10 issues set to affect construction supply chains in 2022
Supply chain risk management expert CHAS, highlights ten issues that will affect construction supply chains in 2022.
The Building Safety Bill
The Building Safety Bill, currently making its way through Parliament, is set to change how certain buildings are constructed, maintained and made safe. It will include regulatory reforms on fire safety and quality of construction products and will introduce a developer levy. Virtually everyone involved in the design, construction and management of higher-risk buildings will be affected.
It is expected that the Bill will receive Royal Assent between April and June 2022 with the provisions coming into force in stages. The HSE will oversee the new building safety regime and is already urging affected parties such as designers to prepare.
New framework for Environmental protection
The Environment Bill became the Environment Act 2021 when it received Royal Assent on 9th November 2021, introducing a post-Brexit framework for environmental governance, primarily in England. The Act paves the way for further laws and guidelines such as legally binding targets around air pollution, biodiversity, water quality and waste which will be defined in due course.
Businesses of all sizes can prepare by reviewing how they currently monitor and manage environmental processes and ensuring environmental management remains high on their agenda.
Net Zero targets
From 1 October 2021, it became mandatory for all companies bidding for government contracts worth more than five million pounds a year to commit to achieving net zero emissions by 2050.
Under the new rules, set out in Public Policy Note 06/21, in-scope organisations need to produce a carbon reduction plan detailing where their emissions come from and what environmental management measures they have in place.
While some large companies already self-report Scope 1 (direct) and Scope 2 (indirect owned) carbon emissions under the Streamlined Energy and Carbon Reporting regulations, the new targets require them to go further. This includes committing to achieving Net Zero by 2050 and reporting Scope 3 emissions such as business travel, employee commuting, transportation, distribution and waste.
The requirements currently only apply to government contracts, but they could become an advisory part of the Common Assessment Standard in 2022.
Focus on Diversity & Inclusion
Diversity & Inclusion is an issue steadily rising up the supply chain agenda, with construction clients increasingly looking for evidence that contractors are proactive in this area. A progressive Diversity & Inclusion strategy will look to create a positive workplace environment where everyone feels valued and people are treated as individuals according to their needs. This may, for example, include making reasonable workplace adjustments to accommodate those with disabilities or those that have different work/life commitments.
The standardisation of Social Value
The concept of social value has been around for a while but it is set to become more defined in 2022. Within construction, social value usually covers how a build can add value in terms of its wider social, economic, and environmental benefits, but there is growing demand for more consistent measurement of social value.
The increase in digitalisation
Digitalisation has been a slow burner for the construction industry, but according to McKinsey, Covid-19 was a turning point with 50% of companies surveyed saying they have increased investment in digital transformation to meet the demands of the next normal.
Central to the construction industry’s digital transformation is Building Information Modelling (BIM), which offers digital modelling for all components of the construction process from tools, people and materials to mapping work areas, reducing defects and identifying health and safety hotspots. The ability to move the planning of build projects online allows a more collaborative way of working with stakeholders having access to data and documents from anywhere and at any time.
The skills shortage
Figures from the Office for National Statistics (ONS) show a record leap in job vacancies, estimated to be 1.2 million in September 2021 across all industries. The skills shortage has been a growing concern within construction due to workers reaching retirement age and not enough people entering the industry to replace them. Furthermore, the industry has seen a 42% decline in EU workers.
The skills shortage makes it even more critical that efforts to diversify the industry and attract a wider range of people to construction roles pay off. It also reinforces the importance of looking after existing staff and contractors.
The Department for Business and Energy and Industrial Strategy’s Monthly Statistic of Building and Components consistently showed month-on-month price rises throughout 2021. The Construction Leadership Council reported improvements in product supply in some areas, and the Timber Trade Federation (TTF) are now receiving record-breaking timber imports; however, supplies are still likely to be under strain in 2022. A shortage of HGV drivers to deliver materials remains an issue, with take-up low for the government’s 10,500 visas for overseas lorry drivers. An FMB survey shows jobs are still being delayed as a result.
Covid-19 is still circulating with outbreaks and the impact of new variants difficult to predict. Businesses will therefore need to remain COVID-secure and continue to manage the risks of the virus in 2022.
According to HSE, stress, depression, & anxiety remains the second highest cause of work-related ill health within the construction industry. This can be driven by working environments that are pressured or dangerous and embedded cultures that can struggle to promote openness. The potential for 2022 to foster a job-seekers market means it’s more important than ever to look after staff and their wellbeing, with careful consideration given to individual needs and requirements to look after a potentially more diverse workforce. Something like a positive, flexible working strategy can offer workers a better work/life balance, impacting positive mental wellbeing and making businesses more attractive to potential employees.