Building together – the key to unlocking a successful 2024 for the construction industry
There’s no denying that 2023 was a tough year for the UK construction industry. While we managed to avoid a recession, the economy continued to be blighted by inflation, rising interest rates and stagnant growth. Construction saw the highest number of insolvencies in a decade, with us sadly losing some well-known and respected contractors and specialists. But, together, we weathered the storm – as we have done in previous recessions and through the pandemic. We are a resilient industry.
The outlook for 2024 is slightly more optimistic, but challenges remain - continued economic uncertainty, cashflow challenges, embedding the Building Safety Act, skill shortages, the continued need to improve productivity, keeping on top of rapid technological advancements, and that’s not to mention a General Election.
What is clear is that these are all challenges that no one business can tackle alone – they require a joined-up industry response from the whole supply chain. The key to a successful 2024 is collaboration, and that is why Mace is a member of Build UK and I am proud to be on the Board.
Keeping cash flowing through the supply chain
It looks likely that some of the economic headwinds we saw in 2023 will continue at least into the first half of 2024. There will be many firms struggling this year, and we should all be cognisant of this. Ongoing inflationary pressures mean that maintaining cashflow throughout the supply chain will be as important as ever.
Since 2018, Build UK has benchmarked payment performance in the industry to introduce more transparency. The good news is that according to Build UK’s data - over the last five years, the average time to pay invoices decreased from 45 days to 30 days, the number of invoices paid within agreed terms increased from 63% to 83%, and invoices paid within 60 days increased from 82% to 95%.
While benchmarking has acted as an impetus for change in industry culture around payment, there is still much more to be done to improve these metrics, and we hope we continue to see these trends improve in 2024.
Driving efficiency and productivity through technology
2023 saw leaps in technology shift business processes in nearly every sector in the form of AI. When it comes to AI, many believe we only scratched the surface of its potential in 2023. Mace is working to uncover more ways that this technology can improve our industry at a time when new efficiencies need to be found.
One area where the industry is using technology is to recognise competence and improve site safety with CSCS ‘Smart Check’. This enables cards across all 38 card schemes carrying the CSCS logo to be verified using the same platform. As explained in Build UK’s guide on How to be a Smart Site, companies can use their site access system or a smartphone app to check they have the right people with the right skills on their project and identify any out of date or fraudulent cards.
We are likely to see innovation being a big focus in 2024 for construction, whether it's increasing the capabilities of Modern Methods of Construction, powering AI processes or supporting staff to work more effectively.
Attracting the next generation
Finally, in 2024, we must continue to ensure that our industry continues to attract new talent. The skills shortage we’ve seen over the last few years will only intensify if we can’t help and encourage new entrants from all walks of life to enter our fantastic industry. It is estimated that we will need to recruit 45,000 people each year to service expected demand.
Open Doors is another initiative from Build UK to help us all attract people into the industry. This enables young people and those looking for a change of career to see what our industry has to offer by going ‘behind the hoardings’ on sites across the UK. In 2023, Open Doors helped 5,000 people take their first step on their journey from education to employment in construction. It will be returning once again from 18th – 23rd March 2024 with hundreds of tour locations expected to take part, including several Mace sites in London.
Working together to build resilience
Construction proved its resilience in 2023 and we believe we can do the same in 2024 if we work collaboratively. By working together across the supply chain through Build UK and supporting the Construction Leadership Council (CLC), we can create a better, fairer and more productive industry.
