including Brexit and the pandemic

including through industrial policy, infrastructure spending and devolution

such as the housing supply shortage, office occupancy rates and online retail, as well as broader influences like inflation

which are rapidly changing, both to adapt to changing market conditions (i.e. increased prefabrication) and to shocks like Brexit, but which also leave suppliers vulnerable when large firms fail

which is influenced by geopolitical instability and by a shift towards diversification of generation

and the drive to meet net zero commitments through mitigation and adaptation

which has a focus on construction materials and regulation

pressures given the sector relies on a labour-intensive business model and has an ageing workforce

including the constraints of the existing electricity grid, and development of gas, hydrogen, water and heat networks

The evaluation identified more than 400 organisations which were contributors to the construction innovation ecosystem in the region. These included enterprises themselves, stimulus organisations and education providers.

There are 264 enterprises which are directly involved in construction innovation - such as manufacturers, technology providers, and advanced manufacturing firms - as well as 39 more which are offering bridging to new technology and approaches, including advanced materials, energy and offshore and automotive.

The evaluation lists manufacturing (41 firms) and construction (39 firms) as the top two sub-sectors for number of firms, followed by architecture (35 firms).

The biggest employers were construction (6,831 in the workforce), manufacturing (4,429 people) and engineering (2,617 people).

The largest turnover was observed in construction (£2.43bn), development (£1.18bn) and manufacturing (£941m).

Most firms in the region are small, with 40% having a turnover of less than £2m per year.

The authors highlight the impact of Esh, as the largest firm headquartered in the region which is actively involved in construction innovation, alongside the largest employers in Equans, Magnet, Northumbria Healthcare Facilities Management and Karbon Homes.

A third of businesses involved in innovation (34%) have fewer than ten employees, and just under two-thirds (63%) have fewer than 50 employees. Ten large firms, which tend to have the resources to aid innovation adoption, are identified in the North East, including Siemens, AECOM, Akzo Nobel and BAM Construct.

Three in ten (31%) of firms trade outside of North East England, with 15% having at least one office outside of the UK.

On innovation tiself, Building information modelling - BIM - is shown to be the leading form of technology adoption, alongside design and construction software. There are a small number of firms actively engaged in the use of new materials and a strong supporting ecosystem in non-construction engineering and manufacturing.

There are 117 organisations involved in developing technology for the construction sector, as well as many more which are likely developing their own proprietary technologies.

The North East also benefits from strong aligned capabilities in digital technologies, off-highway automotive, offshore renewable energy and mining and quarrying.

There are a range of stimulus organisations to support construction innovation - such as networks, catalysts, incubators and researchers - with a total of 88 identified, including 59 with a physical location in the North East.

Networks make up 26% of stimulus organisations, with the evaluations specifically mentioning BIMStore, Constructing Excellence’s OneVoice and the International Centre for Connected Construction.

The evaluation acknowledges the concern that so many networks can dilute their effectiveness, especially as many are discipline-specific and so fail to bring different arms of the industry together. It also notes there is little dedicated to innovation specifically, nor to support start-ups operating in the construction sector.

There are several thriving research centres and centres of excellence in the region, including at all four universities in the North East LEP area. These centres run 19 facilities, and there are a further 10 companies and three education providers with similar offers.

The North East has seen successful partnerships between industry and academia, and is well-served by incubators and catalysts including the Centre for Process Innovation, Digital Catapult North East and Tees Valley, and the North East BIC.

There are eleven organisations which provide access to funding programmes, and devolution continues to change this landscape, with the North of Tyne Combined AUthority running many programmes targeting regional development.

Funding is a mix of large-scale programmes - such as the Brownfield Housing Fund - and small-scale interventions such as those run by Northstar Ventures and FW Capital.

The evaluation notes there has been an historic lack of funding aimed at bringing innovations to market and providing a skilled workforce. While there are some programmes aimed at creating commercialisation pathways - including those run by Sunderland Software City - the evaluation argues there is a lack of sufficient capital or government funding which works for the construction sector, often as the result of requiring a faster return on investment than is possible in the industry.

The North East construction sector is forecast to require an extra 7,900 workers by 2027, with annual recruitment of 1,580 between 2023 and 2027.

Apprenticeship statistics for 2022/23 showed just 260 construction, planning and built environment students and 660 engineering and manufacturing technology students completed apprenticeships in that academic year.

The weaknesses in the traditional education options have led larger companies like Ryder Architecture and Esh Construction to develop their own programmes which provide more routes into the sector, with additional graduate and work experience placements in particular.

Nevertheless, a total of 19 providers offer education programmes with construction elements, at various qualification levels, including Durham University, Gateshead College and their PlanBEE programme, Northumbria University’s digital built environment work.

There are also a huge number of options for mid-career training and upskilling from a range of organisations, including several Chartered Institutes, on topics like project management, surveying, and BIM.

Overall, skills retention in the region remains a problem, and more needs to be done to keep highly-skilled people in the region.

There is also a need to foster diversity, which can itself aid innovation and the adoption of new approaches, especially as the North East’s construction industry is seen as featuring tightly knit relationships.

to build on the region’s leadership in BIM and digital construction

where knowledge and information can be shared

to lead the efforts to nurture and grow the sector’s innovation capabilities

with specific support to nurture their growth

to counter problems of law margins, inertia and long project life cycles

to ensure skills are available when they are needed

combining data from multiple sources to give a picture of the industry

in the region’s construction innovation space

both nationally and internationally, building on the global connections of firms in the region

including by the creation of testbeds and ‘sandpits’ to support innovation and development of new technologies and approaches