Innovation for a carbon constrained city: challenges for the built environment industry.

Rethinking education and skills to promote integration

Knowledge is key to innovation in all areas, including the BE industry, and much needs to be done in this area if the innovation for sustainability agenda is to be successfully addressed. Training future built environment professions and trades and the routes we devise to re-skill those already in place are an important catalyst for innovation in many cities (Office of the Deputy Prime Minister, UK 2004). Current institutional structures and the limited co-ordination of education and training providers may hinder innovation. Technical training often remains structured around preparation for traditional 'artisan' trades, rather than encouraging acquisition of the broader BE skills needed, and provides little incentive to deliver courses on radically innovative construction methods, for example. While specific skills remain vital, existing skills, and built environment generalist skill sets, need enhancing.

At the higher education level we continue to train planners, architects, engineers (civil, structural, environmental), urban designers, landscape architects, property developers and managers, construction specialists, facilities management and so on as 'bounded' professions, largely in isolation from each other. While it may be unrealistic to suggest an evolution in the short term towards a multi-disciplinary 'built environment' professional, shared skills should be fostered regardless of the specialism followed. Innovation is required in course and curriculum design to improve sustainable design and environmental management literacy and ensure integrated approaches to the creation of sustainable buildings, spaces and places.

As Garnaut (2008) notes, market failures in R&D and innovation activity reflect the inability of pioneering research, and the investors behind that research, to capture the full value and, importantly, the wider public value, of their innovations. Better funding to support research and the development of new approaches throughout the innovation chain is needed. Paradoxically, current partnering arrangements between universities and industry often hinder sharing ideas, information and opportunities across a wider breadth of industry players. A substantive rethink on intellectual property (IP) rights may be required to facilitate the timely delivery of new ideas.

Reshaping labour

Initiatives to encourage innovation raise a number of important questions for the role and organisation of labour in the BE industries, particularly in terms of trades. A key impediment to innovation in the sector is the fragmented employment base, with a high prevalence of small scale companies, sub-contractors and individual tradesmen. While these arrangements have provided flexibility and responsiveness to the cyclical nature of markets, innovation requires consistent investment in high level training, usually beyond the reach of small industry players. Creation of 'direct labour' or 'in-company' teams rather than subcontracting arrangements may provide a more coherent platform for on-going skills development and knowledge acquired through past project experience can be retained and transmitted. These arrangements, however, are likely to be feasible only amongst market-leading operations. Without incorporation into wider policy shifts, the continued significance of small firms in the production and reproduction of our urban form will slow innovation in many fields. Since retrofitting of our existing city areas is one of the hardest challenges faced by city policymakers, innovation policy must think in both 'big, global' and 'small, local' terms.

INTEGRATION ACROSS THE LIFECYCLE: REDEFINING VALUE IN THE BE

Since the built environment is with us for the long term, we need to develop appropriately longer term views of how to create, manage and renew it. Financial frameworks for both new construction and adaptations to existing built form are likely to require much rethinking with the onset of carbon trading, pricing or taxation mechanisms. More generally, the importance of moving towards integration over the life cycle of the built environment is crucial to making better use of the materials, energy use and waste represented in the production, use and dismantling of our towns and cities and hence is crucial to BE innovation.

Whole of life considerations

A shift to whole-of-life costing disrupts traditional accounting and financial return frameworks and signifies movement towards more innovative financing mechanisms for the BE industry. Lifecycle cost approaches estimate the cumulative environmental and social impacts of a building throughout its lifespan, from construction to use and demolition and place greater emphasis on the longer-term value impacts of design and construction decisions. As Davis Langdon (2008b) note, the move away from financial models that focus on payback (capital cost reduction) towards lifecycle costing methods (longer lifespan, energy efficiency, reduced operating costs) is challenging traditional depreciation methods.

Development of these so-called 'value-based' methodologies will be a central site for BE innovation and will impact across the working practices of all built environment industries. Barriers need to be addressed, however: investment in technologies, materials and approaches that increase the sustainability credentials and performance of built form means higher upfront investment, leading to dominant perceptions that 'green' design and construction inherently cost more, with the 'payback' benefiting others. Such 'split incentives' create substantive barriers to innovation (Green Building Council of Australia 2008; Reed 2007; Total Environment Centre 2008). The benefits of this additional upfront cost can now be recouped over a relatively short period of time in many cities and, in some sectors, technological advances have brought payback timeframes increasingly within reach of standard investor-return profiles.

Research has helped here by demonstrating the benefits of good design, whether in terms of improving employee productivity and wellbeing, meeting growing market expectations, the ability to command higher rents (a 'willingness to pay'), or premium resale values. Over time, innovation is required to further progress emerging markets where investment needs and sustainability requirements are mutually reinforcing.

Pricing risk: Current barrier, future motivator?

Calls to reshape BE economic decision-making structures highlight a conservative process driven by concerns regarding regulation, risk and insurance. Risk adversity can be attributed to the fragmented nature of all those involved in the process and a lack of willingness by both public and private sectors to take risks--political, economic and reputational--at a time when those risks need to be taken. However, some factors currently creating barriers to innovation may lead to a fundamental restructuring of practice. Corporate social responsibility is likely to provide an increasing impetus to investment portfolio expectations, where 'green' or 'sustainable' becomes the low risk rather than high-risk option. There are now clear signals that the market increasingly expects sustainability as the benchmark and buildings without sustainable features will command lower rents/prices and have accelerated levels of obsolescence (investorwords.com 2008; Jones Lang LaSalle 2006, 2008;). Similarly, where the pricing of risks associated with climate change move up the 'risk-chain' and the industry develops means of accurately measuring and pricing that risk, then insurance considerations may no longer be a barrier but rather an incentive to promote innovative and adaptive behaviours.

Future flexibility; The importance of design

Since built environments often last well beyond initial investment timeframes and buildings, neighbourhoods and cities inevitably 'age'. Predicting demands on form and function in twenty or fifty years is hard and 'future proofing' our built environment is harder, but we can design and develop flexible buildings that respond well to change. In a number of German cities, for instance, floor heights in multi-storey car park construction are sufficient to allow future reuse for residential or commercial applications. Future flexibility in terms of anticipated infrastructure development and changing neighbourhood function is also being incorporated into local planning frameworks. In London, new developments of a certain size need to leave opportunities open to connect to future local energy generation systems, for example (Greater London Authority 2007). Design in every aspect of the BE, from new construction to complex retrofitting, is coming to the fore as a critical competence of the BE industry

Realising 'civic' value

Innovation is fostered through reshaping how we understand the contribution of, and place value upon, the built environment more widely. This value is not simply based upon tangible economic returns, aesthetic distinction or functional purpose, but flows through into its broader social and civic contribution, its impacts on connectivity and mobility and quality of life in our cities. Some approaches seek to counter the disjuncture between short-term economic drivers and long-term commitment to place. These include models where return is offset through patient equity, partnership arrangements that extend across the 'split incentives' divide, or where development and construction market leaders are increasingly building strategic advantage through investing in place rather than simply developing sites and moving on. These responses are often useful but can have negative impacts. Large scale master-planned development approaches, with one 'owner' effectively controlling a large site for many years, may not be socially or economically sustainable in the longer term and the tendency to minimise development risk through greater project control, the penchant for large floor plates, pre-let tenancies to major chains, and an inward facing quasi-privatised public domain may be less desirable an innovation. Other successful centres tend to develop more 'organically', with outward facing and inclusionary realms and permeable built form and public spaces.

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