Why the CMA's civil engineering market study is a once-in-a-generation opportunity

“Once in a generation” is a term that can be overused in Westminster.

It’s often used to describe a great opportunity that needs momentum and political support for change. But I do believe, this time, the term may be worth using.

The recent Competition and Markets Authority (CMA) report into the civil engineering market paints a well-known but still worrying picture of the industry.

Cost overruns, low productivity, constrained innovation, fragmented delivery, and poor procurement all hinder the UK’s ability to deliver infrastructure on time, on budget, and to an acceptable standard.

But it could be argued that those issues are well known. They’ve been recognised by successive governments, industry bodies, and industry players.

So why is this different? Why is the CMA’s report once in a generation?

The government can’t ignore the CMA’s recommendations without good reason

What a CMA report has, that a report from the APPG for Infrastructure or the ICE does not, is a presumption that the government will accept the recommendations unless it has compelling reasons not to.

Wherever ministers decline, they have to come up with a justification, which in turn will help industry understand where the collective mind of Government sits on the issues raised.

The CMA has set out 19 recommendations covering market shaping, procurement reform, public sector capability, and regulatory barriers.

Crucially, the report is clear that these reforms must be delivered as a package. A piecemeal approach won’t achieve the changes needed.

That response is something the industry and parliamentarians like me can hold the government to account on.

Will NISTA be an agent of change?

Political change brought about by Andy Burnham’s rewiring of the state may mean the government response isn’t full, unequivocal agreement.

The CMA believes leadership and ownership of most change should come from the Treasury.

This made logical sense at the time of writing: as an agent of the Treasury, the National Infrastructure and Service Transformation Authority (NISTA) arguably had the best chance of shaping change that must happen cross-government and cross-department, to be successful.

But with some power moving to an expanded Number 10 / Cabinet operation, and with faster and deeper devolution, we will wait to see if the government accepts NISTA as the agent for change, or argues that ownership best sits elsewhere.

It’s about more than just process

Whatever the government’s response is, I don’t believe change will happen through their action alone. It will take the mechanisms of industry leadership, such as the Construction Leadership Council, professional bodies, and major clients, to support the changes needed.

Procedural change, such as mandating the Construction Playbook or setting out changes to procurement, will help address the age-old problems the report highlights.

But pairing that with behavioural change across the whole of industry is equally important.

I argue the reason why we procure poorly in the UK, the reason why innovation feels constrained, the reason why we see very public cost and schedule overruns on high-profile schemes, is as much down to behaviour and risk attitude across the whole industry as it is procedure.

For as long as contractors are fighting on tiny profit margins, for as long as engineers feel undervalued and further down the food chain than they once were, for as long as poor commercial and payment practices exist within supply chains, we won’t see change.

While the market study identifies how low margins restrict smaller firms’ ability to invest, and how disproportionate risk sits with larger firms, I don’t think it recognises the considerable impact commercial practices and norms will have on implementing its recommendations.

We need real industry experience

It will take more than just accepting the report’s recommendations and setting out a strategy paper to truly change the fortunes of the sector.

The question we have to ask ourselves now, is whether there are enough practitioners with real industry experience sitting around the table when the government agrees its response.

Because without understanding the complexity of driving change in the industry, this once-in-a-generation opportunity will be missed, and the industry will continue to fail to reach its full potential.

Learn more about the CMA study