In the latest in his series of interviews with people at the heart of decarbonisation, Andrew Gaved hears from David Frise, CEO of the Building Engineering Services Association, on the current climate for specialist contractors.
The journey to net zero, as we should all know by now, requires significant attention to be paid to our buildings and to decarbonising the heating and other services within them. We also know there is still a job to do to ensure that in the net zero debate, people don’t simply get fixated on heating for houses – and it is not just the national papers who are guilty of this.
As CEO of BESA, the association for the building services engineering sector, a key element of David Frise’s job is to put decarbonising the services in our commercial and public buildings squarely in the forefront of the net zero debate.
But arguably an equally important element is to point out that the work required designing and installing HVAC systems for buildings ranging from hospitals to office blocks to shopping centres is often highly complex, and several degrees of scale up from the heat pump on the patio. The very fact that BESA is an association for ‘building engineering’ and the age-old ‘building services’ term is nowhere to be seen, is testament to the desire to emphasise that there is highly skilled engineering at the heart of it all.
But to understand better some of the complexities of what it means to be a specialist contractor in the midst of the net zero journey, what you need is an hour in the company of David Frise.
Because as someone who has known the often precarious existence of an M&E contractor himself, and who still visibly bridles at the phrase ‘value engineering’, David pulls no punches when setting out the lived experiences of BESA members.
Net zero journey
The opportunities for the sector with net zero is a good place to start, because David believes that the reality on the ground is different to some of the grandstanding decarbonising statements we might hear from high-profile clients.
“Everybody starts their project off with ‘we want to hit all these targets, it’s going to be an exemplar building, we’re going to win awards’. But then as the project progresses, they recognise that actually they can’t build the building that the professional team have designed. Suddenly the specialist is on site, trying to find savings – they are having to value engineer it, and all those ‘nice-to-haves’ are suddenly not so important. I think a lot of manufacturers and contractors are finding that they are doing a lot of work looking into the carbon impact of this and that product, but then as money gets tighter, it’s ‘Just go for it.’
Of course, one of the main issues with net zero is that it is inevitably heavily influenced by government policy. That currently presents a problem for contractors looking for certainty, speaking as we are, a few weeks after the Prime Minister’s row-back on some key net zero deadlines, David points out:
“The government don’t really have any credibility in terms of policy at the moment. So nobody in their right mind is going to invest in something now that is backed by a government policy. That’s not a political statement by the way. That’s just the sad facts of the current situation. We’ve now got nine months of treading water effectively…And then you maybe get a different government…but even if that is the case, then the finances they inherit are not going to be in a good state, so they’re going have very little room for manoeuvre – and that makes it difficult.”
Current workloads
The complexities of working in the wedge between developers and other property owners and major contractors are well illustrated by the current economic climate, he notes:
“It’s a strange sort of position where despite terrible news from around the world, despite pretty gloomy economic forecasts, incredibly high rents, incredibly high mortgage rates, consumer confidence still seems to be high and that’s not very explicable. And I think most people in the market, our members, are pretty busy…”
To illustrate this, David lists a whole range of areas that are still providing decent workloads for his members, from data centres to schools – although he notes that in the latter, concrete issues will probably displace a whole load of scheduled mechanical and maintenance works.
And on top of that there are at least three sizeable building programmes, in the shape of the hospital-building programme, Hinkley and the remaining half of HS2. So there should be optimism. But there are a host of other factors that weigh on a building engineering sector which is dominated by SMEs:
“On the face of it there’s work there, and in a market that clearly has a skills shortage, a demographic issue, you would think those companies that are left which have the skilled workforce should be in a position to have a greater say in the work they do and to get a better margin. But on the other side, you’ve got material prices that are 41% higher than at the start of the pandemic. So even if inflation comes down, the costs will still be 40% higher than the start of the pandemic. Added to that, we’ve seen labour costs increase massively and so we’ve seen margins tighten across the piece and we’ve had some high-profile insolvencies – and I think we’ll have some more unfortunately.”
He notes that the BESA legal department has seen a leap in the number of disputes where members need help: “People are not paying and cash flows getting tight – and the specialists are the ones that suffer disproportionately in this area. So when is contracting not ever tough? When is it not flying by the seat of your pants?”
The challenges of contracting
I think this is a rhetorical conclusion to his argument, but in actual fact, he is just warming up – leaving me under no illusions as to the cosh that the average specialist is under:
“It can be as if ‘the whole world hates me’ on any particular day – everything is contriving to make it difficult because actually so many levers are outside of your control. The main contractor’s project programming is delayed, so you are delayed. The labour expands to fill the void, but they are not as productive…The client might be sympathetic, but that doesn’t translate into an early payment or anything like that. There are obviously exceptions to the rule, but it is always a tough life being a contractor. It’s a shame, but I don’t see that changing much.”
