The pattern of UK construction activity is being reshaped by the COVID-19 pandemic, and as construction workloads are rebuilt over the next two years, businesses will need to refocus their efforts on the sectors that will perform well in the future, not necessarily those that were performing prior to the outbreak.
The Glenigan Construction Industry Forecast for 2020 - 2022 released on 30th June provides detailed analysis of projected performance for all construction sectors and regions throughout the UK, and also includes 4 key recommendations that construction businesses should focus on in order to survive the upcoming storm.
1. Focus on the best performing sectors and regions
Increased government funding will drive growth in the education, health, civil engineering and community & amenity sectors.
Structural changes are also expected to create new opportunities in warehousing & logistics, office refurbishment and the repurposing of redundant commercial premises.
Regionally, construction markets in the northern half of the country are set to outperform London and the South East over the next two years reflecting a shift in government funding.
Firms will need to target these new emerging opportunities, ensuring that they have the expertise and resources to increase their exposure to growing markets.
2. Risk mitigation
Turnover and cashflow will remain a concern over the remainder of 2020 as construction sites have to operate with fewer personnel. This will reduce the pace of site development, delaying stage payments from clients. Contractors and subcontractors may wish to offset the lower monthly revenues generated per site by spreading their workforce across a greater number of projects.
A diversified client base will reduce exposure to any one client with a work pipeline spread more evenly over a larger number of customers. This can help reduce the business’s exposure to a financial crisis or adverse changes of payment by any one firm.
Supply chains should 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 COVID-19 pandemic or new trading arrangements for 1st January 2021.
3. Work more efficiently
Near term on-site working restrictions to contain COVID-19 transmission rates is exacerbating the need for the industry to use on-site labour more sparingly and effectively.
With the UK’s departure from the EU shrinking the pool of available skilled site labour, this will remain a priority as restrictions are eased over the next two years and firms seek to expand their onsite workforce. This threatens to increase construction costs and disrupt the timely delivery of projects.
Companies should invest in design solutions, site operating practices and offsite manufacturing options that reduce the reliance on site labour to safeguard the timely and profitable delivery of projects. In many cases this will involve the use of digital solutions to cut waste and accelerate design and construction processes.
4. Embrace digital solutions
The pandemic has thrown a spotlight upon the benefits of digital systems as more traditional ways of working have been disrupted.
Investment in an effective CRM, digital marketing channels and a modernised salesforce will help firms to rapidly identify and target emerging opportunities, sustain their workload, cutting the cost of winning work, improve efficiency and enhance profitability.
See the opportunities and understand the threats
Download the full 36-page Glenigan Construction Industry Forecast for 2020 - 2022 to see the opportunities and understand the threats for your market:
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