Construction Industry KPIs UK Industry Performance Report 2018 - - PowerPoint PPT Presentation

Construction Industry KPIs – UK Industry Performance Report 2018

Presented by: Allan Wilén, Economics Director Date: 30th January 2019

About Glenigan

About Glenigan

Glenigan provides market intelligence on the UK construction industry. Glenigan uses a robust research process to deliver timely and comprehensive construction project, company and market intelligence: ▪ Database over 17 years totalling almost 10 million planning applications ▪ Planning application data collection from all 464 UK local authorities ▪ A dedicated team of over 100 expert web & telephone researchers ▪ 10,000 unique non-planning projects a year from industry contacts ▪ Expert analysis, detailed market interpretation, data-driven forecasts and bespoke analysis

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Market Conditions

▪ Private sector led recovery ▪ Costs have risen alongside improved volume ▪ Output growth, but weaker project starts in 2017 & 2018 ▪ Cost pressures expected to remain ▪ Brexit additional risk to labour and material availability ▪ Changing pattern of workload forecast

50 70 90 110 130 150 170

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e

Current Prices - Index 2006 = 100

Construction Activity

Output New Orders Underlying Project Starts New Work Output

Sources: ONS, Glenigan

Weak growth in UK economy hitting construction spending

Construction starts fall 6% last year and fall a further 2% in 2019 as…

▪ UK economy grows slowly ▪ Political uncertainty persists, deterring

investment

▪ Business investment decisions delayed ▪ Weaker consumer spending growth ▪ Cooling housing market ▪ Government finances under pressure ▪ Capital spending v front line services

0.0 0.5 1.0 1.5 2.0 2.5 3.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 GDP Annual Growth

Budget - October 2018 OBR - March 2016

Construction Output & Economic Growth

Improved Customer Satisfaction

Key indicator

▪ Drop from peak levels last year ▪ Client satisfaction KPIs on upward trend ▪ 87% rate satisfaction with finished product 8 out of 10 or better ▪ Year on year decline in satisfaction with service and value for money ▪ Improved satisfaction on defects ▪ Reduced contractor satisfaction with client, provision of information and payment

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% Proportion rating 8 out of ten or better

Product Service

Projects delivered on time & to budget

0% 10% 20% 30% 40% 50% 60% 70% 80% Proportion on time or better KPI results

Time Predictability

Design Construction Project N.B. KPI results relate to projects completed during previous year 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Proportion on budget or better KPI results

Cost Predictability

Design Construction Project N.B. KPI results relate to projects completed during previous year

Proportion of projects completed to budget

9

5% 62% 33%

Sample of completed new orders and their budget outcome

Projects under budget Projects completed on budget Projects exceeding budgets

Source: Office for National Statistics

Mixed environmental performance

10

50 100 150 200 250 2010 2011 2012 2013/14 2015 2016 2017 2018

Index 2010 = 100

Energy Use Mains Water Use Waste Commercial vehicle movements

Firms eager to replace staff

▪ Fewer staff leaving ▪ Increased staff turnover ▪ Firms keen to replace departing staff ▪ Small drop in skills base ▪ Increase in training days per employee

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2012 2013/14 2015 2016 2017 2018

Percentage of employees

Median % staff turnover Median % of employees who left employment

Health & Safety

12

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 100 200 300 400 500 600 700 800

Fatalities Rate Accident Rate

Accidents & Fatalities

Accidents Fatalities Source: HSE N.B. Break in accident rate series from 2012/13

▪ Long term improvement in accident rates ▪ Change to data collection in 2012/13 ▪ Stabilisation in accident rate in last 4 years

Industry Profitability Remains Under Pressure

▪ Margins remain under pressure ▪ Jump in productivity growth ▪ Volatile workload and structural changes over next two years ▪ Industry will face increase pressure on margins and capacity

• 5%

0% 5% 10% 15% 20% 2009 2010 2011 2012 2013/14 2015 2016 2017 2018 Median profitability

Profitability & Productivity

Profitability Productivity

Construction Output & Economic Growth

Construction Prospects

▪ Brexit uncertainty inhibiting investor and consumer confidence ▪ Slower UK economic growth ▪ Government has looked to private sector to lead the recovery

▪ Business investment hardest hit by Brexit ▪ Consumer confidence also vulnerable

▪ Weaker housing market growth ▪ Retail property facing structural change ▪ Office development pipeline vulnerable ▪ Industrial starts - manufacture caution v demand for logistics space ▪ Civil infrastructure potential growth area ▪ Construction back in recession – falls in project starts & output ▪ Longer term opportunities - adapting to post-Brexit environment

Allan Wilén Economics Director, Glenigan T: 0207 715 6433 E: allan.wilen@glenigan.com