2018BookofCases

5 L EAN C ONSTRUCTION I RELAND A NNUAL B OOK OF C ASES 2018 Introduction Linesight is delighted to contribute to this inaugural LCI Annual Book of Cases 2018 – the first such publication for the Irish construction industry. This publication brings together company case studies and project demonstrations from Irish organisations that have realised the tangible value- add and other benefits offered by Lean thinking and practices for themselves, their supply chains, and their project clients and owners. Linesight believes that the publication of this LCI Book of Cases on an annual basis will offer distinct benefits for the Irish construction industry in promoting the adoption of Lean. This Linesight summary reviews the Irish construction industry performance in 2018 to date, and looks forward to what we can expect throughout the remainder of 2018 and beyond, as well as identifying some key challenges that the Irish construction faces in delivering this pipeline, including: 1 .How new project delivery methods and digital technologies are changing the industry; and 2 .How Lean Construction can be a significant factor and enabler in supporting the construction industry to deliver better value for all stakeholders. Overview The Irish economy is forecast to continue to grow strongly for the remainder of 2018 and into 2019. The ESRI recently updated its prediction for GDP growth in 2018 to 9%, followed by 4.5% in 2019. This prediction is informed by stronger-than-expected domestic consumer sentiment, as well as underlying trends in taxation receipts, and is based upon the assumption that a Brexit deal will be in place by March 2019. At these rates, Ireland will have the fastest growing economy in the EU, with growth rates at almost twice the Eurozone average. The economy is approaching full employment, with unemployment rates expected to decline to 5.6% in 2018 and 5.0% in 2019. In August, the CSO published statistics showing that the total number of people employed in Ireland reached over 2.25 million in the second quarter of 2018. This is a 3.4% increase from the same quarter in 2017 and represents the highest total ever recorded. Against thi s background, i t i s not surpr i s ing that construction is booming also, with most sectors showing significant growth. CSO indices published in June, with some caveats, show that the volume of output in building and construction increased by 7.4% in the first quarter of 2018 when compared with the preceding period. This reflects increases of 5.6%, 5.5% and 1.1% in the volume of residential building work, non-residential building work and civil engineering work respectively. At the beginning of 2018, Linesight predicted that construction output would reach € 20.1 billion this year. It now seems likely that this figure will be closer to € 21 billion. This represents growth of almost 64% in the last three years. However, even with these impressive growth rates, the output in 2018 will still only be 55% of the 2007 peak output of € 38 billion, albeit it that this was unsustainably high. It will also lag significantly behind the recognised European sustainable level of 10% to 12% of GDP. Employment in construction is also growing rapidly. The CSO Labour Force Survey, published in August 2018, showed direct employment in construction was 137,400, an increase of 25,000 or 22% in two years s ince the corresponding period in 2016. When indirect jobs are added, the increase is significantly greater. Sectors All sectors of the Irish construction industry are contributing to the recovery in output, with the private sector recovery initially led by new commercial office space and office fit- outs in the Greater Dubl in Area (GDA) . These are continuing, and there was an impressive take-up of over 160,000 sq.m. of office space in the first half of 2018. The recovery in this and other sectors is now spreading to Cork and other major urban centres, but is predominately still concentrated in the GDA. In August 2018, the new draft guidelines on Urban Development and Building Heights were published, and these will undoubtedly influence future commercial development. Projects in the Hospitality and Retail sectors are also increasing. Visitor numbers were up 6.7% in the first half of 2018 and 5,000 hotel beds are due to be delivered in the coming years. Irish retail trends of footfall and consumer sentiment are bucking the European trends and leading to increased investment. In the industrial sector, the IDA continues to attract multinational companies to invest in Ireland, particularly in the Data Centre and Life Sciences sectors. In its update for the third quarter of 2018, the IDA reports that FDI companies now directly employ over 210,000 people, represent ing 10.2% of total Ir i sh employment, 58% of which is outside of Dublin. In the public sector, Budget 2018 provided for an average increase of 17.4% for the publ ic capital expenditure programme this year, with the provision for housing rising by over 62%. Earlier in the year, the Government also published Project Ireland 2040, which includes the new National Development Plan 2018 – 2027 This provides for a € 116 billion plan to upgrade State infrastructure, in line with a population increase of approximately one million people over the next ten years. Public capital expenditure is planned to rise from € 4.5 billion in 2017 to € 5.8 billion in 2018, with further increases to € 7.3 bi l l ion and € 7.9 bi l l ion in 2019 and 2020 respectively. The plan prioritises expenditure on education, housing, roads and hospitals. Amongst the projects included in the plan are new motorways, a second runway for Dublin airport, a metro link from Swords to Sandyford with a stop at Dublin airport, a new university for the South East, and Introduction by Derry Scully, Group President, Linesight