the u.k. construction industry an overview

The U.K. Construction Industry

AN OVERVIEW

© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Industry and its structure

Some of the problems and how they are being addressedThe economic contextSolutions ??Problems solved


The Construction Industry UKSize

Approx. £ 113 billion pa. (8% UK GDP)Approx 25% public sector investment

Public sectorHighways, utilities, education, health, housing

Private sectorHousing, Offices, Industrial, retail

Private sector “provision”- public serviceHousing (RSL), Education, health, infrastructure (PPP)


Construction 2010


Current position 2010


Political influence ?


Spending trends


• The UK’s four main ambitions are to:

• create the most competitive tax system in the G20;

• make the UK the best place in Europe to start, finance and grow a business;

• encourage investment and exports as a route to a more balanced economy; and

• create a more educated workforce that is the most flexible in Europe.

• As set out in ‘The Plan for Growth’ published alongside the Budget 2011


Headline Forecasts % change year on year, unless otherwise stated

Outturn Forecast

2009 2010 2011 2012 2013 2014 2015

UK GDP -4.9 1.3 1.7 2.5 2.9 2.9 2.8

Euro Area GDP -4.0 1.7 1.4 1.8 1.8 1.9 1.9

World GDP -0.7 5 4.2 4.3 4.3 4.4 4.4

PSc net borrowing 11.1 9.9 7.9 6.2 4.1 2.5 1.5

CPI 2.2 3.3 4.2 2.5 2.0 2.0 2.0

RPI -0.5 4.6 5.1 3.6 3.5 3.6 3.8

Unemployment (m) 1.53 1.5 1.54 1.53 1.43 1.31 1.18


% change year on year, unless otherwise stated

Outturn Forecast

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Consumer spending -1.9 5.1 5.2 4.2 4.6 4.6 4.6

Res property prices -2.9 5.5 -2.9 1.2 3.9 4.3 4.3

Res property transactions 14.2 -1.9 -1.0 20.2 20.4 1-.5 5.2

Comm property prices 5.9 4.7 2.1 3.9 5.6 5.2 4.2

Com property trans -17.5 11 4.5 3.1 5.1 5.3 5.2

Market interest rates 0.8 0.7 1.6 2.7 3.4 4 4.4

Euro/Sterling exc rate 1.13 1.18 1.16 1.16 1.16 1.16 1.15

Pubsec exp £ billion 600.9 632.8 656.7 669.6 682.4 694.6 713.4

Pubsec cap inv £ billion 68.9 61.6 53.7 50.7 47.7 49.1 50.4

Total Pubsec exp £ billion 669.7 694.4 710.4 720.2 730.1 743.6 763.8


What is the short-term future for Construction


Industry structure• Categorised by small organisations employing up to

10 employees

• Typically trade based

• Is the industry concentrated?

– 100 largest firms same value of work as 137,000 smallest firms

– Top 42 firms responsible for 13% of output

– Possibly an argument that the industry is becoming more concentrated- main difficulty is measurement


SIC Categories


SIC Category F- Construction


Number of firms


Rise of the subcontractor• Traditionally (50 yrs ago) high % employed craftsmen• Now >80% work subcontracted to specialists• Specialists range from high-tech Mechanical and

Electrical to low-tech labour only bricklayers• Result

–Increase in transactions in industry

–Increase in fragmentation

–Disbursement of expertise

• Problems- need for committees and reports

Financial Management in Construction Contracting


Trades and employees


Problems and Reports

• Problems–Late and low-quality projects–Lack of skilled labour–Poor prediction of budgets–Cost overruns–Disputes–Communication…..


Reports


Egan outcomes


How have we done?Met targets ??


Economic and Business Blockers…


the u.k. construction industry an overview

Documents

andrew ross

peter williams

john wiley sons

change year

industry structure

res property prices

res property transactions

comm property prices