NuGen Properties

Contractors are becoming more risk averse

Gleeds chief executive Graham Harle

A survey of construction contractors by quantity surveying firm Gleeds paints a gloomy picture of the UK construction industry.

Fewer than one in five of those quizzed said they have any confidence in the government’s ability to improve market conditions. Almost two thirds said they felt that the industry has little or no influence on government policy – which Gleeds calls “a damning indictment” of the relationship between construction and government.

Gleeds’ latest market report has revealed that 95% of contractors or members of their supply chains had declined a tender in the last quarter, up from 78% in the consultancy’s spring survey. At least 40% attributed this move to a lack of capacity, while 52% said that the proposed tendering/contract conditions were too onerous or there was an unacceptable risk profile.

In terms of the state of the sector today, interest rates and inflation were ranked the greatest threat by half of those quizzed, with investor confidence and materials and labour cost escalation remaining a concern for many. Over 90% of respondents reported that inflation is now heavily impacting the viability of schemes and 96% shared concerns that rising mortgage rates and rental activity will continue to negatively impact housebuilding.

With a general election on the horizon, respondents told Gleeds that they would like to see an incoming government focus its efforts on addressing labour shortages and shrinking the skills gap; incentivising land purchases and development; and improving payment practices. 

Gleeds chief executive Graham Harle said: “The market report reflects the fact that the wider economic conditions remain challenging. Clearly, the construction industry does not have faith that the current government is listening, so it seems that we must act to strengthen the sector from within. Embracing digital technologies will help us to boost productivity and may enable us to attract a more diverse workforce, while increasing collaboration and forging knowledge transfer partnerships will allow us to deliver even greater efficiencies despite depleted resource.”

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