Reversing the trend: strategic moves can counter construction sector setbacks
There is a current sense of unease in the UK construction sector, coinciding with a period of stalled economic growth and higher interest rates. Despite these challenges, many companies have developed effective strategies to navigate this difficult period, and there are now reasons for cautious optimism in certain areas.
Analysing the current industry trends
The month of May saw an unwelcome milestone in the construction sector, with 42 companies entering administration – a record high since Creditsafe started reporting the data in January 2020.
These figures continue the trend set during the first five months of the year, during which 154 instances were recorded, a 54% surge compared to the same period last year.
Notably, most of these companies were small-scale operations that are exempt from reporting revenue and profit figures. However, larger organisations have not been immune to the difficulties.
Ambivent, a building services company with a £14.5 million turnover, went into administration following issues collecting payments, which in turn impacted their ability to pay suppliers.
Similarly, design-and-build contractor Howard Russell Construction Ltd entered administration after project delays and material cost escalations rendered the company unable to meet financial obligations. This happened despite a nearly fourfold increase in turnover the previous year.
Current areas of growth
The overall picture for the sector may be about to improve. Construction insights company, Glenigan, has forecast growth of 12% in 2024 and 3% in 2025. This turnaround will be fuelled in part by the delivery of existing and planned major capital projects.
Reflecting this, the infrastructure sector is currently booming, with water services and AMP8 underway, as well as significant frameworks with National Grid, Magnox and Sellafield.
The current spend in these areas offers the potential for construction companies to pivot and find lucrative opportunities during hard times.
In addition to this, a rise in energy prices has encouraged an accelerated shift towards green solutions. This has been prompted by the draw of potential improvements to long-term returns on investment that sustainable solutions can offer. The adoption of sustainable practices not only alleviates environmental concerns but also presents its own prospects for growth and differentiation within the sector.
Professional support to secure contracts
For businesses looking to secure contracts, it’s beneficial to consider professional bid services, such as those offered by BWL Group. With their expert support in bid management and bid writing, companies can identify targets and improve their bidding strategy. Our in-house expertise helps clients stand out in a highly competitive market and secure key contracts. In these trying times, having a reliable partner like BWL Group can make a significant difference in overcoming obstacles in your move towards sustainable growth.