UK construction sector looks back on turbulent 2023

According to the Office for National Statistics, there has been modest growth in construction output over the past calendar year – just over 2%. But on interrogation, this figure reflects steady levels of maintenance and repair work, rather than new projects – new work fell by 1.9% overall, up to a 13.2% drop in the residential construction subsector, while repair and maintenance work rose by 10.2%. In fact, there has actually been a lot of talk about recession this year, mirrored in many other parts of the international market.

Part of the reason for this probably lies in the fact that project participants are still struggling to shake off the long-term effects of the past: the pandemic and Brexit in particular; as well as the ongoing impact of the war in Ukraine. These appear in the obvious inflationary pressures, particularly energy and product costs affecting projects.

Perhaps in some areas there are deficiencies in industry knowledge on this front, given the relative lack of experiences for many of living in inflationary times. The industry is still finding its feet in how best to deal with price change: employers, contractors and supply chain are playing catch up in how to factor this into the way projects are planned and delivered.

2023 has also contained more than its fair share of unwelcome surprises and lack of forward movement in terms of long term-planning. There is still a yawning gulf between infrastructure needs and the ability of procurers to deliver new projects. In the UK, the cancellation of HS2 north of Birmingham has rightly been seen as a missed opportunity with concerns over what will replace the project. The government’s NHS hospitals programme is also missing in action.

The year has also brought about some major changes in the industry.  And it is here that there is some cause for positivity! A Pinsent Masons survey from the start of the year illustrated that most – if not all – stakeholders fully understand the significance of the effects that they may have on achieving decarbonisation. New Engineering Contract (NEC) is to be commended for introducing specific drafting to help address this – the clauses considered last year are now starting to be implemented on real world projects and procurements.  There are also signs that – at last – there are steps being taken to accelerate the rate of progress for major planning processes.

Despite some nitpicking, there remains widespread acceptance by many - although not all - that a collaborative approach to contracting is seen as important in delivering successful project, and societal, outcomes. Many contractors are simply moving out of markets where risk and reward do not tally. In this season of goodwill, that may be something for us all to reflect upon.