The Society of Chartered Surveyors Ireland (SCSI) and PwC have released their 2019 Construction Market Monitor, with some interesting findings emerging. Representing the views of 250 members of the SCSI, the report looks at business confidence and priorities as well as a range of important areas for future development, which will drive the success of Ireland’s construction sector.
While more than half of the survey respondents reported that they are operating at full capacity and 60% have experienced increased workloads over the past year, activity levels for private commercial and private housing are reported to have moderated. This is in contrast with public housing and infrastructure, whereby increased activity levels are reported.
The above moderation is thought to be somewhat attributable to capacity constraints, with the attraction and retention of talent posing the largest challenge to the sector in terms of hampering growth, as also highlighted once again in Linesight’s Knowledge Center 2019 report. For example, shortages of plumbers, carpenters, bricklayers and quantity surveyors were reported by over 80% of respondents, while over 60% cannot get enough electricians and civil engineers. A sustainable solution to bridge the skills gap has yet to be found, but industry stakeholders and Government have a role to play in ensuring that specific training is provided and invested in, to ensure capacity is expanded to a point that the ambitious development plans that exist can be delivered.
As referenced in the Linesight Knowledge Center 2019, tender price inflation also poses a concern for the industry, with this compounded by a claim by unions for a 12% wage hike over three years, to be factored into tendering costs. Cash flow and raising finance remain a challenge for a significant proportion of respondents, and a PwC 2019 international survey indicated that construction underperforms with regards to working capital benchmarks when compared to other sectors. For example, debtor and creditor days were found to be significantly longer than many other industries, at 83 and 70 days respectively.
Although the Brexit deadline has been postponed, 31% of survey respondents indicated that their organizations were not ‘Brexit ready’, while 60% were just ‘somewhat prepared’. Although it has already led to some opportunities for Ireland, in terms of associated jobs.
Overall, the outlook is positive but cautious, it is almost universally recognized that the industry is operating below capacity, hampered by the skills shortage, and impacted by tender price inflation, finance and cash flow challenges, and of course, uncertainty arising from the prolonged Brexit process.