Specialist contractors in construction benefiting from economic conditions

Thursday 7 August 2014

The strengthening economic environment is having positive effects for specialist contractors in the construction sector, according to new research.

The latest State of Trade Survey from the National Specialist Contractors Council (NSCC) showed orders in the second quarter of the year increased to 57 per cent. This is up from 27 per cent just over a year ago.

What's more, the balance of orders - the difference between the number of contractors reporting an increase and those reporting a decrease - hit its highest level since 2000.

Unsurprisingly this has resulted in improved confidence among specialist contractors, with 59 per cent expecting an increase in workload over the next quarter. The percentage expecting workloads to grow rises further to 72 per cent when asked what their forecasts are for the coming year.

Specialist contractors are now largely working at over 75 per cent capacity, with 84 per cent of respondents reporting this to the NSCC. Forty-three per cent of respondents are actually working at over 90 per cent capacity.

However, this is causing problems for some specialist contractors, with 64 per cent witnessing rising supplier prices and 19 per cent claiming they can't tender for work because of skills shortages. This percentage is above the five-year average of six per cent, indicating that the lack of skills in getting worse.

Nonetheless, Q2 was a positive period for specialist contractors, especially with payment practices beginning to improve.

Sixteen per cent of contractors are now getting paid in less than 30 days, on average - the highest percentage ever recorded by the NSCC. The number of businesses waiting more than 60 days for payment now stands at 14 per cent, which is the first time this measure has been lower than the number receiving payment in 30 days.

The new Supply Chain Payment Charter, which the NSCC played a role in creating, has been named as the reason behind increasingly prompt payment. The document contains a commitment to 30-day payment terms and no retention by 2025.

NSCC chief executive Suzannah Nichol said: "It’s encouraging to see the early effects of the Construction Supply Chain Payment Charter with the result that more specialist contractors are now being paid within 30 days. Continuing this trend along with investing in the skills of our workforce to meet the current demand is essential if we are to sustain the growth we all want."

Getting fresh talent is certainly something that is high on the agenda of construction firms. Mark Syrett, southern regional business manager of JTL, recently told Kent Business that the construction industry is nearly at the point of no return and more needs to be done to bring in the required skills.

Getting new talent is key for innovation, according to David Lindsay, Network Rail senior director. He told the newspaper that this is what drives the sector forwards.

Mr Lindsay explained that during the Christmas period, fresh talent enabled him to deliver a project to a short timescale, thanks to the innovation of a 4D virtual construction.

By Victoria McDonnell

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