Growth rate slows for building services contractors
Building services contractors have reported increased turnover in the six months from July to December 2015, according to the results of the latest state of trade survey by their trade association, but the rate of growth is slowing.
The industry remains “in good shape”, according to the research, with order books and enquiries continue to grow, although the rate of this increase in has slowed compared with the previous six months. Tender prices also continued to rise throughout the period, but at a more sluggish pace than in the first half of the year.
The research was carried out on behalf of the Building Engineering Services Association (BESA).
Problems with late payment eased slightly, but remain “a serious impediment to business growth”, according to BESA members, who also reported that growing shortages of skilled employees – particularly design engineers, quantity surveyors and planners – had led to a sharp rise in labour costs.
Although the findings suggest that the market is cooling, the survey indicates that the “net optimism measure” remained positive, albeit down from +45% to +24%.
With the exception of Ductwork Group members, companies of all sizes, specialisms and geographical location remained optimistic, although to a lesser extent than at the time of last summer’s survey.
Employment levels remain healthy, with a net of +37% expected to employ more staff in the coming six months of this year, a similar level to the last survey. There was also a net increase in those engaging agency labour.
BESA president Jim Marner said that the next three years would be challenging but also potentially rewarding for building engineering services firms.
“Skills shortages, labour costs, project risk, procurement and quality control will all become even more significant in the coming months along with efforts to adopt more modern design methods,” he said.
Mr Marner added that the industry was facing its second “perfect storm” in recent years, with the growth in workload coinciding with skills shortages and pressure on cash flow – and that contractors would have to “step up to the challenge once again”.
The market drivers and technical challenges faced by firms in recent times would be “magnified times ten” between now and 2018, he said.
He also predicted changes that lie ahead. “The wider use of BIM, along with offsite manufacturing, means we will need new kinds of skills,” Mr Marner said. “We will be spending less time on-site, but that doesn’t mean we will need a smaller workforce. What we will need is a smarter one.”
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This article was published on 9 Mar 2016 (last updated on 9 Mar 2016).