They fail to innovate and spend least on R&D
Contractors are the least innovative of firms in the construction industry with the lowest spend on research and development, according to a survey of nearly 400 companies ranging from architects to engineers and main contractors.
The survey, published by Constructionline and sister company Capita Symonds, asked a series of questions designed to gauge the construction industry’s appetite for innovation, diversification and research and development.
It also found that companies in construction are failing to apply for government grants which could help them innovate and diversify. More than 80% of construction firms were unaware that grants are available to support innovation and only 4.1% of construction companies had actually applied for grants, the survey found.
Firms answered individual questions and were also given an overall score (out of a possible 33 points). The highest overall score was 26 with just 3.5% of respondents scoring 20 or above, while the average score was 10.31.
Compared to architects and engineers, contractors were the least innovative overall (9.7 points average), suffered the lowest levels of R&D spend; the lowest levels of awareness of government funding streams; and were least likely to diversify their services.
Richard McWilliams, director of innovation at Capita Symonds, which co-sponsored the survey, said: “Innovation is vital for economic growth and, with ever-increasing frequency, buyers are seeking an innovative approach to ensure continuous improvement and more cost-effective products, processes and services from the supply chain. Often, this translates into a requirement within tender questions for bidders to demonstrate how they are innovating.
“The majority of money in construction passes through contractors’ hands – it’s a shame they can’t find the cash to innovate on products and services. The difference between a good company and a poor one in this respect is as little at £50,000 per year — that’s one good person.”
Philip Prince, sales and marketing director at Constructionline, said: “According to our research, last year’s annual spend on R&D was around £66,250 among high scoring (20 points plus) firms, but just less than £16,000 on average. In addition, more than eight out of 10 construction firms were not aware of funding for innovation, including schemes like Technology Strategy Board grants, Knowledge Transfer Partnerships and R&D tax relief.”
But the news on diversification was healthier, he added, with 63% of firms having diversified their services and 71% having a defined approach to the development of new ideas.
Survey results: the key points
- The most innovative companies (scoring 20 or more, 3.5%) spent, on average, £66,250 on R&D activities a year — approximately four times more than the overall average (£15,623).
- Average spend on R&D equated to £15,623 a year and £514 per head (which is higher than the UK per capita spend on R&D, calculated at £349)
- Average highest spend per head can be found in manufacture (£1,087), followed by architects (£670). Contractors are well below this (£227).
- Around 63% of companies had diversified their services. Those companies that did diversify services had an innovation score of 11.9 on average in contrast to 7.6 for those that had not diversified. Engineers and contractors were the least likely to diversify their services.
- Manufacturers were the most likely to undertake product development (44%).
- 25% of architects had developed new software.
- Mid-size organisations with between 250 and 500 staff were the most likely to have explored funding opportunities for innovation with 43% aware of government funding streams and 29% having applied.
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