CIF Director of Main Contracting Paul Sheridan: Is sustainability going to transform the contractor’s business model?

by | Jul 5, 2023

The drive to reduce embedded carbon in the construction industry is likely to have a transformative impact on how business is done.

This process may take several years but with more and more private and public clients, along with their funders, looking at whole life cycle costing, carbon budgeting and ultimately the environmental performance of their built asset over its entire lifetime, this transformation almost looks inevitable.

The placing of corporate sustainability reporting on the same basis as financial reporting through the imminent new EU Directive is another engine of this transformation.

Clients will be forced to significantly shift their narrow focus on the capital cost of construction based on a lowest price, risk transfer model to one based on collaborative contracting with significantly enhanced design and scoping of projects.

The CIF and its members have been calling for projects to be awarded based on quality over price for many years and now with this new focus on asset management and performance it seems that we are about to see a major increase in shifting how projects are tendered for and evaluated.

Sustainability and quality go hand in hand with performance.

With environmental performance likely to be the main criteria upon which tenders will be evaluated, one would expect that it will transform how contractors seek new clients and businesses.

This new model has the potential to move our industry away from the singular metric of turnover growth to a more hybrid model; based on a matrix of KPIs such as profitability, environmental performance, social value and client relationships.

The Irish economy continues to grow and according to The EY/Euroconstruct Winter 2022 Report it estimates that construction investment, will grow by 2.5 per cent in 2023 and 4.1 per cent in 2024.

The Government’s commitment to delivering Housing for All by narrowing Ireland’s infrastructural deficit through the €165billion NPD and meeting Ireland’s climate objectives provides a counter cyclical investment model to sustain our industry.

The continued FDI investment in Ireland and the rebalancing of investment from a challenging but stable commercial market into life science projects is providing CIF members with more attractive business opportunities based on partnership.

In this competitive environment, the client who adopts the collaborative risk management approach will be best placed to deliver their high performing built asset.

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