Construction is Ideally Positioned to Deliver on The Ambitions of Project Ireland 2040
Pat Lucey, the new CIF President, talks to Barry McCall about his priorities for the next two years.
When Pat Lucey speaks about the construction industry in general and Sisk in particular, he exudes pride and a keen appreciation for heritage. When he points to the pictures of various members of the Sisk family in the boardroom and in the second-floor meeting room in Sisk’s Dublin HQ, it’s with genuine affection and respect.
He also speaks fondly and passionately about Sisk’s long-term commitment to training and apprenticeships and the skills and crafts that the industry needs if it is to grow and thrive in the future. Indeed, it is hard to tell which he sees as most important to Sisk; the boardroom or the joinery.
The new President of the CIF has come through his own form of apprenticeship over the past four years, as he explains. “The presidency of the Construction Industry Federation is a great honour. It has been a four-year journey to this point. I spent two years as Vice-President, another two years as Senior Vice-president, all of which prepares you very well.”
The lead-in to his presidency coincided with the recovery in the industry.
“We went into recession in 2007 and began to emerge from it in 2013,” he says. “Commercial building activity started to come out of the downturn first, with a reasonable amount of activity in 2014.”
This was mainly private sector work concentrated in the Dublin area. “It has continued apace since, mainly in that Greater Dublin area. But many sectors and regions lag behind. For example, Civil engineering hasn’t really come out of recession as of yet. Housebuilding is improving, but regional housebuilders still face a non-market where costs far exceed the price of the existing stock and where people are migrating to Dublin.”
As a former President of the CIF’s Civil Engineering Contractors Association, he expresses concerns about this sector. He points to the Ulster Bank PMI (Purchasing Managers Index) which scores sentiment on a scale of 0 to 100 with anything over 50 representing a positive outlook and performance. The civil engineering sector index plunged to the mid-20s in early 2009. Today, a decade later, it still only hovers around the 50 mark.
“The sector has stagnated since 2013,” Pat Lucey adds.
“Civil engineering is very dependent on public spending. In the past, the recovery in public spending has tended to lag behind the recovery in the general economy by a few years. This time it has been different. The severity of the recession meant that the public finances have been slower to recover.”
He is quick to acknowledge the Government’s plain speaking in relation to that.
“In fairness to Paschal Donohoe, when he was Minister for Transport he said that spending on infrastructure wasn’t really going to get started until 2019. We have known for years that this was the case and that it would be 2020 before we were back at a reasonable level of activity. As Minister for Finance, he has been quite specific about balancing the books in 2018 and ramping up spending in 2019, and he has stuck to that. You can’t fault that policy, but it’s been a hell of a long time to wait.”
“We know that infrastructure spend stimulates economic activity. That’s why the emphasis in Ireland 2040 on developing the country to counterbalance the influence of Dublin and the Eastern region is so welcome.
“We are a small country, and it is not that difficult to get from one side of it to the other,” he adds. “But it is difficult to get from Limerick to Cork. There is a gap in our national roads infrastructure, and that has to be addressed.”
Pat Lucey welcomes the aspiration to develop the Cork-Limerick economic corridor to the point where it supports 1.5 million people.
“This is the obvious counterbalance. Dublin doesn’t have to keep growing to the detriment of the regions, and regional growth should be complementary to the wider economy’s growth. Development in Dublin has to continue, and achievements to date should be consolidated through improving transport links around the city and constructing an adequate and affordable stock of residential units. Let’s make Dublin better before it gets bigger.”
He is concerned about the growing inequality between certain regions and the rest of Ireland.
“There is an issue about the North- West and Donegal. They are particularly exposed to the impact of Brexit and investment there should be prioritised.”
Turning to the private sector, he describes the failure of the Athenry Apple data centre project as “one of the most significant lost opportunities we have ever experienced in this country. We will never know the true extent of the damage it has done our reputation internationally. This is an example of a private sector company choosing to go to a regional location because of local infrastructure, connectivity through airports, availability of good quality housing, excellent educational facilities, and great potential for good work-life balance, yet it was stopped by shortcomings in the planning process.
“Changes have been made, and we have to see how they work out,” he continues. “There must be a right to object, but there must also be a more efficient process elsewhere that we can learn from.” Regional construction companies are part of the essential lifeblood of the industry.
“Those construction SMEs in the regions represent a fantastic production line of people coming into the industry,” he explains. “They are owned and managed by people with an entrepreneurial flair who back themselves in being efficient and innovative. We are always keen to celebrate entrepreneurs in other sectors, but not so much in construction. If in the next two years we focus on building the regions and supporting these local entrepreneurial companies, we will attract people to the industry that we wouldn’t be able to otherwise.”
Looking towards his two-year term as CIF President, Pat Lucey outlines three priority areas he wishes to address – people, procurement, and public policy.
Under people, he says it is all about careers.
“How do we attract people to careers in the industry?” he asks. “The CIF will start a campaign to address this in 2019. It will be a broad-reaching campaign and will certainly have a strong focus on apprenticeships. The national focus is on university education, and apprenticeship is not valued as much as it should be. Apprenticeships are the gateway to a good living and attaining skills that can take you from the site to the boardroom in Ireland, or internationally. It’s accepted internationally that Irish construction workers are among the best and our teams are highly sought after globally.” Improving diversity within the industry is another way of increasing the available talent pool.
