table 12 Housing stock development 1965-2000 (millions)

millions

Pre 1965

stock remaining Total stock

1965 14.9 14.91970 14.7 15.91975 14.4 16.91980 14.2 17.91985 14 18.71990 13.8 19.71995 13.6 20.42000 13.4 21.1

This table presents the data used to compile Figure 5.1. The data aretaken from ABI (2003) as reported by CFR (2003). Again, there areinconsistencies with Table 16.

This table presents the data used to compile Figure 5.2. The data aretaken from DTI (2002) Housing and Construction Statistics.

This table presents the data used to compile Figure 5.3. The data istaken from UCAS (2002).

74

Statistical Annex


Sector ABI

Mining and quarrying of construction materials 23,853Manufacture of construction products 381,989Construction (SIC 45)1 1,665,147Sale of construction products 590,968Professional services 308,227TOTAL employees 2,445,184

TOTAL employment 2,970,184

Table 13 The labour force in the construction industry 2001 (all manpower)

Note 1: includes estimate of 525,000 self-employed within SIC 45.2

All manpower Employees Self-employed

1991 1626 994 6321992 1478 893 5851993 1405 810 5951994 1381 772 6091995 1388 756 6321996 1385 745 6401997 1399 846 5531998 1426 920 5061999 1411 894 5172000 1485 974 5112001 1567 977 590

Table 14 Time series for employees, self-employed, and allmanpower in the construction industry 1991-2001(000s based on last quarter of the year)

Table 15 Applications and acceptances to undergraduatecourses in built environment subjects 1994-2000

Applications Acceptances

1994 12379 77921995 11635 82241996 10536 78221997 9748 80091998 9117 75251999 8246 71682000 8010 6964

This table collects together data on the principal industries related toconstruction activity including quarrying, materials production andsales, construction equipment, and professional services. The data isfrom the Annual Business Inquiry (ABI) and, therefore, is consistentin the concepts and definitions used. It does not, however, comprise acompletely accurate view of construction industry activity.

A number of industries (for example sawmilling, manufacture ofpaints etc, and manufacture of glass and glass products) supplyindustries other than construction. Some industries on the list (forexample, manufacture of concrete products) purchase materials fromother industries on the list (quarrying, manufacture of cement). Theturnover of wholesalers includes the materials and products they sell.Architectural and engineering activities include a significantproportion of non-construction-related consultancy activity(mechanical, electrical, and specialist engineering relating to themanufacturing and process industries).

The figures in the Turnover column include purchases from otherindustries and from each individual industry: construction turnover of£131 million includes sub-contracting (purchases by the constructionindustry from the construction industry). They can be added togetherto provide total turnovers but include a significant proportion ofdouble counting in terms of construction industry output. The figuresin the Value-added column exclude inter-industry purchases and canbe added together to arrive at total output, but not necessarily totalconstruction output.

As indicated above, the figures include non-construction-relatedactivity. And a number of categories of construction activity are notincluded: DIY and (some) self-build activity; private sectorconstruction, direct labour activity (which will be allocated to theindustry that undertakes it) and the black economy. Despite theseproblems the ABI data is currently the best official source available forproviding a consistent picture of both gross and net outputs of theconstruction sector.

75

Statistical Annex


Table 16 Gross and net outputs of the construction sectorand its constituent and related industries

1 2 3 4 5 6 7

SIC Industry Turnover GVA at Purchases Employment Employment

of all basic costs during year

enterprises prices

45 Construction 131,179 47,647 85,208 23,798 137014.1 Quarrying of stone 568 215 352 86 414.2 Quarrying of sand and clay 3871 1427 2475 589 2520.1 Saw milling etc of wood 1193 320 878 203 1320.2 Manufacture of plywood and board 876 206 670 142 720.3 Manufacture of builders’

carpentry and joinery 3332 1291 2022 756 4924.3 Manufacture of paints, etc 3544 1180 2350 636 29

All data in cols.3 to 6 are in £ millions.

