Graham Harle is chief executive of Gleeds Worldwide
I was recently reminded of a column I wrote for Construction News back in 2019, in which I suggested that sales of lipsticks and underpants could offer useful insights into the health of the UK economy. I suggested that these tactics would be at least as reliable as the financial forecasting coming out of the Office for National Statistics (ONS) at that time.
“Even the numbers from the ONS are often published and then adapted upwards or downwards some months later, giving a sense that they too are merely guessing”
Four years on, and despite technology coming on leaps and bounds, I’m not sure that things have really changed all that much. Whether you prefer The Economist’s ‘Big Mac Index’, the Champagne Index, or even the Baked Bean Index, most would agree that the future is not looking particularly rosy, although accurate projections of exactly how bleak the picture is are hard to come by.
In the intervening period we have endured a pandemic, the breakout of conflict in Europe, and now find ourselves staring down the barrel of recession following soaring inflation that the Bank of England notably failed to predict – instead it has successively raised interest rates 14 times to make up for the lag, the observation now being that the medicine applied is too severe, and ultimately too late. Even the numbers from the ONS are often published and then adapted upwards or downwards some months later, giving a sense that they too are merely guessing.
Positive territory?
One current indicator which does at least appear to tally with my own observations is the S&P Global/CIPS UK Construction PMI index for July, which thankfully climbed back into positive territory with a score of 51.7 up from 48.9 the month before.
The survey showed increased infrastructure work, office refurbishments, and resilient demand for a range of commercial projects, but another steep reduction in house building acted as a severe constraint on construction growth overall. This is hardly surprising as the aforementioned UK interest rate rises and cost-of-living pressures have sucked all confidence out of the housing sector.
In our own surveys at Gleeds, we are seeing a distinct lack of confidence in the supply chain to even bid for work. We found that 95 per cent of contractors or members of their supply chains had declined a tender in the last quarter, up from 78 per cent in our spring survey. At least 40 per cent attributed this move to a lack of capacity, while 52 per cent said that the proposed tendering/contract conditions were too onerous or there was an unacceptable risk-profile.
Fewer than one in five of those quizzed said they have confidence that the current government can improve market conditions and ultimately increase output from the sector. Almost two-thirds of contractors reportedly feel that the industry has little or no influence on government regarding decision-making that impacts the built environment, in a damning indictment of the relationship between construction and the incumbent leadership.
Action needed
In light of this and with the prospect of a general election looming, respondents told us 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.
However, with a finding that more than 60 per cent of contractor respondents feel that the industry has little or no influence on government, my view is that we must take action for ourselves. Adopting digital approaches including artificial intelligence and data analytics, increasing collaboration, and acting to attract a more diverse workforce will help improve project outcomes and efficiently use resources.
Recently, built environment professional bodies have embraced the digital revolution, which is vital to ensure the principles are immersed in training to lead the transformation. The Joint Contracts Tribunal (JCT) announced in July the long-awaited publication of an updated suite of contracts in 2024, which will see the embedding of gender-neutral language, championing of digital working, and updates to reflect the Construction Playbook. So, whether you are taking your lead from burgers, Bollinger or beans – investing in people, professionalism and technology will all be essential to surviving what comes next.
