Nick Charlton, managing director, Davis Builders
My main fear for the coming year is the return of terrible subcontractors. The recession helped eradicate some of the worst companies that weren’t being run very well, but as the economy improves there’s a real danger they will return to the market, meaning bad news for quality, and the end purchaser and client. Finding tradesmen is going to be an issue in the near term because everyone is so busy, which means longer lead in times to notify trades when they are needed on a job. As a result we expect costs to increase, we’ve got a project coming up hat will require trades in the last part of 2014, by which time their rates will have increased significantly.
The recession has taken a lot of talent out of the industry, I’m already in desperate need of site managers and have to compete with the likes of Willmott Dixon, which had 25 school sites starting in July/August, to take get them. As a small contractor with a turnover of £5-£6m, the worry is that as things improve managers will want to move up the chain to larger contractors able to pay more.
Many companies have failed to invest in apprenticeships over past three-to-five years, which will mean taking people on who don’t have as much knowledge, then fighting an uphill battle to get them trained up fast enough.
Chris Kane, director, Greendale Construction
Things are definitely looking upbeat for us, we have already secured enough business to match last year’s turnover (our fiscal year starts in August), even if we don’t secure any more work. The type of work is also very varied, including a £4 million church on Poole High Street, which came in last week, work on various schools and a new cardiology unit for the NHS. We complete a lot of public sector education work and this time of year is typically quite slack for us as children return to school, but this year our guys are moving on immediately to new projects. I’ve noticed a great deal more construction activity in Bournemouth and Poole, where in the past 4-5 years there hasn’t been anything underway.
People have been warning that increasing demand will result in capacity problems for construction firms in terms of staff, materials and other resources, but for me, it’s a question of planning in advance and managing your resources early. For example, I’ve heard that Thermalite building blocks have lead times of several weeks rather than days now because house builders are buying them up, but that kind of issue can be resolved by planning ahead.
People are concerned about a potential housing bubble as house prices rise, but I can’t see it happening as everything locally is selling now, even properties that have been on the market for a long time.
Philip Hall, Managing director, Hall Construction
I’m confident 2014 will be a busy year now as we’ve had a big increase in enquiries since the end of July compared to the same time last year. I’ve spoken to several local estate agents and they feel there’s a shift underway and more house buyers and other clients are actively looking for properties.
My concern is the potential increase in material costs and labour rates when demand really picks up. Over last four or five months labour rates at recruitment agencies have crept up in line with demand by about three to five percent, which isn’t significant but if things really start moving those that have cut their rates over the past five years will be looking to regain financial ground.
Rates for insulation products are also a worry as they have been increasing despite the recession as a result of environmental requirements on projects. Suppliers know they have something of a monopoly and can charge what they want.
During the recession a lot of firms, including mine, chose to cut back on training and it’s always difficult to invest in training when the industry’s future is so unpredictable. Fortunately, with funding from the National Lottery Training Bursary Scheme we have been able to take on two trainees, a heritage construction manager and a carpenter, who will gain experience with us over the next year.
Hameed Ahmed ICIOB, CEO, Zack Alexander Developments
The Government’s intervention in mortgage lending is creating an artificial spike in workloads, which I and many of my colleagues, believe is creating another housing bubble just waiting to burst. As a small builder that is experiencing a huge rise in orders, I’m hoping the government can wind the scheme down gradually within two years to create a stable environment rather than it suddenly stopping it and leaving us all in the lurch and unable to shift properties.
Maintaining a qualified workforce is a major challenge over the coming years, we have taken on four apprentices and are planning to take on four more by December. Just to train them up to a level where they are functional on site is taking a long time, which has slowed down the pace of projects. A major problem is that technical colleges don’t include enough practical on site experience as part of courses, a mere two days a week bricklaying would produce a much more well-rounded apprentice.
Many local builders have not been as proactive in taking on apprentices and our local technical college says many students are walking away from level 2 courses because they feel potential employers just aren’t interested, which will have a major knock-on effect.
Andy Tooley, director, 8Build
I’m hoping that the current upward trend and positivity continues in the marketplace and perhaps even that profitability may start to return to pre-2008 levels for the industry as a whole.
However, with an increase in the volume of projects being undertaken, together with ‘mega-projects’ such as Crossrail in progress, there is a fear that the industry is facing a skills gap and a materials shortage that will only increase over the coming period. Supply will not meet demand and the costs of resource will increase.
Another fear is that where long-term projects were secured during the down turn, there is a possibility that the supply chain will not be able to deliver on tendered prices, as the cost of labour and materials may increase. These factors could place an added burden on an already pressured supply chain and prolong the anticipated recovery of the industry as a whole.
