New state-of-the-industry report: Profits & productivity up – project delays a concern

A new report from industry analysts Glenigan, funded by the CITB, states that the construction industry has returned to growth.

The 2015 UK Construction KPI Annual Report, published today, shows that the median profit margin rose from 2.1% in 2014 to 2.8% this year.

Productivity has also been seen to improve.

With relation to costings, seven out of ten projects have come in on budget or better – which equals 2014’s best ever performance on this measure. Whereas only 40% of projects have completed on time or earlier – the average since 2003 has been 45%.

The report has found that companies are expanding their workforces, with more positions available, which is in contrast to a year ago where industry employment was reducing. Although the proportion of women and ethnic backgrounds, as well as those under 24, has seen a fall.

The report, supported by BRE SMARTWaste and endorsed the department for Business, Innovation and Skills and Constructing Excellence, reveals that while company workloads have increased, this is affecting the maintenance of client relationships and client satisfaction.

The industry is continuing to make progress in Health & Safety, with the incidence rate falling to 412 accidents per 100,000 employees – a 2.3% decline from the last report.

The use of BIM is rapidly growing , with 13% of projects completed in 2014 compared to 9% in 2013 and 4% in 2012.

Further progress can be seen in the environmental stakes, with projects becoming more environmentally efficient, with fewer CO2 Emissions and less waste created from each project.

Allen Wilen, economics Director at Glenigan, said The rapid upturn in activity during 2014 put pressure on capacity, manifesting itself in rising material and labour costs and extended delivery times. Evidence from this year’s KPIs suggests that construction firms have managed to keep control of costs, but delays to schedule have worsened.

“The impact of accelerated industry growth is most evident in the workforce indicators. Staff turnover was up to 5.3%, the highest level since 2008, and staff loss is down to 6.3%.

“The construction industry is looking to a progressive growth in workload over the next few years. However the anticipated recovery presents fresh challenges: growing and up-skilling the workforce, delivering improved productivity and containing costs will be priorities.”

Stephen Radley, Director of Policy at CITB, said: “There are many positive results in this year’s report, but it shows there is no room for complacency.

“We welcome the return to growth, but project delays shows that the skills challenge is an issue for many across our industry.

“That is why CITB is working with partners in industry and government to deliver the skills that industry needs to grow.”

“Later this month, CITB will launch a new service to help employers achieve this, by providing clear information on the many opportunities available in construction.”

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