Fortune favours the brave
I read an article recently that highlighted the plight of smaller regional construction contractors and their inability to win new work in these straitened economic times.
The article was based on a survey conducted by Constructionline - a pre-qualification certification scheme for contractors and consultants - which revealed that of the 115 SME contractors surveyed 54 per cent had seen a decrease in their workload in the last three months. One of the biggest challenges, according to 42 per cent of SMEs, is winning new work, while cashflow was also cited as another major worry.
The survey is a stark reminder of the pressures that many companies in the construction sector are currently facing, and whilst I don't doubt that those at the smaller end of the scale are bearing the brunt, I would argue that most, if not all contractors, whatever their size, are having to deal with the same problems.
Even the biggest contractors aren't immune from the effects of the challenging market conditions. According to recent reports, Balfour Beatty could lose around 600 jobs as part of a restructure of its £3.4bn turnover UK construction services arm. Carillion is also downsizing its UK construction business in order to cope with the shrinking market.
The fact of the matter is that it is difficult out there and with cuts to public sector capital budgets beginning to bite, coupled with a struggling private sector, the prospects for the construction sector look fragile.
The latest figures from the Office for National Statistics (ONS) appear to back this up and even go as far as suggesting that a sharp fall in construction output is to blame for the double-dip recession.
The ONS said construction output fell by three per cent during the first three months of the year, adding that a fall in government spending had contributed to the particularly large drop.
However, some have questioned the validity of the ONS data.
The latest UK construction Purchasing Managers' Index, published by CIPS and MArkit, makes more positive reading, for example. It said that construction output rose during April, albeit at a slower rate than in March.
There are signs that the housing market is improving and the need in sectors such as education and healthcare is as demanding as ever, so there is work out there to be won.
As is the case for any business trying to win work in an increasingly competitive market, the key to success and survival is innovation.
At Willmott Dixon we have developed standardised products for schools and swimming pools, which makes them more affordable. In a cost-driven market, this kind of thinking is becoming fundamental.
In the housing sector, we are helping to develop an innovative model that allows us to partner with local authorities and land owners to develop housing for private rent. The key to such deals is a funding stream not reliant on Government grant.
History tells us that only the fittest survive. Those that adapt to the changing environment live on, while those that don't react quick enough wither and die.
Yes it's tough, but opportunity only knocks for those who are willing to go out and look for it. As they say, fortune favours the brave.