Monday, 29 December 2014

Reflections on 2014...

The Christmas break is alway a good time to reflect on the previous year and to see what progress we have made and what has changed in 12 months.

We entered the year with the recession still very much in everyone's minds. The market was cautious particularly in the regions. London remained largely unaffected with concerns around costs and resource being talked up.

2014 was a really tough year for tier one contractors with their cash positions being eroded, balance sheets weakened and margins challenged. To survive the recession some tier one contractors had taking on work at low margin only to find subcontract costs increasing. They were also more gun ho when it came to risk during recession only to find things unravel during construction.

A number of Chief Executives unfortunatley lost their jobs as shareholders looked for scapegoats.

During the keynote at BIM Show Live I mischievously suggested there was a revelution looming and that baby boomers should take note. This was all a bit of fun to stimulate discussion however in some ways this has become a reality. Some of these Chief Executives were undoubtedlybaby boomers and who paid for decisions made during recession. At the time I commented that these senior figures can't have all have made mistakes and we should look more at the culture of our industry to find long term answers.

Not only have there been job losses at a senior level there has been a move in attitude. Digital construction is increasingly accepted with clients want to see objective risk management tools.there has also been an increase in the linkages between construction, albeit small steps at this stage.

 Consultants are now adopting digital tools as a matter of course and main contractors are looking at how new technology effects their workflow.

Subcontractors have been effected by delayed payments throughout the year from tier one contractors which has, in some cases, prevented long term investment. Manufacturers are also considering their investments but remain cautious.

Yet again as our industry has moved back into growth the skills issue has risen its head. I've been in the industry for over 20 years now and this just keeps recurring. Not enough bricklayers...not enough bricks! The discussion raised momentum towards the back end of the year so hopefully this can build during 2015.

In the regional market fee levels remained very tight. This suggests that work has not reached the levels of pre recession and companies are still looking for revenue.

On balance 2014 was not a bad year for construction but neither was it great. There were no big winners but a few losers. It was a year of transition but fortunately the momentum is upward.

Here's to 2015...

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