With total output expected to grow by 5% in 2014, the outlook for the construction industry is more positive than it has been in years.
However, the State of the Industry Barometer findings reveal a number of key trends that construction companies need to be aware of and prepare for, in order to make the most of the upturn.
1. Are you focusing on your recruitment and training strategy?
Survey findings
- 44% of companies said recruiting, training and retention of staff was a key strategic issue, a 175% increase in the figure 12 months ago
- 46% of companies cited lack of resources to meet demand as a major barrier to wining work this year.
Key issue to consider
With around half of industry saying that they are struggling to meet the recent pick-up in demand, on top of the long-term skills gap that continues to build, this is an issue that is unlikely to go away.
So, do you have a long-term strategic plan in place to review where the gaps are in terms of key skills and resource levels? This review should be undertaken in the context of the long-term pipeline of opportunities and the dynamics of the markets they are working in. This process allows for early identification of potential shortfalls and reduces the risk of having to turn down opportunities, or worse still, carrying out sub-standard work due to a lack of skilled personnel.
Initiatives to work effectively alongside industry bodies and the government to retain and attract talent also need to be developed to ensure a new generation of skilled talent is available to deliver the infrastructure (eg nuclear, HS2) and buildings the nation needs. Developing ways to attract more young people into our industry should be a priority for every company.
2. Do you have a strategy in place to manage the impact of aggressive tendering?
Survey findings
- 62% of companies stated that aggressive tendering is a major barrier to them wining work, although this figure fell 5 percentage points from the last survey
- 25% of companies said this area was a top strategic priority for them in 2014.
Key issue to consider
Despite the upturn, some companies are still putting in very low price bids. This increases pressure on margins already being squeezed by recent increases in labour and material costs.
Successful strategies you could employ to negate this issue, include:
- Having a clear plan in place for which jobs to target to increase the win rate and avoid costly procurement processes
- Effective targeting of key clients to build long-term relationships with increased emphasis on service and value
- Continuously educating customers to consider life costing over lowest capital cost
- Partnering more closely with the supply chain to look for efficiencies to drive down costs without comprising on quality.
3. Do you have the right level of marketing resource in place as the market picks up?
Survey findings
- 69% of companies are planning to increase their marking spend
- 33% of companies are looking to grow their marketing headcount.
Key issue to consider
Marketing is usually one of the first areas to be cut when sales and profit budgets are under threat. However, the majority of companies are now increasing their marketing spend as their sales prospects improve, although the growth in headcounts is lagging behind. This is partly due to the fact that it is less risky to increase marketing spend, which can be gradually increased or decreased, compared to headcount which tends to be more fixed.
One point is very clear though. ‘Doing more with less’ is now the key mantra for marketers and ensuring that each pound spent can be justified to the senior team should be the key focus when reviewing your marketing strategy and plans.
Also, you can use the results of the barometer as evidence to help support any requests for additional budget to take advantage of new market opportunities.
Download an executive summary of the latest report.