“We have to look into diversity,” he says. “Many of our members are increasing their efforts in this area. The obvious one is gender diversity. Our industry is predominantly male, but it doesn’t have to be. It is recognised that a more diverse workforce produces better solutions to problems.”
Attracting talent is only part of the story, however.
“When we do get people in, we’ve got to care for them. Great improvements have been made in health and safety over the years, similar progress must be made with site welfare facilities and working conditions in general. Nobody should be hurt when carrying out their job, facilities should be modern, and working conditions must reflect 21st century standards and expectations. The Health and Safety Authority recently complimented the industry on the fact that accidents and fatalities continue to drop significantly despite a large increase in activity and an increase in new workers into the industry. But, we must never get complacent.
“We tend to work long hours and travel long distances,” he says. “That is a big problem. Members are putting in place measures to tackle it. They are doing things like opening satellite offices to reduce commuting times and finishing early on Fridays. Over the next two years, we will be working hard on skills, attracting people to the industry, caring for them, and improving diversity.”
Mental health and wellbeing is another aspect.
“There have been many initiatives in mental health in recent years. In 2015, there was a great joint initiative between CIF and Pieta House; and the ‘Mind Our Workers’ campaign continues. A lot of companies also have their own mental health programmes. We are getting to the point now where companies are talking to each other about it. We had a really successful health and safety conference recently, and a lot of people there shared their experiences and ideas – that was very helpful.”
A key area that has to be looked at within procurement is margin.
“At the moment the industry is working on profit levels of 1% to 2%. This is not sustainable. A lot of companies have gone out of business, and this affects the whole supply chain, our public and private sector clients and, ultimately, the Irish citizen. Construction is a significant part of the economy, and if we want it to be efficient, to be productive, to be sustainable and to attract and retain the best talent, it has to have reasonable levels of profit.”
Pat Lucey attributes at least part of it to what he describes as ‘a plague on the industry”: lowest price tender evaluation. He concedes that it is understandable for public bodies bound by EU tendering rules to go for the simplest option and accept the lowest price.
“Public procurement is an issue across Europe,” Pat Lucey points out. “We are not alone in this. I would like to see a move to a tender evaluation process that measures quality, deliverability and price. A system that takes all aspects into account would be much fairer.”
Aspects like deliverability can be subjective, of course.
“You need to be really disciplined in how you evaluate tenders. The process must be fully transparent to withstand legal challenges and be beyond public doubt. Transport Infrastructure Ireland is working on a new tender evaluation process for the N22 and N5 schemes. They are trying to strike a balance between lowest price and other criteria to give a better result all around. If they get that right, it could be a game changer. The lowest price has its place in certain circumstances, of course, and our members are not afraid of going toe to toe on price when called upon to do so.”
Another aspect of sustainable procurement he mentions is the bundling of contracts.
“We had a conference on procurement in Tullamore recently, and some very interesting ideas in relation to joint ventures came up around contract bundles which would facilitate more SME involvement. The CIF is going to look at guidelines in relation to that.”
Pat Lucey reserves a special welcome for the Project Tracker being produced by the Government.
“Every single project is being tracked, and Government has committed to updating it regularly with detailed information. This is really important for contractors as they can only plan ahead if they have the information. Contractors will invest in training, people and plant if they know what is coming. They will reach out to international partners for major projects like Metrolink and join up with other local contractors for bundles of schools and so on – but they can only do that if they have up-to-date and accurate information. The Project Tracker is very welcome. Indeed, there has only been one edition so far. They are going about it the right way though.”
He notes the oft-quoted figure of 12% of GDP, which is regarded as the ideal level of output for the industry.
“That’s fine when the economy is performing well”, he says. “But if you take the extreme scenario when all funding is turned off at the same time, the result is that the industry has to build up from a near-zero base when the economy starts to grow again. You can’t go from no houses being built to a lot, at the flick of a switch. You can’t build a motorway without the prescribed surveys, assessments and consultations. There is a timeline for projects – being shovel-ready only comes after a long period of essential lead-in work. We have just been through that extreme scenario, and it will take time to bring new people into the industry and to get them up to speed in terms of productivity. You can’t just begin spending and overnight expect the industry to be at maximum efficiency.
“The situation is made all the harder when design work is cancelled. Consulting engineering and design generally is a people business. People were lost from the Irish industry during the recession, and it will take several years to build up those resources again.”
He believes targets should be set as public policy for a level of output below which we should never again go to ensure there is a sustainable and efficient industry in future years.
“This is a job for the newly formed Construction Sector Group,” he says, “Contractors are only part of the story. We need the clients and the designers on board as well. Minister Donohoe says that we have got to get away from the boom-bust cycle and he is right. Going from highs to lows is no way to live. The Construction Sector Group has the expertise to establish the optimum and minimum levels of output for the industry. We will come up with better answers when we have all sides at the table.”
Pat Lucey believes that progress in these areas will result in a sustainable industry that will be able to deal with any challenges which may arise in the coming years. He is also confident that the industry will be able to meet any additional demands placed on it in future.
“When you look at what happened in the past, the industry sourced specialist expertise overseas where necessary, but ultimately the challenges were solved by the indigenous Irish industry.”
First Published in ‘Construction’ Magazine December 2018/January 2019 CLICK HERE to read the full magazine