UK Construction Sector – 5 Reasons for Optimism in 2024
The UK construction sector has been battered by a storm of challenges in recent years, including covid, the subsequent supply chain disruptions and rising costs as well as labour shortages.
However, amidst these difficulties, there are five compelling reasons to be optimistic about the industry’s prospects in 2024.
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Government Plans Large Scale Investment Projects
Despite uncertainties, the construction sector anticipates positive shifts, especially with the government’s commitment to significant investment projects. Glenigan, a construction insights company, predicts a 12% increase in the industry in 2024 and 3% in 2025. The recent decision to redirect funds from the HS2 high-speed railway project towards alternative transport improvements and infrastructure upgrades in various regions offers new opportunities for contractors.
Projects like the Health Infrastructure Plan, the School Rebuilding Programme, and UK transport improvements should lead to contracts feeding down the construction sector’s food chain. Additionally, there is of course the ongoing need for high volume house building across the country that should ensure demand remains high. Half of construction firms already anticipate current project levels to increase by up to 20% during 2024.
Costs & Inflation Could Fall
While global economic factors continue to influence construction costs, there are signs of relief. The fluctuating costs leave SMEs vulnerable, to cash flow pinch points. However, the Construction Material Price Index highlights a 2% decrease in material prices compared to the previous year.
The S&P Global/CIPS UK Purchasing Managers’ Index suggests optimism with lower shipping costs and increased price competition among suppliers. To navigate financial constraints, construction firms are advised to forecast ahead, stress test for the potential impact of various risks. Doing so will give themselves the best chance of mitigating adverse events.
Plant Theft Bill Comes Into Effect
The rising impact of plant theft, costing the industry over £800 million annually, has prompted the introduction of the Equipment Theft (Prevention) Bill which will come into effect in 2024. The legislation aims to prevent the resale of stolen equipment and tools, providing a potential deterrent to thieves.
Despite the ongoing challenges, businesses are encouraged to compile complete equipment lists, mark items for easy identification, and invest in advanced security technologies endorsed by schemes like Official Construction Equipment Security and Registration Scheme (CESAR).
Sustainability: An Innovation Opportunity
Sustainability presents both challenges, in terms of upgrading equipment and vehicles as well as upskilling employees. However there are also considerable opportunities. The government’s ‘net-zero’ priorities, include a shifts to green energy, zero-emission vehicles and accompanying infrastructure.
There will also be demand for energy-efficient buildings from forward thinking firms and retro fitting of older structures. While facing pressures to reduce its own environmental impact, the construction industry can frame sustainability as a significant new revenue generator.
New Technologies Could Ease Labour Pinch Point
The construction industry’s skills shortage is ongoing, with over 140,000 current job vacancies. This has prompted increased investment in training programs as well as new technology. Robotics, automation, augmented reality, and 3D printing are gaining momentum to bridge the gap caused by the lack of skilled workers and supply chain delays.
These technologies can not only enhance efficiency but also contribute to a safer and more productive work environment. For example, gas supplier Cadent recently utilised robotic technology to upgrade gas pipes underground. Joints were checked and sealed on the system. Not only were road works avoided but the task was completed several weeks quicker than otherwise would have been the case.
In conclusion, despite the challenges that remain, the UK construction sector can have some hope for a brighter 2024. With government investments, cost alleviation, enhanced security measures, sustainability initiatives, and technological advancements, the industry has a promising future. Forward-thinking construction firms, embracing these emerging trends, with a positive mind-set will be best positioned to make the most of the opportunities that lie ahead.
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