Better Risk Management ‘Will Improve Delivery Of New Homes & Buildings’’

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Burflex House, Clay Street, Hull, East Yorkshire, HU8 8HA E. info@burflex.co.uk

Better Risk Management ‘Will Improve Delivery Of New Homes & Buildings’’

Better Risk Management ‘Will Improve Delivery Of New Homes & Buildings’’

A new report has highlighted how better management of risk in the construction sector will result in more new homes, buildings and infrastructure being delivered on time and on budget, by eradicating unfair risk allocation between clients and contractors.

The CBI’s Fine Margins report shows how the construction sector can become financially sustainable by tackling these issues, freeing up investment for more technology and training. If the result of this investment is that industry productivity climbs by just two per cent, it could potentially add £30 billion to the economy each year by the end of the decade.

As the CBI says, it is now “crunch time” for the industry. Although it currently employs 2.3 million people and contributes six per cent to the country’s GDP, its average profit margins at the largest firms are just 2.5 per cent. Businesses in the industry spend twice as much on legal services than those in other sectors and one-third of the workforce will retire in less than 15 years.

Recommendations to businesses include being prepared to challenge a contract when bidding and, if necessary, walk away. Boards and business leaders are being advised to think strategically about long-term planning and the shareholder management that will be required for such a strategy.

It was also suggested that the use of single-stage procurements be discouraged in bigger construction projects above a certain value.

CBI deputy-director general Josh Hardie said: “This is a crucial time for the construction industry with the demand for new, sustainable homes, offices and transport infrastructure on the rise. And all within the scope of rapidly improving the sector’s impact on the environment.

“By fixing the foundations of the construction business model between clients and contractors, essential new investments in skills, tech and innovation are possible and we can unleash the full potential of the industry.”

The most recent data release from the Office for National Statistics on construction output in Great Britain shows that output rose by 0.5 per cent in the last quarter of 2019, driven by 0.8 per cent growth in new work, offsetting a 0.1 per cent drop in repair and maintenance.

All sectors saw growth apart from private housing and public other new work, both of which saw 1.1 per cent falls. The biggest positive contributions, meanwhile, were seen from public new and private commercial housing – up 8.4 per cent and 2.5 per cent respectively.

In comparison with 2018, last year’s level of all work saw a 2.5 per cent increase, driven in large part by 3.4 per cent growth in new work. New orders were also up 4.4 per cent in fourth quarter, driven by an 11.2 per cent rise in all other work (although offset by an 8.5 per cent drop in new housing).

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