2018BookofCases

6 L EAN C ONSTRUCTION I RELAND A NNUAL B OOK OF C ASES 2018 € 10.9 billion invested in healthcare. Residential construction has traditionally represented a major component of the overall Irish construction industry. In recent years, there has been ongoing concern that the annual number of residential units constructed was overstated as it was based on ESB connections. However, the CSO has now published a new data series that seeks to address this problem. This shows new dwelling completions (which exclude Purpose-Built Student Accommodation (PBSA)) increasing from a low of 4,575 units in 2013 to 14,435 last year. The number of new dwellings completed for the first half of 2018 was an encouraging 7,909, which is 30% more than was built in the same period of 2017. However, this level of output is still well below the required levels. Project Ireland 2040 estimates that 550,000 homes will be requi red over the next 20 years , and the Nat ional Development Plan commits € 11.6 billion to provide 112,000 new social homes by 2027. Private sector housing output is steadily increasing, but significantly more output is needed to cater for demand and to address the hous ing cr i s i s , particularly in Dublin and our major cities. The build-to-rent (BTR) provisions and growing numbers of PBSA units will help to address these shortages, but demand significantly exceeds supply also in these sectors, as evidenced by recent Linesight research. Challenges Although the output of the Irish construction industry has risen significantly in recent years, there are a number of challenges and risks to be overcome. The most significant domestic concern is the skills shortage, which arose as construction employment fell to a quarter of its peak level. This skills shortage is affecting main contractors, specialist sub-contractors and the design professions, all of whom are struggling with recruitment difficulties. Training within the industry is ramping up again, with greater numbers of apprent ices and school leavers enter ing thi rd- level construction-related courses, but these will take a number of years to come on-stream. Another major domestic concern is increasing tender levels, with construction inflation levels running well ahead of general inflation rates. This is fuelled by increasing demand, pressure on wage rates, increases in material prices and regulatory changes. Fol lowing a massive fal l of 33%, construction prices are now expected to equal 2007 boom- time prices by 2019. External influences could also adversely affect the recovery of the industry in Ireland. The impact of Brexit has been relatively benign to date, with some positive impacts as international firms chose to relocate to Ireland. However, the general uncertainty about Brexit is bad for confidence levels and this may impact on the overall economic recovery. The fal l in the value of ster l ing i s al so having negat ive implications. In the USA, recent taxation changes and the imposition of trade tariffs under the Trump administration are also causing uncertainty. These have resulted in some major corporations repatriating funds, and others slowing their investment decisions in Ireland and other locations abroad. Housing and Off-Site Manufacturing A significantly greater residential supply is needed to meet demand, and this poses a significant challenge for the Irish residential market. As mentioned above, it is predicted that 550,000 homes will be required over the next 20 years. While the build-to-rent (BTR) provisions and growing numbers of PBSA units are helping, these sectors also face supply challenges, as evidenced by recent Linesight research. Speed of delivery is a key element in addressing the housing shor tage, and of f-s i te manufacturing (OSM) plays a fundamental role in achieving this. However, it is important to note that the OSM market in Ireland is in its infancy from a design and regulatory perspective. Early engagement is a critical success factor with OSM, and it must be a specified client requirement from the outset, as well as factored in from the design stage. Furthermore, the supply chain must be involved from an early stage to ensure that the building is designed for OSM, ease of manufacture and installation on-site. Ultimately, collaboration is key throughout the process. While OSM was utilised in Ireland in advance of the economic downturn, it has only really re-emerged in more recent years. The opportunities for OSM in BTR are proven by its successful adoption in markets such as the UK, and attributable to two key characteristics – repeatability, and standardisation of design. The industry i s undergoing somewhat of a digi tal revolution, with the increasing adoption of BIM modelling a particularly beneficial evolution. OSM lends itself to this technology, benefiting from the coordinated 3D modelling of details and components, and ensuring a single point of reference for all design information. It is particularly benef icial dur ing the ear ly deci s ion-making process demanded by off-site construction, allowing efficient planning and design, including plug-and-play service connections, leading to fast and efficient on-site installation and connection. In particular, 3D walk-throughs can be utilised to manage the early detailing/optioneering and sign- off of layout and finishes, addressing the risks associated with this early sign-off. While the challenges are not insignificant, in terms of the availability of experienced resources from design through to on-site construction, OSM offers speed of delivery that could help to overcome the current supply challenges posed within the BTR sector. With that said, it is imperative that funding models change to address the different risk profile of OSM projects, and that clients collaborate and engage with suppliers in the research, development, and testing of systems required to confirm compliance with Building Regulations. New Project Delivery Techniques and Digital Technologies The sector needs to embrace new project delivery techniques including new digital technologies for design, cost estimating, cost control and project management best practice. Over the last decade, rapidly evolving technologies have revolutionised almost every industry and sector. However, the world of construction is ranked amongst the least digitised sectors globally, according to the McKinsey Global Institute’s digitisation report. Spending on technology and R&D in construction both typically account for less than 1% of revenues. As an important industry on a global scale, construction has a significant economic impact, with an estimated market value of US$10 trillion per year and employing about 7% of the world’s working-age population. The role of technology and improved techniques in the industry should not be underestimated, in areas such as ef f iciency, the reduct ion of project durat ions , the improvement and reduction of defects correction processes, automated robotics, mechanics, and much more. Software solutions for site optimisation, project organisation processes, schedule shortening mechanisms and innovative materials and tools have the potential to revolutionise the industry and its processes. BIM, for example, offers significant opportunity for construction efficiencies, essentially combining technology with new working practices. The potential benefits associated with the technology are well documented; the use of 3D models allows the visualisation of the overall development, facilitating collaboration and information sharing amongst all members of the design team on a centralised model, leading