Prepare for uncertain times
Figures from the latest Electrical Contractor’s Association’s Member Business Trends Survey indicate that the UK construction industry is preparing for a challenging time over the next one to two years.
The most significant change, highlighted in the survey, is a lowering in confidence, with just under a quarter (24%) of ECA members expecting to see revenue growth over the next 12 months compared to almost 40% last year.
Uncertainty in respect of the next 12 months is greater amongst small and medium sized firms than larger firms. This possibly reflects their respective order books. For the first quarter of 2008 the proportion of members reporting a decrease in turnover increased relative to the last quarter of 2007 with a third of members (33% ) expecting to see a reduction in revenue over the next 12 months.
Commercial building is forecast to drop by 14% over 2008-2010, representing a fall of £3.3 billion in the value of output. With these facts in mind, the ECA advises that now may be the time for companies to diversify into specialist areas in order to widen opportunities.
David Pollock, ECA Group CEO comments: “Despite these difficult times there are still many areas within our industry where businesses can grow and prosper. New technologies are emerging at an increasing rate and the demand for intelligent solutions provides firms working within our industry with substantial opportunities. Diversifying into specialist areas could ultimately widen the scope for work and offer better prospects.”
The survey showed a major cause for dissatisfaction for companies dealing in sub-sub contracting work was payment. A mere quarter (24%) of those who completed sub-sub contracting work received all payment before the Final Date for Payment. Other areas of concern were obscurity in the initial documents and failure to collect interest on late payments.
David Pollock continues: “As the UK business climate changes we are urging ECA members to look at costs within their business plans and to keep an eye on cash flow. Firms need to proactively make sure that money is paid on time to prevent running into financial difficulty. It may be a bumpy road ahead but businesses need to bed down now for the long haul. Think about expanding into new areas of work and consider whether your business is vulnerable to making a loss on that job you have just been asked to tender for.”