housing

It would seem that whatever the reason, the UK housing market is at a crossroads. Some sources state that the house building industry has responded strongly to the demand for new housing, increasing output by 55% over the last five years, while other stats show England alone has a backlog of 3.91 million homes, which would mean that 340,000 new homes need to be built each year until 2031. Combine this with the recent UK Government aim to deliver just 300,000 homes a year by the mid-2020s through planning reform and targeted investment, and you’ll realize the math just doesn’t add up.

housing

On the other side of the fence developers and homeowners alike are primed for potential house price fall out during Brexit—but which way? A quick internet search for ‘UK housing Brexit’ will spawn wildly differing headlines, from “Will house prices rise in a ‘Brexit bubble’?” to “Up to 25% wiped off house prices in some of UK’s wealthiest areas.” Whatever the short-term uncertainty, it’s clear that the long-term picture means more houses need to be built.

CONSTRUCTION IS THE ONLY CONSTANT – THERE’S WHAT SORT OF HOUSING…

But there needs to be a strategy behind increased house building. First what are we building and for whom? The Heriot-Watt University research states that simply building a total of 340,000 homes each year will not meet this need—145,000 must be affordable homes, broken down between social rent, intermediate affordable rent and shared ownership.

….AND WHO DOES THE BUILDING?

To address this shortfall, upcoming housing projects are likely to be large-scale and span a complex network of government and industry players. This creates a perfect storm for delays and spiraling costs—indeed ONS statistics show that the construction industry ranks lowest on labor productivity output per hour, below the whole economic average and trailing manufacturing, production & agriculture, finance and other services.

FROM BID MANAGEMENT AND ESTIMATING TO PROJECT MANAGEMENT AND ANALYTICS—GOOD ENTERPRISE SOFTWARE IS ESSENTIAL!

These crucial new UK home construction projects must be managed effectively, and this is where enterprise software can play a role in driving efficiency.

Through raw materials, subcontractor and manpower projections, ERP can significantly aid the planning process before a project even begins on site, providing detailed analytics that allow accurate estimates pre-project and can track costs during construction. With ERP acting as a central resource for controlling projects, productivity can be optimized as planners, decision-makers and workers interact with the same system for key construction processes—such as commercial management, project cost control, program management, procurement and sub contract management, human resources, health and safety, risk management and accounting. Keeping track of complex processes and providing analytics are essential to keep all stakeholders in the loop— including developers, builders, government agencies, buyers and renters.

But increasing productivity alone is not enough to fully address the UK’s imminent house building needs—we need to look outside the box. Even if productivity was increased, the construction industry only has a finite number of skilled laborers. The Chartered Institute of Building (CIOB) has reported that the industry will need to find 157,000 new recruits by 2021 just to keep up with demand.

NEW BUILDING METHODS ARE KEY

Easing UK house building pressures might actually start in the factory—home-building factories to be exact. One new IFS customer is doing exactly that, operating from its 40-acre manufacturing and head office site in the East Midlands, Caledonian Modular has one of the largest single-site volumetric manufacturing capability in the UK offsite building industry. Caledonian is facing a significant growth period, and IFS Applications 10 will help the business deliver these new modular construction programs efficiently and cost-effectively.

At IFS, in 2018 we saw four times greater customer activity around modular construction than in any previous year—this blog from my colleague Kenny Ingram shows how it’s set to shape industry in the coming year.

SOMETHING MUST CHANGE

One thing’s for certain, UK house building is going to have to cope with a huge growth but, if it’s done right, there is a massive opportunity to help improve the quality of living for renters and buyers across the UK.