XYZ Reality Guest Blog

A Favourable Forecast for 2022

XYZ Reality Guest Blog

A Favourable Forecast for 2022

Whilst many in the construction industry will no doubt be disappointed with the way 2021 culminated, with supply chain issues, labour shortages and the Omicron variant exacting their toll on sector performance, there are plenty of reasons to be optimistic going into 2022 and beyond.

Whilst many in the construction industry will no doubt be disappointed with the way 2021 culminated, with supply chain issues, labour shortages and the Omicron variant exacting their toll on sector performance, there are plenty of reasons to be optimistic going into 2022 and beyond. 

Every year we put together a bi-annual forecast which offers a vertical-by-vertical snapshot of the construction sector. Published at the end of last year, its key takeaway is an across-the-board rebound with the value of underlying project (under £100m in value), rising 7% this year and a further 5% in 2023.  

The figures are being borne out by the findings of our proprietary Indexes and Reviews which, despite poor project start performance, identify a fast growing pipeline of main contract awards and planning approvals in Q.4, indicating plenty of work across the UK in the next 24 months.  

Partly, this boost is down to a number of factors from greater public sector investment in critical infrastructure to a boost in civil engineering major project workloads.  

What’s clear is there are plenty of opportunities to be had, it’s just knowing the right places to look as, regardless of specialism, the pattern of post-COVID UK construction is evolving at a fast pace.  

Construction workloads are already being rebuilt, and the best performing sectors now will vary from those pre-Pandemic. For example, structural changes to social norms are expected to create new opportunities in data centre and logistics construction, as well as office and retail refurbishment and repurposing.  

Agile contractors are already seeing new and evolving opportunities with savvy ones investing to strengthen their capabilities and capacity in these niches. This will no doubt be consistent across every region of the UK, in line with the Government’s levelling-up agenda. 

However, it won’t be all wine and roses. Although the initial recovery from the Pandemic’s disruption was rapid, supply-side constraints are likely to bite well into the first half of 2022. As such, contractors and subcontractors should seek to identify and mitigate any potential interruption to product material supply, both home and abroad.  

This is also prompting built environment professionals to look at risk mitigation strategies and invest in their business to reduce exposure to external, potentially damaging, events. For instance, the current slow pace of site developments will delay stage payments from clients, and push back late trade timings. Contractors and subcontractors can potentially offset lower monthly revenues by spreading their workforce across a greater number of projects.  

It goes hand-in-hand with a desire to reduce waste and maximise efficiency, as the tap of skilled EU labour is turned off, and hybrid work models become the norm. Companies investing in the latest ConTech, Modern Methods of Construction and the latest thinking around on site operating procedures will have the advantage over competitors, especially as the appetite for automation increases. 

Ultimately, this leads me to the crucial and pivotal role technology will play in supporting the industry’s gradual revival. Where we once saw reluctance, we now see overwhelming enthusiasm.  

Investment in an effective CRM, digital marketing channels and a modernised salesforce, in addition to the range of high-precision on-site innovations, such as Engineering Grade AR, will help firms to rapidly identify and target emerging opportunities. In turn, this will help sustain workloads, cut costs of winning work, improve delivery efficiency and enhance profitability. 

So there you have it, the future of UK construction is indeed bright, now we need to realise it.  

Allan Wilen, Economic Director, Glenigan

Allan heads up Glenigan’s Economics Unit and has over 30 years’ experience in providing insightful market analysis and forecasts on UK construction and the built environment. Following 20 successful years as Economics Director at the Construction Products Association, Allan joined Glenigan 12 years ago. During this time Allan and his team have helped hundreds of businesses confidently develop their market strategies.

Allan sits on the Consulting Committee on Construction Industry Statistics for the Dept for Business, Energy & Industrial Strategy (BEIS), is a member of a Construction Leadership Council working group and is a guest lecturer in construction at the University of Reading.

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