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skill shortage

Skills shortages remain key challenge to infrastructure delivery

Construction and infrastructure workload expectations continue to improve with respondents the most positive since the referendum, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction and Infrastructure Market Survey, Q1 2017. The pace of growth has increased across all sectors pointing to a widespread improvement in the sector.

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BESA Highlights Growth in Building Engineering Services

Much like within the architecture sector, contractors within the building engineering services sector maintain a positive outlook, with turnovers reported to have increased over 6 months up to last December (reported by BESA). The growth showcases the present state of the sector and its capacity to grow amidst unreliable economic

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BDC 318 : Jul 2024

skill shortage

Skills shortages remain key challenge to infrastructure delivery

Construction and infrastructure workload expectations continue to improve with respondents the most positive since the referendum, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction and Infrastructure Market Survey, Q1 2017. The pace of growth has increased across all sectors pointing to a widespread improvement in the sector. Survey in brief National workloads expectations improve with the most positive sentiment since the referendum. Road and rail set to remain the fastest growing infrastructure sub sectors over next twelve months. Quality of available workers cited as a barrier to growth. Workloads and 12 month projections In Q1 2017 27% more respondents reported an increase in workloads, (up from +18% in Q4 2016). Expectations for the next 12 months also remain firmly positive particularly for activity levels although they have reduced slightly in case of profit margins. The shortage of skilled labour persists in UK infrastructure and construction and is again widely cited by contributors as a factor potentially impacting the performance of businesses working in the industry. Looking at the different sectors, 34% more respondents cited an increase in private housing output rather than a decrease, which puts it above the other sectors for the pace of growth once again; this has been the case since Q1 2013. While the commercial sector saw the largest growth in workload for the quarter (compared with Q4 2016) with 31% more respondents seeing a rise, infrastructure workloads continue to grow steadily with the most significant increases in rail, road and energy categories. These sectors are also viewed as the most promising sectors in infrastructure for the next 12 months. Breaking this down, 60% of respondents felt that repair and maintenance work of existing structures is the most needed type of investment in their area whilst 40% felt investment in new projects was necessary. Growing skills shortages As workloads increase, skill shortages are still sighted as a significant problem to the industry with 53% of respondents stating a shortage of skilled labour to be a key impediment to growth. This is slightly up from 50% in the last quarter. In recent reports, the proportion of respondents noting skill shortages to be the major barrier to growth had come down slightly but the latest results along with surveyors’ comments suggest labour shortage pressure across the UK construction sector is intensifying once more. Alongside this, 65% of respondents reported insufficient availability of quantity surveyors, with skill shortages in this area becoming increasingly prominent since 2012.  The results also point to the quality of available workers (rather than simply the quantity) being the principle driver in skill shortages, with 67% of respondents taking this view. Looking at this further, 59% of contributors feel that improved education pathways and training would the most effective policy response to alleviate labour supply pressures, whilst 31% of contributors feel direct government subsidisation of training would be the most effective. Financial constraints and their impact Meanwhile, financial constraints are still the most significant obstacle to growth with 70% of respondents citing this as an issue. Planning and regulation remains a significant impediment to growth with 61% of respondents citing this as an obstacle (up from 53% in Q4 2016). At the same time, tender prices are expected rise in the next 12 months. Specifically, 69% more respondents believe tender prices will go up in the building sector (rather than fall). The expected increase in tender prices may signal rising costs and shrinking profit margins which is also reflected in the 12 month expectation of profit margins easing from +26% in Q4 2016 to +18% in Q1 2017. Regionally all parts of the UK have observed an increase in pace of output growth in Q1, with the exception of Northern Ireland. The was due to the pace of growth slowing within the infrastructure, private industrials and public non-housing sectors. Output growth gathered the most pace in London and the South East where the net balance rose from +7% to +22%.   From http://www.rics.org  

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BESA Highlights Growth in Building Engineering Services

Much like within the architecture sector, contractors within the building engineering services sector maintain a positive outlook, with turnovers reported to have increased over 6 months up to last December (reported by BESA). The growth showcases the present state of the sector and its capacity to grow amidst unreliable economic climate; however, as always, there is more to it than that. Over the period, it has been reported that the frequency of enquiries and order books had in fact slowed down as compared to the previous 6 months, with tender prices, yes, rising over the period, but at a slower rate than previously. Combined with a reported rise in material and labour costs, the figures do call into question how the industry will fare in the coming years, however the present state of the sector remains wholly positive. As has been the case for some time within the construction industry, late payments remain a major challenge for businesses, though the situation is reported to have improved marginally. Late payments, in effect, making budgeting and cashflow a severe concern for contractors, remains one of the key factors impeding the growth of businesses, combined with the widely reported labour shortages in comparison to the demand for skilled labour – such as building and quantity surveyors, planners and design engineers. Though the figures do highlight a slowing down of growth across the market, the two aforementioned challenges may indeed be amongst the most prominent factors holding the industry back from achieving further growth and, as such, businesses are increasingly urged to assist in the labour shortages through apprenticeship schemes, training and improving awareness of the opportunities actually available in the industry. After all, it is the next generation of engineers which will define the future of the industry itself. In contrast, the upcoming deadline for businesses to take up Level 2 BIM across any and all public sector works does not appear have drastically impacted the industry as feared, with only a minor reduction in BESA members undertaking such projects (31%, down from 33%). But, of course, in building for the industry of tomorrow, the power is in the hands of businesses to act now in a bid to overcome some of the modern industry challenges, with movements towards addressing the lack of skilled labour being amongst the more important. Jim Marner, President of BESA commented: “The issues of skills shortages, labour costs, and the movement of resources, modern methods of design, project risk, procurement and quality control will all become even more significant in the coming months.” As such, contractors are urged to step up and make a difference.

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