Rhino walking on rope in the sky.

+ Passing innovation risk down the supply chain to companies that are structurally incapable of taking on that risk solves nothing – the risk must lie with those who stand to benefit.

Numerous indicators and enquiries show that the construction sector has historically underperformed on procuring large-scale infrastructure projects. Put simply, it gives investing countries poor value for money. This is the case around the world.

I believe the solution is to make innovation the focus of procurement, and to shift the innovation risk towards the client and infrastructure owners. Project risk and company size should match, as they do in other industries.

In the aviation, automotive and oil and gas sectors, the main players are big enough to take on the risk of a new airliner, a new car or a new oil field. Project risk and company size match: mega-projects, mega-corporations.

Construction companies are a fraction of the size of the oil, aerospace or automotive majors. Yet their challenges on similar scales: metros or high-speed railways cost the same in ballpark terms as the development of a new aeroplane or oil field.

As things stand, no construction company (or designer) anywhere in the world could take such a risk. Hence innovation progress is slow: mega-projects, modest corporations. We have innovation inertia – the procurement framework limits opportunities for substantial technological innovation and major cost savings.

Yes, some advances are being made. Leading consultants and construction companies are regaining the confidence to invest in research and innovation, and they are making significant process improvements. But, in my opinion, none of this equates to the sort of transformation that’s required.

Specifying the performance rather than the solution is key to stimulating market-led innovation. For example, inviting bids to construct a flood defence structure will produce a range of prices, but it’s unlikely to stimulate innovative thinking. Whereas inviting bids to protect people and property from the risk of future floods will generate some proposals to build the same flood defence structure, but it may also encourage some radically different alternatives.

This way, society will benefit and the public and privately regulated utilities will be transformed. It happens in other industries: customers demand value and suppliers innovate in response. In the aerospace industry for example, passengers demand cheaper flights, so airlines demand fuel- (and carbon-) efficient planes, and aerospace manufacturers produce dramatic increases in efficiency (40% since 2000). As a consequence, passenger demand increases, generating further improvements.

Governments around the world need to place construction higher up the list of priorities for research and innovation funding. For example, although construction is one of the largest of the UK Government’s eleven industrial strategies, there is no equivalent innovation funding like the seven technology and innovation Catapult Centres.

The construction sector needs help to generate innovative solutions for countries. Passing innovation risk down the supply chain to companies that are structurally incapable of taking on that risk solves nothing. Instead, the innovation risk must lie with those who procure the projects – those who stand to benefit. Being bold enough to focus on performance and outcomes rather than preconceived solutions is the most effective way to transform the industry.