Construction workloads ‘resilient’ despite Carillion and snow storms

The Birmingham skyline dotted with cranes

Construction workloads in the Midlands remained resilient despite bad weather and a weaker near-term economic outlook, in the first quarter of 2018 – according to analysis by RICS.

The industry body found the early part of 2018 workloads in the Midlands increased across all subsectors, with both new work and repair and maintenance activity rising steadily.

Its data comes from its own first-quarter market survey.

In Q1 2018, 37% more chartered surveyors reported that their workloads had risen as opposed to fallen, alongside the East of England this was the strongest reading across the UK.

While 63% of respondents noted bad weather conditions as a limiting factor, the “Beast from the East” was not enough to slow the pace of growth.

RICS senior economist Jeffrey Matsu said: “While a short-lived snowstorm may have snarled logistical supply chains and site works at the end of February, it was not enough to negatively impact on workload order books. Indeed, several years of limited spare capacity have resulted in a backlog within the delivery pipeline which will take some time to unwind.

“Risk aversion by both lenders and developers, in the wake of Carillion and ongoing Brexit negotiation, will continue to weigh on investment decisions.”

Companies in the Midlands continue to highlight the shortage of skilled professionals as one of the biggest constraints to growth.

69% of chartered surveyors reported a lack of quantity surveyors as holding back projects. This quarter, respondents also reported it increasingly difficult to recruit labourers.

Lee Jones of Quantem Consulting in Birmingham added: “Sufficient competition in major supply chains for larger projects is causing constraints due to a limited workforce.”

The shortage of labour, coupled with higher input costs, continues to restrict growth in profit margins, and while cost pressures may ease later this year, expectations on profit margins are still well below the three-year average of 40% recorded between 2014 and 2016.