Transcript The UK Construction Industry AN OVERVIEW

The U.K. Construction Industry
AN OVERVIEW
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Industry and its structure
Some of the problems and how they
are being addressed
The economic context
Solutions ??
Problems solved
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
The Construction Industry UK
Size
Approx. £ 113 billion pa. (8% UK GDP)
Approx 25% public sector investment
Public sector
Highways, utilities, education, health, housing
Private sector
Housing, Offices, Industrial, retail
Private sector “provision”- public service
Housing (RSL), Education, health, infrastructure (PPP)
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Construction 2010
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Current position 2010
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Political influence ?
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Spending trends
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
• The UK’s four main ambitions are to:
• create the most competitive tax system in the G20;
• make the UK the best place in Europe to start,
finance and grow a business;
• encourage investment and exports as a route to a
more balanced economy; and
• create a more educated workforce that is the most
flexible in Europe.
• As set out in ‘The Plan for Growth’ published
alongside the Budget 2011
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Headline Forecasts
% change year on year, unless otherwise stated
Outturn
Forecast
2009
2010
2011
2012
2013
2014
2015
UK GDP
-4.9
1.3
1.7
2.5
2.9
2.9
2.8
Euro Area GDP
-4.0
1.7
1.4
1.8
1.8
1.9
1.9
World GDP
-0.7
5
4.2
4.3
4.3
4.4
4.4
PSc net borrowing
11.1
9.9
7.9
6.2
4.1
2.5
1.5
CPI
2.2
3.3
4.2
2.5
2.0
2.0
2.0
RPI
-0.5
4.6
5.1
3.6
3.5
3.6
3.8
Unemployment (m)
1.53
1.5
1.54
1.53
1.43
1.31
1.18
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
% change year on year, unless otherwise stated
Outturn
Forecast
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15 2015-16
Consumer spending
-1.9
5.1
5.2
4.2
4.6
4.6
4.6
Res property prices
-2.9
5.5
-2.9
1.2
3.9
4.3
4.3
Res property transactions
14.2
-1.9
-1.0
20.2
20.4
1-.5
5.2
Comm property prices
5.9
4.7
2.1
3.9
5.6
5.2
4.2
Com property trans
-17.5
11
4.5
3.1
5.1
5.3
5.2
Market interest rates
0.8
0.7
1.6
2.7
3.4
4
4.4
Euro/Sterling exc rate
1.13
1.18
1.16
1.16
1.16
1.16
1.15
Pubsec exp £ billion
600.9
632.8
656.7
669.6
682.4
694.6
713.4
Pubsec cap inv £ billion
68.9
61.6
53.7
50.7
47.7
49.1
50.4
Total Pubsec exp £ billion
669.7
694.4
710.4
720.2
730.1
743.6
763.8
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
What is the short-term future for
Construction
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Industry structure
•
Categorised by small organisations employing up to
10 employees
• Typically trade based
• Is the industry concentrated?
– 100 largest firms same value of work as 137,000 smallest
firms
– Top 42 firms responsible for 13% of output
– Possibly an argument that the industry is becoming more
concentrated- main difficulty is measurement
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
SIC Categories
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
SIC Category F- Construction
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Number of firms
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Rise of the subcontractor
• Traditionally (50 yrs ago) high % employed
craftsmen
• Now >80% work subcontracted to specialists
• Specialists range from high-tech Mechanical and
Electrical to low-tech labour only bricklayers
• Result
–Increase in transactions in industry
–Increase in fragmentation
–Disbursement of expertise
• Problems- need for committees and reports
© 2013 Andrew Ross and Peter
Williams. Published 2013 by
Financial Management in Construction
Contracting
Trades and employees
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Problems and Reports
• Problems
–Late and low-quality projects
–Lack of skilled labour
–Poor prediction of budgets
–Cost overruns
–Disputes
–Communication…..
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Reports
• Over 40 since 1949
–Most recent
•Latham 1994“ Trust and Money”
•Egan 1998“ Rethinking Construction”
•Never Waste a Good Crisis 2010
–Impact
•KPI, Strategic and project Partnering, integration of supply chains,
adoption of out of industry practice (automotive & aerospace)
•Main focus- public sector projects
–Need to improve the construction industry….
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Egan outcomes
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
How have we done?
Met targets ??
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
Economic and Business Blockers…
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.