Clients urged to get ahead of contractor recovery cycle

Aaron Morby 1 month ago
Share

Consultant Turner & Townsend is urging its clients to start proactively planning for a resurgence in construction activity after revising up its inflation forecasts.

It argues for investment decisions to be ‘made not delayed’, and for project teams to secure their supply chains to help tackle stubbornly high inflation.

Despite continued headwinds, the cost consultant has revised up tender price forecasts in its Spring report .

Real estate inflation is set to increase to 3.2% this year, up from the 2.7% it previously predicted in December, while infrastructure remains at 4.5%.

T&T pointed to the high cost of borrowing, as well as a mismatch of the skills needed in the sector for its belief the industry will see resurgent price pressure.

While redundancies and unemployment have risen as demand falls, there are still acute specialist skills shortages, which are keeping labour costs elevated.

The consultancy also predicts that better times for the sector are just around the corner.

T&T says the current recession is due to be short-lived and shallow and is advising clients to make the most of the present lower contract demand while mitigating the remaining challenges.

It also warns against the temptation to put too much contractual risk onto suppliers – instead working collaboratively to understand and share the potential impacts.

Martin Sudweeks, UK managing director of cost management at Turner & Townsend, said: “While the construction sector is still facing a host of complex challenges, there is plenty of room for optimism in 2024.

“Even as we head into a period of political and economic unknowns, built asset investment decisions are now being made, not delayed.

“This is not to say we’ve got an easy ride ahead of us.  We still face structural issues, particularly the pressing skills shortage.

“To ensure growth while prices remain high and the future uncertain, effective cost and project management will be crucial.

“The greatest exposure to political uncertainty will run through the supply chain – so clients need to better understand their suppliers to identify and share risk.

He said: “New contracting strategies, more robust procurement, and careful apportioning of risk through project teams will be essential.”

 

Latest news

Wates wins former Daily Mail printworks transformation

British Land advances major cultural venue at London’s Canada Water
13 hours ago

Mace poaches Ramboll chief to be Head of Engineering

Martin Feakes will develop civil and structural engineering offer at Mace
12 hours ago

Subcontractors form alliance for major civils jobs

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

Fear of supply chain failures boosting collaboration

Procurement survey also reveals project bank account use is rising
16 hours ago

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

Healthy Homes service will be offered to social landlords across England
17 hours ago

Higgins wins £75m Peabody Passive House job

Latest phase of Deptford Landings to start construction
16 hours ago

Contractors and unions agree Sizewell C working deal

New deal offers improved sick pay and parental leave over Hinkley Point deal
1 day ago

Competition chiefs win legal fight for more construction raids

High Court rules CMA officials can raid a domestic property as part of investigation
1 day ago

More Osborne companies file administration notices

Three more divisions lodge notices with court
2 days ago

McLaren wins multi-storey urban logistics contract

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

Big social housing schemes at risk over funding uncertainty

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

Kier wins Worcestershire town centre renewal

Firm secures Bromsgrove commercial and cultural hub project
2 days ago

BAM signs Kent school contract at £42m

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

RG Group signs £121m Newcastle rental homes job

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

Geoffrey Osborne files administration notice

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

Winners named for £260m Manchester Uni framework

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

Shed specialist Benniman rides out market lull

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

Another contractor cleared after high profile immigration raid

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

McAleer & Rushe wants to meet new London suppliers

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

McAlpine signs £500m Broadgate dual towers deal

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

Worker rescued from collapsed four metre deep trench

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

Gove puts another major building scheme on hold

Secretary of State starts another planning fight after M&S defeat
6 days ago

Greenwich University tenders £300m framework

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

Work starts on Manchester 26-storey Obsidian tower

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

Race for £1.3bn West Midlands social homes framework

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

Delancey submits £400m King’s Cross lab plans

200,000 sq ft lab/office project will be built above railway and tube tunnels just 4.5m below
6 days ago

Winners revealed for £150m fire safety framework

New deal will help organisations comply with the Building Safety Act
6 days ago

Sellar plans £500m City tower next to Walkie-Talkie

Consultation starts on London 60 Gracechurch Street tower
7 days ago

Severfield ends year on high with record order book

Orders top £500m with strong future pipeline of opportunities ahead
7 days ago

Second senior director exits National Highways

Commercial director Malcolm Dare set to move on to new role
7 days ago

Contractor services