Sectors - Commercial

UKIS Engage: Construction Business Survival

The shape of the UK construction industry is changing and is still being reshaped due to the COVID-19 pandemic, and as construction workloads are rebuilt over the next two years, businesses need to have their focus on the sectors that will perform best in the future, and not necessarily those that were performing well before the outbreak.

Glenigan released their Construction Industry Forecast for 2020-2022 on 30 June 2020, which provided a detailed analysis of projected performance for all construction sectors and regions in the UK. Here are the four key recommendations the construction sector should focus on in order to weather the upcoming storm.

  1. Focus on the best performing sectors and regions

Increased Government funding will help drive growth within the education, heath, civil engineering and community and amenity sectors. Along with this, structural changes are expected to create new opportunities in warehousing & logistics, office refurbishment and repurposing of redundant commercial properties.

In a regional aspect, the construction industries in the northern half of the UK look to outperform those in London and the South East in the next two years, which will reflect a shift in Government funding.

Construction firms need to target these new and emerging opportunities and must ensure they have the correct expertise and resources to increase their exposure in growing markets.

  1. Risk mitigation

Turnover and cashflow are set to be a concern over the last half of 2020, with construction sites needing to work with less of their workforce due to COVID restrictions and social distancing in place. This will in turn reduce the pace of site development and will possibly also delay stage payments from clients.

Contractors and subcontractors might also want to offset lower month revenues generated per site by spreading out their workforces across a greater number of projects.

A diverse client base will also reduce exposure to any one client with a work pipeline spread more evenly over a larger number of customers. This should help reduce business’ exposure to a financial crisis or any adverse changes of payment by any one firm.

Supply chains must also be reviewed to ensure that firms are similarly not over-exposed to a few clients and to identify any potential interruption of product supply, especially from overseas sources due to the Coronavirus pandemic, or any new trading arrangements after 31 December 2020, the date the UK officially leave the European Union.

  1. Work more efficiently

Due to working restrictions on-site the construction industry needs to use on-site labour more sparingly and effectively.

On top of this, the end of the transition period following the UK’s departure from the EU means there could be a shrinking pool of available skilled site labour. This will remain a priority as restrictions are eased and firms seek to expand their workforce. This also threatens to increase construction costs and disrupt the timely delivery of projects.

Companies should also invest in design solutions, site operating practices and offsite manufacturing options in order to reduce the reliance on site labour to safeguard the timely and profitable delivery projects. In a lot of cases this could involve the use of digital solutions to cut waste and accelerate design and construction processes.

  1. Embracing digital solutions

The Coronavirus pandemic has thrust the benefits of digital systems into the spotlight, as the more traditional methods of construction have been disrupted. Investment in effective CRM, digital marketing channels and a modernised salesforce has the potential to help firms rapidly identify and target any emerging opportunities, sustain their workload, cut the cost of winning work, improve efficiency and enhance their profitability.

Glenigan is a partner of the UK Infrastructure Show (UKIS), the UK’s leading infrastructure and supply chain event, which explores the latest developments across the sector. This year, UKIS is going online and will be delivered as a live, online interactive event on Wednesday 9 September 2020.

More information on what you can expect from this new digital event experience can be found by visiting the UKIS website here.

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