Labour productivity in the construction sector has remained flat for a number of years.
Research by McKinsey shows that since 1945 productivity has barely grown at all for construction, but it has risen by 1500% for sectors like manufacturing, retail and agriculture. With new technologies and different approaches to infrastructure life cycles emerging, there should be more innovation in the sector. Canada has an opportunity to further enhance its credentials as a global centre of excellence of innovation in infrastructure. By developing a system that better enables innovation, it would see greater value for investment, and the opportunity to develop better products and services in the province to export around the world.
In 2018 Canada invested $85.8 billion in infrastructure across the country, with around $58 billion coming from different levels of government and the broader public sector. 585,000 direct and indirect jobs are supported by investment in infrastructure. To deliver innovation, companies in the infrastructure sector need certainty to make long-term investments in skills, equipment, and research. This comes from a stable and predictable pipeline of projects and consistent levels of government spending.
This report explores different approaches to enabling innovation to be introduced into a project in the most efficient and effective way with a focus on procurement.
- Better end-products and services: Innovation delivers benefits for the public who are the ultimate end users of public services. Plus, front line public services workers such as nurses and doctors, transit operators, teachers, and the police. Many hospitals have found better building designs have improved patient care for example.
- Better value: Innovations in design, construction, or through use of different materials and technologies can lead to significant long-term cost savings, creating better value for taxpayers and local communities.
- Increased economic growth: Government can act as a first buyer, demonstrating proof of concept and leading to significant demand, and local creating jobs. There are also potential export opportunities, as well as increasing the competitiveness of local firms with US$10 trillion spent each year globally on construction goods and services.
- Solving societal challenges: Procurement is often used by governments to solve challenges like mitigating the impacts of climate change, reducing environmental impacts, or providing more sustainable public services (for an aging population for example).
Innovation in infrastructure projects can take place at any stage, but there are a number of factors that can hold it back. To overcome these barriers there must be a strong culture to encourage innovation, and effective processes and policies in place to enable it. These challenges include: