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FEBRUARY 2015 PRO INSTALLER
PRO BUSINESS
www.proinstaller.co.uk
Top five issues to
affect construction
industry during 2015
Glenigan economist, Tom Crane takes a closer look at the main political, economic and project
developments that are likely to impact the construction industry over the next twelve months.
1. General election jitters
The approaching election is already
looming large in the minds of UK businesses. These worries are also being felt in
the construction sector, with 58% of those
responding to 2014 Quarter 4 Construction
News barometer survey of major contractors
concerned that the general election could
stall construction activity, up from 51% in
Quarter 3.
Few specifics have been given around
infrastructure spending, especially from the
Opposition, but again here an understanding appears to have formed by both parties
around the importance of long term stability
in infrastructure planning. In the key areas
of housing and infrastructure the policies
of Labour and the Conservatives one of
whom will almost certainly choose the next
Chancellor are closely matched. Shadow
communities secretary Hilary Benn stated at
the Glenigan Breakfast Briefings in May last
year that Labour would not amend the National Planning Policy Framework (NPPF),
which Glenigan has found to have had a
positive impact on new home approvals.
The focus of upcoming housing policy from
both main parties appears to be supporting
and encouraging more small and medium
sized house builders back into the market.
2. Construction insolvencies
- so far, so good
3. What will the 2015 UK
Construction KPIs look like?
Company insolvency is a spectre that
we expected to rear its ugly head in 2014.
Expansion in workloads, alongside rising
material and labour costs and fixed price
contracts, can have a devastating impact on
the cashflow of profitably trading businesses.
Yet official figures from the Department
for Business, Innovation & Skills (BIS)
paint a positive picture. The number of
firms entering administration or undergoing voluntary liquidations fell by 8% and
14% respectively during the first three
quarters of 2014. More historic numbers
covering the first half of 2014 also show
drops of 23% in the number of compulsory liquidations and 15% in the number of
self-employed individuals in construction
declaring bankruptcy.
However, this trend could still reverse
during 2015 as issues on jobs negotiated
during the downturn continue to emerge.
Of 32 major contractors surveyed in Construction News’s latest barometer, only
19% were confident they had no problem
contracts within their business and the majority expect them to cost up to £25 million
during 2015.
The 2013/14 Construction Key Performance Indicators (KPIs) painted a picture
of an industry that had been battered by
the economic downturn, but can hold its
head high from having held a solid base of
performance. The 2.1% median profitability
rate found by the last survey is among the
chief concerns, especially when combined
with clients’ worsening perceptions of value
for money they received from their project
teams. However improvements in cost predictability, health and safety and environmental performance provide a decent base
for the industry to build upon as conditions
improve.
4. Nuclear Power Station
- Hinkley Point C
Energy company EDF hope/expect to
make a final investment decision on Hinkley Point C during the first quarter of 2015.
The 3,200 MW, twin reactor generator at
Hinkley Point in Somerset is set to be the
UK’s first new nuclear power station in
20 years (Glenigan Project ID: 01611123).
While site preparation works are already
underway, the main civil engineering works
now appear unlikely to begin until 2016.
5. Time to get ready for BIM
From 2016, Building Information Modelling (BIM) will be mandated on all central
government projects. Repeat private sector
clients are also increasingly looking to BIM
to help deliver cost savings, accelerate construction times, cut risk and improve asset
management.
Glenigan survey data has found that to
date, BIM usage has been on a small but
rapidly expanding proportion of projects.
However, the current year promises to be a
year of transition as the government’s 2016
deadline approaches. BIM proficiency may
quickly become a widespread requirement
for clients, making training and development a priority for the year ahead.
Construction outlook for 2015
Glenigan is forecasting sustained construction growth in 2015, led by the private
sector, with the recovery taking hold away
from London and across the UK’s economic regions. For the full sector and regional
outlook for the industry over the next 12
months, download our Construction Prospects for 2015 report.
For more information visit
www.glenigan.com