26 September 2011, LONDON – With the UK economic environment leading many clients to reduce construction activity, the country’s leading contracting organisations have had to re-think their strategies and priorities as competition for new work increases, according to research by global construction consultants Davis Langdon, an AECOM company. In ‘Review of Contracting Supply Chain’, Davis Langdon surveyed more than 70 of the UK’s leading contracting organisations to capture their insights into the current state of the construction industry including their strategy, turnover, tendering activity, capacity and which clients they are targeting.
Davis Langdon’s unique survey found that over 50 per cent of all tendering activity concentrated on the greater London area with a particular focus on the commercial office and residential markets. In addition, more than 70 per cent believe that refurbishment, rather than new build, is currently driving the construction industry.
According to Iain Parker, Davis Langdon’s Head of Offices, “There is an increasing emphasis on London and the south east, with contractors targeting office developers known to have large corporate portfolios, even for contractors that have not traditionally been active in these markets. Some clients are taking price advantage of the current market conditions by often increasing the number of tenderers, which is having the effect of making the industry think that there is more work than there actually is.”
In addition, Davis Langdon found that while virtually every organisation anticipated steady growth in turnover over the next three years, the actual level of secured turnover was very low and virtually nil in 2014.
Mr. Parker commented, “While almost all respondents were bullish in their projections for growth through 2014, it is also clear that the construction industry remains in a fragile position. With the majority of contractors maintaining their current capacity, the difficult scenario of either increasing their workload or shrinking their business lies ahead if they are unable to meet their turnover expectations. Although the empty order books create a good level of choice for small to medium sized projects, clients would be keen to see new market entrants for larger schemes, and there is evidence of some contractors wanting to step up their capability, along with medium sized contractors having an intent to form joint venture arrangements to break into the top tier”.
To read the full supply chain survey summary report, please visit www.davislangdon.com/eme/supplychainsurvey.
