Construction firms in Europe have challenges to face in terms of efficiency and skills supply – that’s the view of Kirby Group Engineering Managing Director, Jimmy Kirby.
Founded in 1964, Kirby is one of Ireland’s principal mechanical and electrical engineering contractors. The company expanded into the UK market in 2008. “Originally, we were invited in by one of our large multinational power sector customers to deliver projects for them; then we successfully expanded into other sectors,” says Jimmy Kirby. More recently, the firm has established a strong presence in mainland Europe and has secured contracts in Sweden, Finland and the Netherlands.
Good outlook for construction in Europe
The outlook is generally good, both in Ireland and Europe, for the construction industry at present, he believes. “Private sector investment in Ireland is strong at present. This is being driven by companies in the data centres, life sciences, and commercial sectors. 2019/2020 looks strong for the industrial manufacturing sector as well, where there is the possibility of a few major investments that will provide a boost for the sector in Ireland if these go ahead. There is less investment in the UK as a result of Brexit and other factors, with European investment holding well.”
That said, the construction sector does face challenges, which Kirby places in two categories – skills and efficiency. “The industry is challenged with limited resources in terms of both, tradespeople and professionals. Demand is going to exceed supply in the coming year. The other challenge is efficiency, the industry needs to improve, and we need to achieve increased output for our inputs.”
Efficiency challenges in construction
On efficiency, he points to research, which shows that construction efficiency has fallen behind that of other industries. Indeed, a 2017 report by the McKinsey Global Institute found that if construction productivity was to match that of the total economy over the past 25 years, it would bring an added value of US$1.6 trillion to the industry each year, which would add about 2% to the global economy.
“Construction has been underperforming when compared to the other industries,” says Kirby. “Other sectors have hit 45% efficiency gains over the past 25 years, whereas construction has been flatlining. The whole project process needs to be improved. It’s not just the contractors who need to improve. All project stakeholders have to move closer towards a lean approach, similar to the manufacturing industry. Improvements are required all along the project lifecycle, from design, through construction and commissioning. That’s a challenge for the industry globally. There is anecdotal evidence that the Chinese seem to have achieved significant efficiency improvements. We are doing what we can to improve our efficiency in our own organisation, with 10% efficiency gains on some of the services that we provide. The industry is working on it as well, it remains a challenge.”
Skills in the construction sector
When it comes to skills, Kirby is taking direct action. “We have an apprenticeship programme and a graduate programme,” he says. “We have been running the apprenticeship programme for the past 50 years and the graduate programme is more recent. Both of them are aimed at nurturing talent to come through and play a greater role in the organisation.” Kirby also runs a site management programme, which helps craft professionals to go on to become site managers and then project managers.
Looking at some of the emerging trends for the industry, he points to Building Information Modelling (BIM) and off-site fabrication.
“We will see more technology applied to construction. This will play a role in meeting the challenges that we face. It’s definitely where some of the increases in efficiency will come from. Off-site fabrication is becoming more significant in some countries. It helps to address labour shortages. It also has additional benefits, as it can be more efficient to fabricate in off-site workshops. It can improve safety, quality and delivery. BIM enables off-site fabrication to a large extent. Technology applications are tools; they are part of the innovation that is crucial for improved efficiency.”
Greater environmental demands represent another trend. “We have an environmental plan for all of our projects. It deals with all possible impacts and we minimise our impact as much as we can. We set targets each year; it’s all about prevention. Our target is to have 90% of our waste recyclable. We monitor that constantly in order to optimise our environmental performance.”
Irish construction in Europe
“The Irish construction industry is doing well, particularly in Europe,” he says. “That is due to the overall capability of the industry to deliver projects. There is a willingness to adapt to meet client needs. That’s part of the Irish culture; we do adapt well and we are prepared to do things differently. Innovation and collaboration are important to the success of our service.”
It is also a question of standards and quality. “The US multinationals have played a significant role in that regard,” he says. “Working with them over the past 40 years has brought Irish construction companies to where they are today. Irish contractors operate at a world-class level and compete well internationally as a result. We are competitive across all the key performance indicators – safety, quality, delivery and price. Irish contractors are winning business in Europe as a result. That’s due to the value proposition they offer, it’s not all about price.”
For the future, he believes the Irish construction sector will maintain its strength and will remain competitive in domestic and international markets. “The industry offers an excellent value proposition, but we will have to continue to push on lean processes to improve our efficiency.”