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Construction industry grows despite project delays

The construction industry has returned to growth, with profits and productivity up, according to a report from industry analysts Glenigan.

The 2015 UK Construction Key Performance Indicators (KPI) Annual Report, published today, shows that the median profit margin rose from 2.1% in 2014 to 2.8% this year.

Productivity has also improved. Seven out of 10 (69%) of projects came in to budget or better - on a par with 2014 as the best ever performance on this measure.

However, projects were completed on time or sooner only 40% of the time, below an average of 45% since 2003.

Companies are however, increasing their workforces in contrast to a year ago when the construction workforce was still contracting.

However, the proportion of women and people from minority ethnic backgrounds, as well as those aged under 24, has fallen in the latest results.

Supported by BRE SMARTWaste and endorsed by the Department of Business, Innovation and Skills (BIS) and Constructing Excellence, the report reveals that increased workloads has meant that firms are struggling to maintain levels of client satisfaction, which has fallen in each of the last three surveys.

Nevertheless, the industry continues to make progress on environmental performance and on safety, though a small but concerning rise in fatality rates shows that there is no room for complacency.

Glenigan economics director Allan Wilén said: “The rapid upturn in activity during 2014 put pressure on capacity, manifesting itself in rising material and labour costs and extended delivery times. Evidence from this year’s KPIs suggests that construction firms have managed to keep control of costs, but delays to schedule have worsened.

“The impact of accelerated industry growth is most evident in the workforce indicators. Staff turnover was up to 5.3%, the highest level since 2008, and staff loss is down to 6.3%.”

However, Mr Wilén said the anticipated recovery presents fresh challenges: growing and up-skilling the workforce, delivering improved productivity and containing costs will be priorities.

CITB director Stephen Radley also attributed project delays to the skills shortage affecting many across the industry.

“That is why CITB is working with partners in industry and government to deliver the skills that industry needs to grow,” Mr Radley added.

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