MONEY MATTERS There is £3 billion worth of retentions outstanding in the UK construction industry at any one time, according to the Specialist Engineering Contractors’ Group – something that impacts both the private and public sectors. The issue was highlighted when it transpired that thousands of subcontractors are still owed retention payments following the collapse of Carillion in January 2018. The problem goes much wider though; over a three-year period the industry has lost £700 million worth of retention monies because of upstream insolvencies, according to Labour’s front-bench business team. Reform of retentions in construction contracts has been campaigned for over many years and the Construction (Retention Deposit Schemes) Bill, introduced as a private members’ bill, had its first reading in the House of Commons on 9 January 2018. If it succeeds, there will be a statutory obligation on any party withholding cash retentions to place them in a retention deposit scheme. EFFICIENCY DRIVE It is estimated by the Department for Business, Innovation & Skills that 30 per cent of the construction process is rework, 60 per cent of the labour effort is wasted and 10 per cent of loss is due to squandered materials. The Scottish government has published a Scottish Procurement Policy Note 1/17 on the Implementation of Building Information Modelling (BIM) within Construction Projects, setting out how BIM should be adopted within public sector procurement. Electrical contractors are at the forefront of achieving greater environmental awareness. Those already familiar with renewable technologies such as solar photovoltaic and ground source heat pumps are most likely to gain commercial benefit.
£140M: THE ADDITIONAL INVESTMENT IN HOUSING ANNOUNCED BY THE SCOTTISH GOVERNMENT IN 2017
£4BN: THE ESTIMATED ANNUAL SCOTTISH PUBLIC SECTOR CONSTRUCTION EXPENDITURE
SUPPLY AND DEMAND The Scottish construction industry is facing a skills shortage, as more than 36,000 new workers a year will be needed to cover current demand, according to the Construction Industry Training Board (CITB). As a result, wages are rising sharply for those with the requisite skills but, combined with an increase in the cost of materials, this is having a negative impact on construction companies. Furthermore, CITB figures suggest 45 per cent of the UK’s 270,653 migrant construction workers are from EU countries, so Brexit could have a significant impact upon available labour and cause greater pressure in terms of skills shortages. The good news is that construction apprenticeship starts are at a record high, with numbers increasing from 19,973 in 2014 to 24,899 in 2016, according to the CITB. In Scotland, numbers are rising too; construction accounted for 25 per cent of starts in the government’s Modern Apprenticeships programme up to the end of the third quarter of 2017.
‘Brexit could have a significant impact upon available labour and cause greater pressure in terms of skills shortages’
Rob Shepherd is a freelance business journalist who specialises in the building services industry
LOOKING FORWARD The financial crisis of 2007-08, the collapse of Carillion, the Scottish independence movement and uncertainty over the final Brexit deal all continue to have an effect. However, with the Scottish government reiterating its commitment to developing the country’s infrastructure, solving the housing crisis and reducing carbon emissions, the construction industry’s role in boosting Scotland’s economy is vital. This is a summary of a white paper produced by NICEIC, looking at business trends in the Scottish construction sector. To access a free copy of the full version, visit www.niceic.com/contractor/ for-contractors/scotland
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