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The Main Challenges Facing the Construction Industry Right Now

During the last few years, the construction industry in the UK has operated in a challenging and constantly changing landscape, with the supply chain, particularly under pressure from Brexit, Covid-19 and the ongoing war in Ukraine.

Liz Truss has also been appointed as the new Prime Minister, with the incoming PM apparently committed to the government’s Net Zero policy and under pressure to decarbonise existing homes considerably in the coming years.

This will also impact the industry in the months ahead. But what are the industry’s biggest challenges right now, and why are they such important considerations?

  • #1. The Rising Cost of Materials: Arguably the biggest threat is now the cost of raw construction materials, with 48% of respondents to a survey commissioned by builder insurer specialists Arthur J Gallagher citing rising energy prices as the biggest underlying factors. A further 48% attribute this to inflation, which is also being driven by the increased wholesale price of commercial and domestic energy. This is increasing the cost of projects and making companies less profitable, which could become even more challenging over time.
  • #2. A Lack of Skilled Labour: This is another significant issue, albeit one that has pre-existed the pandemic and the rising cost of living. Ultimately, some 57% of construction forms have revealed that they’re currently short-staffed, while 17% have invested more money into recruitment and attempting to plug their skills gap, which continues to cost employers an average of £32,000 per annum. It’s also contributing to the government’s failure to build the 340,000 new homes needed each year in England.
  • #3. Health and Safety and an Aging Workforce: Some 10.7% of respondents have also moved to recruit employees from other businesses and different parts of the country, in order to help tackle their skills shortages. It should be noted that a lack of skilled staff is also contributing to increased health and safety risks, particularly in instances where demand and project deadlines remain unchanged. Increased recruitment is also occurring as the workforce continues to age and creates gaps in both skilled and unskilled labour, with a pressing need for younger workers to enter the industry.
  • #4. Minimal Technology Adoption: Increased technological adoption has the potential to help the construction sector, by creating more scalable and cost-effective business models. However, construction firms have been slow to embrace helpful tech innovations, with some 36% of respondents in a different study citing a lack of financial resources as being responsible for their failure to incorporate technology. This is thanks largely to a continued lack of cash flow, with 44% of construction businesses struggling as a result of the pandemic and outstanding CBILS loans. We’d expect this trend to continue in the near term, while this only serves to compound the inherent lack of skills within the sector.

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