Over 1,300 UK industry experts were polled in a recent survey by the Access Group’s Construction division on economic turbulence in construction in 2023
Over 45% of respondents hold more than two decades of experience working in construction and respondents represented a diverse range of professions, including quantity surveyors, structural engineers, operations managers, and finance leaders.
The survey’s goals were to assess prospects for the construction industry over the coming year, pinpoint the biggest problems it currently faces and gauge the sector’s current attitudes towards technology.
Facing economic turbulence in construction with confidence
It goes without saying that the current economic picture in the UK is, at best, turbulent.
Only one year after emerging from the Covid-19 recession, UK Chancellor Jeremy
Hunt declared in his Autumn Statement that the country is now in a renewed recession.
Continued Brexit adjustments, the war in Ukraine’s impact on energy and material
costs, and inflation at a 40-year high have all had an effect on the sector. These factors have also led to wage stagnation, significant cost increases and a decline in demand for retail and leisure projects.
Within this landscape, the Access Group conducted a survey of professionals in the
construction industry to understand their perspectives for the upcoming year, how they intend to stay competitive, and plans to invest in technology to boost productivity and reduce risk.
One of Access’s key findings is that, despite the challenging year ahead, 45% of respondents believe their companies will grow over the coming year, while only 2% believe their companies will “significantly shrink” and 30% believe their company will not experience any significant change during the coming year of recession.
While the Access Group’s findings show that contractors are still realistic about 2023, with 79% of those questioned bracing for a ‘negative impact’ over the next six to 12 months and only 5% breaking the trend and forecasting a favourable impact, the results also suggest a degree of optimism. Growth is still anticipated for some sections of the sector.
Although government housebuilding goals are likely to see a decline, maintenance, infrastructure and retrofitting orders should keep the sector buoyant.
Leading challenges for the construction sector in 2023
Survey respondents ranked a list of significant issues that will affect productivity and profitability in construction in the upcoming year.
As their top challenges for 2023, respondents listed time-consuming estimation processes, an excessive amount of time spent on reporting and trouble controlling labour costs as their main concerns.
Additionally, respondents were asked to identify 10 essential elements for sustaining competitiveness over the following 6-12 months. Managing project expenses and developing effective project estimations and valuations came out on top. Accurate and responsive costing is top-of-mind to safeguard profit margins given the current
volatility of material, labour and plant prices due to inflation and shipping cost increases.
Taking on bad debt in 2023
The industry as a whole continues to be extremely concerned about toxic bad debt caused by supplier and contractor insolvencies. Lack of knowledge about the financial standing of both suppliers and customers can hasten the accumulation of bad debt, with the risk being greater during uncertain economic times.
The Access Group questioned respondents about the risk that bad debt poses to their businesses today and how they expect it to affect them over the course of the next 12 months. Bad debt presently provides a ‘moderate to severe’ risk to business, according to 63% of respondents. 70% of respondents predicted that bad debt will increase over the next 6–12 months, and another 23% said that bad debt will continue at the same level. 10% predict a large rise in bad debt during the coming 12 months.
Futureproofing for economic difficulties in construction
The Access Group also gathered data on software uptake in the industry. The poll revealed that the industry is still at risk from slow systems, inaccurate cost management and lengthy reporting processes, as well as from delayed estimates created using Excel spreadsheets.
65% of respondents said they were already using software for estimating and pricing, and 58% said they were using software to handle their payroll and human resources. However, just 10% of respondents use end-to-end ERP software, and only 9% use project management software for site management.
The three most popular software solutions that contractors are looking to purchase in the upcoming year are ERP software, training software and estimating and pricing software.
When asked to rank the software functionality which would be most beneficial to the industry, the most sought-after qualities by construction companies are ease of use,
security and seamless product integration. The market is looking for software that integrates with existing systems, protects sensitive data and is simple to learn and adapt to.
An upbeat outlook despite economic turbulence in construction
Construction output collapsed as a result of Covid-19 and it took until late 2022 for it to fully recover. The sector has already demonstrated its resiliency through this rebound to 2019 levels of output, and the findings from the Access Group’s comprehensive poll indicate that this confidence and optimism will persist.
45% of the businesses polled said they still expect growth in 2023 despite the prevalence of bad debt and unfavourable economic headwinds. Firms also continue to strengthen their competitive edge by investing in software that boosts efficiency and safeguards profitability.
Investing in technology is the best way for firms to ensure their productivity and profit margins remain above water during economic precariousness. The Access Group’s Construction offering includes leading estimating software, Access ConQuest, and an ERP system developed for construction management, Access EasyBuild.
For full results and further analysis, visit The Access Group’s website.
Alex Gillham
Digital Content Manager
The Access Group
Tel: +44 0845 345 3300
carol.massay@theaccessgroup.com
*Please note: This is a contributor profile.