Data in col.7 are in thousands.

continued page 76

76

Statistical Annex


1 2 3 4 5 6 7

SIC Industry Turnover GVA at Purchases Employment Employment

of all basic costs during year

enterprises prices

25.23 Manufacture of builders’ wareof plastic 4525 1762 2775 953 58

26.1 Manufacture of glass andglass products 3010 1250 1769 744 38

26.22 Manufacture of ceramicsanitary fixtures 402 231 176 121 6

26.3 Manufacture of ceramic tiles etc 202 82 121 57 326.4 Manufacture of bricks etc 629 339 291 200 926.5 Manufacture of cement, lime

and plaster 904 402 487 207 426.6 Manufacture of articles of

concrete etc 3931 1417 2520 675 3526.7 Cutting etc of stone 400 221 178 99 628.1 Manufacture of metal structures, etc 6879 2568 4349 1738 8228.2 Manufacture of central heating

radiators and boilers, and ofmetal tanks 1282 501 775 290 14

28.63 Manufacture of locks and hinges(2000 data) 742 322 432 232 15

29.23 Manufacture of non-domesticcooling and ventilation equipment 3573 1350 2228 801 43

29.52 Manufacture of machinery forquarrying and construction 2380 712 1700 432 17

31.3 Manufacture of insulated wireand cables 1624 551 1059 365 16

31.5 Manufacture of lighting equipment 1520 560 965 393 2151.53 Wholesale of wood, construction

materials, and sanitary equipment 14531 3250 11319 1854 9451.54 Wholesale of hardware, plumbing,

and heating equipment 7712 1541 6191 988 5351.62 Wholesale of construction machinery 2045 344 1695 177 871.32 Renting of construction machinery

and equipment (without operator) 3883 2238 1684 927 5174.2 Architectural and engineering activities,

and related technical consultancy 26324 14576 12346 8320 348Total for

constr. 231061 86503 147015 45783 2418

sector

By SIC

section:

F Construction 131179 47647 85208 23798 1370C Quarrying 4439 1642 2827 675 29D Manufacturing 40948 15265 25745 9044 465G Trade 24288 5135 19205 3019 155K Real estate, renting and

business activities 30207 16814 14030 9247 399

continued from page 75

All nCRISP publications are available from the MSU or as pdfdownloads from the nCRISP website (www.ncrisp.org.uk). Recent andplanned publications include:

• Nanotechnology in Construction, SPRU, University of Sussex *

• Sustainability in Construction, David Bartholomew Associates

• The Size Structure of UK Construction, Construction Forecastingand Research

• Research and Innovation in UK Construction Firms, Technopolis

• A Review of Recent Work on Construction Futures, Universityof Reading

• Business Models for UK Construction (think pieces and workshopproceedings), Roger Courtney, Pat Hillebrandt, Graham Ive,Richard Saxon +

• Research and Innovation Strategies for UK Construction (thinkpieces and workshop proceedings), Andrew Cripps, John Fidler,Richard Lorch, Ron McCaffer

• Mapping Construction Research and Innovation, DavidBartholomew Associates

• Sustainability think pieces by Bill Bordass, Bill Gething, ChrisMorley, David Fisk, Peter Sharatt, Val Lowman. Prepared as acontribution to a programme of workshops with The BritishCouncil for Sustainable Development

* jointly funded by nCRISP, the Office of Science and Technology (OST) and Foundation for the Built Environment (FBE)

+ jointly funded by Be

Other Recent and PlannednCRISP Publications

Contact nCRISPManagement support to nCRISP is provided by DAVIS LANGDON CONSULTANCYIf you would like to submit questions, comments or suggestions on the issues raised inthis publication, or help with nCRISP’s work, please contact Jim Meikle, Guy Hazlehurstor Jennifer Campbell at the nCRISP Management Support Unit

Davis Langdon Consultancy, MidCity Place, 71 High Holborn, London WC1V 6QS

Tel: +44 (0)20 7061 7007 Fax: +44 (0)20 7061 7005E-mail: [email protected] www.ncrisp.org.uk

The Social and Economic Value of Construction Pearce

the social & economic value of construction - crisp

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