The construction industry is one of the UK’s largest industries with an annual output of £110 billion, but is also one of the most challenging to be in right now. As industries go, construction is having a turbulent time with an onslaught of challenges not looking likely to slow anytime soon. From rising material costs to labour shortages and evolving legislations to meet, it provides a challenging time for construction firms and inevitable project delays and rising costs as a result. Within this blog post we’re going to examine some of the biggest challenges currently facing the construction industry and how to overcome them.
Undoubtedly one of the biggest issues currently facing the construction industry is a labour shortage, with the Construction Industry Training Board predicting an additional 225,000 workers may be needed before 2027 to meet growing demand. There are multiple reasons for the lack of labour, one is the fact the construction industry is an ageing industry with 61% of the workforce expected to retire in the next decade, and falling apprenticeship numbers of younger workers joining the industry. Secondly, when the pandemic hit in 2020, many workers were made redundant due to construction projects grinding to a halt, and these workers have since either retired or found jobs in other sectors and are not returning to construction.
Construction firms need to be looking at ways to attract younger skilled workers, and more importantly, how to keep them. Creating a culture of collaboration and good communication here can help significantly and giving workers the tools to help them achieve that. Regular training, reviews and providing a motivating and positive working environment can also help.
The increasing costs of materials and labour are adding additional pressure to construction firms due to supply chain disruptions from situations such as the war in Ukraine. It makes it harder for firms to forecast costs accurately and can lead to quality issues as firms try to claw back cost savings. Closely monitoring your cash flow (more on this further down) and switching to reputable suppliers can help combat some of the challenges associated with rising costs.
The construction industry is notoriously slow at adopting new technology, and was voted second least most digitised industry by McKinsey Globe Institute. One of the biggest drawbacks of not having robust technological systems in place results in haphazard document management, and laborious and human error ridden, manual tasks of data entry and record keeping leading to poor cash flow management, unreliable time keeping and inaccurate forecasting.
With regards to cash flow alone, there was reportedly £300 million of bad debt in the construction industry at the start of 2023, predicted to rise to £1 billion in 2024. Staggeringly, more than 100 construction firms are on the brink of collapse each week due to poor cash flow because of not being paid on time by customers. A robust construction solution to give real-time visibility into financial status will help you to stay on top of credit management procedures and highlight cash flow difficulties much sooner.
Creating waves in the construction industry recently was the government’s new goal to achieve net zero emissions by 2050. However, the construction industry alone accounts for approximately 40% of all UK emissions, so the deadline poses big challenges into how construction firms will achieve this. It will mean undergoing vigorous carbon assessments, adopting greener skills, and utilising new technology.
Other key legislations coming into force include the Building Safety Act 2022 which aims to create greater accountability and responsibility for fire safety, and changes to the Defective Premises Act 1972. Keeping on top of current and new legislation can be difficult to navigate and a reliable system to keep on top of your responsibilities is recommended.
Construction firms are also facing greater than ever before pressure to maintain health and safety standards. The construction industry was ranked the most dangerous industry to work in, in 2021, and has one of the highest rates of work related injuries. In today’s claim culture this can have costly ramifications for firms as workers claim compensation. Therefore, setting up digital reminders for health and safety training and maintenance checks should be fundamental to help you keep on top of your responsibilities.
Finally, the lack of collaboration in the construction industry is an emerging challenge as it becomes clear that unaligned thinking is causing delays and inaccuracies which can be costly. This is where construction software comes into its own as you can integrate every element of your contracts into the software to keep on top of deadlines, costs and responsibilities. There can be multiple users so all functions can see in real-time exactly what is happening, where and who by so there will be less mistakes. Joined-up thinking should be a priority in any UK firm!
Overall, the outlook for the construction industry is positive and demand within the industry is continuing to increase year-on-year, but there are undoubtedly some large challenges cause headaches for construction firms. Labour shortages, increased costs and strict regulations are some of the biggest issues at present.
Investing in a robust solution to help manage all aspects of construction projects from planning and costing, right through to legislation management, time keeping and document management will help you stay on top of your costings, time keeping and legislative requirements and help drive efficiency and productivity.
For more information about our construction solution, CIS 5, please contact us today to arrange a bespoke demo and to discuss your requirements further.
Posted On: September 28, 2023