This sounds like the future offers little but doom and gloom to the contractor, I say. No, counters David, the fundamentals are still there – so it becomes a matter of working to improve their position: “The work needs to be done and because of the demographics and insolvencies there is less capacity in the market to do it. So those who have the skills and capability should do well and they just need to try and control the things they can control as far as possible, in the recognition that this is a world where you don’t control all the elements, so you need to focus on what you can control.”
And so, he contends, more than ever the sector needs to focus on just how vital its work is: “When you talk about ‘building engineering services’, you get that kind of nod from people that says: ‘I haven’t got a clue what you’re talking about.’ But simply put, it’s the stuff that makes buildings work – things like heating and ventilation – and when you succeed at it, nobody knows you’ve done it. You’re just comfortable.”
To underline this, recent events have shown just how seriously we should be taking the V in HVAC too, he adds: “Who in the public knew ventilation was so important before the pandemic? So you’ve got this technology which is incredibly important to people’s lives – and bearing in mind that 90% of us spend 90% of our time in a building, we should acknowledge that it’s really, really important. In terms of health, physical and mental health, and wellbeing, it has a huge impact if you’re in a good building, – we spent something like £1.3 billion before the pandemic started on sorting out poor health outcomes in bad housing. I bet that’s doubled or possibly tripled by now. So all of these things, they really, really matter.”
Help build a better world
This goes double as we attempt to mitigate the climate crisis, he stresses: “The built environment gives off nearly half of the total [greenhouse gas] emissions anyway. So you’ve got an opportunity literally to build a better world… And what we are about, our whole purpose, in BESA is to build a better building engineering services industry – one which is profitable. If they’re profitable, the companies can invest in technologies; they can innovate; they can employ apprentices; they can do all the things that will deliver a better built environment where 90% of us spend our time.”
Unfortunately, he continues, that is Utopia, rather than the current scenario for the built environment. “By and large as a society we allow the building of speculative buildings, to the cheapest price – it’s a return on investment that the developer is looking for. Yet the return on investment societally should be that you have a building that at its most basic simply complies with the building regs. That would be a start, wouldn’t it? It’s not too much to ask.
But lest anyone think that this is a recent problem, David shares a lesson from history. “The association is 120 years old next year. We managed to find the minutes from the first meeting in 1904. Two of the issues the founders talked about were skills shortages and poor payment.”
You can’t dumb this down
So, some things never change – but the fact that this an unashamedly technical industry should also have consequences when it comes to skills and training, he says:
“You can’t dumb this down. Engineering services are really difficult. And the point is that you can get by with these little short courses that are proliferating at the moment. You can go away and become something because you’ve done a three-day course. We don’t just install products, we install integrated holistic systems that work as a whole – and the product we create is a building that works holistically…and you don’t learn that on a three-day course. You need the apprenticeships. You need the longer-term stuff to get that appreciation of, ‘this impacts that.’”
He acknowledges that the rest of the construction industry doesn’t always appreciate the fact that building engineering work is complicated: “If a client says: ‘I want the wall moved three metres that way’, by the afternoon the dry liners have moved the wall. But our changes mean going up three floors, changing pipe work and ductwork and it is massive upheaval. They call what we do ‘the dark arts’ for good reason.”
The transactable building
With the collaboration of other groups within its umbrella body ActuateUK, BESA is setting out to better convey the interrelationship of all the systems in a building. The ‘transactable building’ project has the ultimate aim of giving clients a building that they can ‘transact’, that they can sell or rent in the full knowledge that the building is compliant, he says. “That might sound simple, but I think we all know that there are shades of grey here. So what we’re doing on the building engineering services side is going through each individual system, such as heating, and asking ‘What does compliant look like? What are the standards that need to be included? What is the best practice for the process?’”
Those standards might be contained in BESA guidance, it might be the relevant British standard, it might be the manufacturer’s instructions, he says: “You pull all that together and if there are any gaps, that is where you write a new standard or a guide to do that, using the industry experts in that field.”
An added benefit of this work is that by nature it is collaborative across the industry – and it has already seen a wide range of input, from commissioning specialists through to manufacturers, consultants and contractors. Ultimately, he says, the project will ensure that there is agreement across the industry about what ‘compliant’ means.
The new building safety regime prompted by the Building Safety Act should – and he emphasises ‘should’ – have an influence in all of this because it is focused on delivering evidence of competence. Individual competence, but also importantly ‘organisational’ competence that requires companies to show they have the skills and processes to deliver buildings that are not just safer, but better all-round.
“This could change everything,” he says. “The building control regime will become a regulated profession next April, so in theory they will be asking for evidence (via the Golden Thread) that someone was competent to carry out their work. That should put more of our members in control of more of the process, because they can evidence competence and compliance while many can’t. That could be a big deal.”
This is the industry, to coin a phrase, taking back control: “We are the industry. We can’t wait for government to do it, although legislation has its place. We can’t wait for anybody else to do it. And we don’t have any commercial gain from this. This is truly BESA’s purpose to help create a better building engineering services industry.”
