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Building confidence in construction? A 2024 analysis.





As we enter 2024, the UK construction industry is going through changes influenced by various challenges and opportunities. The Brexit and devastation Grenfell Tower Fire aftermath, along with ongoing global and economic changes, has influenced the construction sector in the UK. The construction sector can expect a better output this year following a decline in output in 2023 with the industry this coming year predicted to increase by 1.1%. Although not reaching the output levels of 2022, it signifies a positive shift for the upcoming year. In this blog, we'll take a closer look at what's happening in the UK construction industry in 2024, checking out sector growth, innovative trends and challenges in construction.

 

The highest growth sector predicted:

Investment in Education

The education sector is predicted to be the highest for growth rate this year, this is due to the Department of Education's plan to reconstruct hundreds of schools over the next decade. This comprehensive plan involves the refurbishment of over 800 academies, colleges and more.

This funding is expected to benefit not only the education trusts nationwide but also contribute to the growth of the construction industry in the coming year.


Growth Across Various Sectors:

Although education is predicted to have the largest growth rate, reports suggest that the construction industry in 2024 will experience gradual and modest growth across multiple sectors. From a 3.8% per annum real-term growth rate in NHS funding to improved market conditions in the social housing sector, numerous opportunities are expected to open up for construction firms in the coming year.


There are a variety of innovative trends that can be seen in 2024 

Social and technological innovations are predicted to be leading the construction growth. Below is what we can expect over the coming year:


1.     Rise in CMS Adoption- Cloud-based Construction Management Software (CMS) is gaining attention, enabling construction teams to oversee project planning, scheduling, communications, and documentation from a unified platform. The surge in CMS usage is driven by increased efficiency, reduced downtime, and better staff satisfaction. Predictions suggest large growth in the usage of this software throughout 2024 and beyond, with a projected global market value of nearly £20 billion by 2028.


2.     Prioritizing Sustainability- In 2024, the UK construction industry is shifting towards sustainability. Industry leaders are predicted to adopt advanced technologies and sustainable practices that will fundamentally reshape the sector. This transformation is likely driven by the government's commitment to achieving Net Zero by 2050. 


3.     Rise in 3D Printing Usage- Another construction trend in 2024 to look out for is the increased utilisation of 3D printing. The introduction of the UK's first on-site 3D reinforced concrete printer is set to bring about environmental cost savings and community benefits for the country's construction sector. While the UK has traditionally made progress in this area, the widespread adoption of 3D printing in construction will be advantageous in 2024.

 

However, there are three main challenges facing the UK construction industry in 2024:


1.     Shortage of Workers: The construction industry is struggling with a shortage of skilled workers, mainly due to the impact of Brexit. Beforehand, the industry heavily relied on the skilled workers from the European Union, but now there's a significant reduction in this crucial labour pool. Adding to the challenge is an ageing workforce, with many experienced tradespeople nearing retirement and an insufficient number of younger workers to fill their roles. To tackle this issue, the government added five construction occupations to the Shortage Occupation List (SOL) last year, but the effectiveness of this remains unclear.


2.     Housing Market Slowdown: Despite a lack of policies to boost capital investment, the UK economy has managed to avoid a recession. In Q3 of 2023, the GDP grew by 0.6%, and construction output increased by 0.1% compared to the same period the previous year. With inflation at 5.1%, and high interest rates at 5.25%, there's a noticeable negative impact on industry demand. Rising interest rates, have led to the highest credit-related warnings since 2008, particularly affecting the housing sector, which is experiencing a downturn not seen since the global financial crisis. ONS data revealed a 2.8% decrease (£260 million) in new private housing work in Q3 2023 and a 13.4% drop compared to the same period in 2022. 


3.     Building Safety Reforms: The construction building safety regulations in England and Wales were adjusted in the previous year. After the devastation of the Grenfell Tower fire in 2017, regulations are becoming tighter to avoid another tragedy. In October 2023, the significant changes introduced by the Building Safety Act 2022 came into effect, focusing on the design, construction, and oversight of "high-risk" buildings. However, this is just the beginning, with additional changes including the reform of the building control system are expected to be implemented later this year. On April 6, 2024, approved inspectors must apply to register with the Building Safety Regulator (BSR) to continue working as a registered building control approver (RBCA). Other changes include transparency (requiring building owners to share information regarding the safety of the building and all safety measures in place) and accountability (holding those accountable for non-compliant high rise buildings). Whilst this will positively affect the safety of consumers, it may prolong the duration of the construction project itself due to the tighter regulations with new mandatory reporting and registration requirements; concerns have been raised due to the shortage of building-control inspectors leading to an increase in costs for the construction company.

 

If you’re looking for a compliant FCSA accredited payroll provider to pay your construction workers, call our sales team on 01305 233170 to find out more.


Thanks to Anya Marsh, Business Development Manager, for writing this article.

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