Trauma ahead as contractors “engulfed” by soaring demand

Grant Prior 9 years ago
Share

Construction experts are warning that more contractors will fail as the industry struggles to cope with booming workloads.

The warning came as construction buyers reported workloads rising at their steepest level for eight months in the CIPS/Markit Construction PMI.

But Richard Threlfall, head of infrastructure, building and construction at KPMG UK, said: “The industry will soon be running white hot, as housing, commercial and infrastructure demand are rising together.

“What we are seeing is very unusual. Private demand is rocketing in response to an improving economy and much stronger business confidence.

“And public demand is surging too, following the Government’s post-election re-commitment to a huge infrastructure investment programme.

“The critical question is, can the industry deliver? I am concerned it cannot.

“The industry is about to be engulfed in a tidal wave of work but it’s struggling already with a huge skills shortage, weak Tier 1 balance sheets, and a lack of investment in capacity.

“I expect a lot more industry trauma as this story plays out.”

Stefan Friedhoff, Global Corporates managing director for construction at Lloyds Bank Commercial Banking, added: “There is confidence in the market, particularly given the business environment has become more stable over the past two months.

“Despite this and record order books, however, ongoing price sensitivity continues to put margins under huge pressure.

“Unfortunately, the causes of this – a shortage of suppliers and labour, project delays and demanding clients, among other things – are long-term industry issues likely to ensure slim margins remain for the foreseeable future.”

Latest news

Berkeley subbies face six weeks without payments

Introduction of new finance software means payment hiatus for suppliers
21 hours ago

Pagabo reveals 56 winners of latest £1.6bn retrofit deal

Decarbonisation Solutions Framework launched: Full list of winners
21 hours ago

Go-ahead for £100m Liverpool Love Lane flats

500-flat scheme will be built across four blocks in Vauxhall area of city
21 hours ago

Unions win HS2 site access battle at Old Oak Common job

Skanska, Costain, Strabag JV now the last denying unions access to HS2 sites
20 hours ago

Contractors jack 1,100t viaduct into place in 13-hour operation

158m-long composite deck structure jacked into place 10-hours ahead of schedule
21 hours ago

Wates wins former Daily Mail printworks transformation

British Land advances major cultural venue at London’s Canada Water
2 days ago

Mace poaches Ramboll chief to be Head of Engineering

Martin Feakes will develop civil and structural engineering offer at Mace
2 days ago

Subcontractors form alliance for major civils jobs

Trio of specialists join forces to collaborate and offer Tier 1 contractors a turnkey solution
2 days ago

Fear of supply chain failures boosting collaboration

Procurement survey also reveals project bank account use is rising
2 days ago

Wates sets up business to target 160,000 mouldy social homes

Healthy Homes service will be offered to social landlords across England
2 days ago

Higgins wins £75m Peabody Passive House job

Latest phase of Deptford Landings to start construction
2 days ago

Contractors and unions agree Sizewell C working deal

New deal offers improved sick pay and parental leave over Hinkley Point deal
2 days ago

Competition chiefs win legal fight for more construction raids

High Court rules CMA officials can raid a domestic property as part of investigation
3 days ago

More Osborne companies file administration notices

Three more divisions lodge notices with court
3 days ago

McLaren wins multi-storey urban logistics contract

South London win with British Land is pioneering urban logistics hub
3 days ago

Big social housing schemes at risk over funding uncertainty

Housing associations warn uncertainty over public funding beyond 2026 is curbing new schemes
3 days ago

Kier wins Worcestershire town centre renewal

Firm secures Bromsgrove commercial and cultural hub project
3 days ago

BAM signs Kent school contract at £42m

Sevenoaks school rebuild signed off at £8m more than first estimates
3 days ago

RG Group signs £121m Newcastle rental homes job

Developer Olympian Homes advances 519 flats plan at Pottery Lane site
6 days ago

Geoffrey Osborne files administration notice

Contractor in talks to save parts of the business
6 days ago

Winners named for £260m Manchester Uni framework

B&K, Henry Bros, Graham, Robertson and Vinci among new line-up
6 days ago

Shed specialist Benniman rides out market lull

Worcestershire warehouse builder says industrial and logistics work is picking up again
6 days ago

Another contractor cleared after high profile immigration raid

Adana Construction employees were working legally on site swooped on by Home Office
6 days ago

McAleer & Rushe wants to meet new London suppliers

Contractor holding Meet the Buyer event in London: Register now
6 days ago

McAlpine signs £500m Broadgate dual towers deal

Work to start on iconic 36-storey and 21-storey towers
7 days ago

Worker rescued from collapsed four metre deep trench

Fire crews take six hours to save trapped builder near Blackwall Tunnel
7 days ago

Gove puts another major building scheme on hold

Secretary of State starts another planning fight after M&S defeat
1 week ago

Greenwich University tenders £300m framework

Up to five firms will carry out upgrade and newbuild work at three campuses
7 days ago

Work starts on Manchester 26-storey Obsidian tower

Contractor Domis starts Salboy's 10th Manchester scheme in seven years
7 days ago

Race for £1.3bn West Midlands social homes framework

The Community Housing Group reboots tender race for new build housing
7 days ago

Contractor services