Future Growth of the Construction Sector

Future Growth of the Construction Sector

Future Growth of the Construction Sector

Project Ireland 2040 finally arrived to great fanfare in Sligo on the 20th of February 2018.

It is a very ambitious plan totaling €116 billion which re-imagines and prepares Ireland for the future. The publication covers major areas such as housing, infrastructure, health & education and environmental issues. Also technology, culture & heritage and finally Ireland’s security. The plan hopes to put certainty into a range of markets well into the future not least the Construction Sector.

But back to the present and 2018 is looking very positive with Aecom predicting construction growth of 14%. This equates to €19.5 billion of construction projects. While this is positive continued growth, which started around 2015, it is not without its concerns. Labour being one issue. Increased cost of construction from other areas such as materials, financing, rising interest rates and utilities being another. They all culminate in an overall escalation in pricing, says Colm McGrath, MD, Surety Bonds.

Labour shortages on the horizon

How is construction going to maintain momentum when labour shortages start to kick in? The apprenticeship figures are startling and should be a cause for concern for future growth. Bricklayers and Stonemasons apprentice registrations in 2017 was 40, now a total of 127 are in training. For plumbers it was 224 bringing it to a total of 1,272 in training. Painting and decorating is at 85. Who could blame the youth of today for not wanting to go into apprenticeships? Particularly when many would have seen or heard about the plane loads of construction sector workers emigrating during the downturn with many never to return after setting up new lives abroad.

To rectify and future-proof some of these issues, the industry is going to have to speed up the pace of innovation.

The World Economic Forum issued a working paper in May 2016 titled ‘Shaping the Future of Construction. A Breakthrough in Mindset and Technology’. It was written in collaboration with The Boston Consulting Group. It also has input from some of the largest and most influential global engineering, construction & technology companies. The industry’s present state is also described & relevant global trends and their impact on the industry are assessed. It also devises an industry-transformation framework with key areas for development and action. All in all it is a hefty read.

In recent years, we have already seen many contractors take up one such technological innovation; Building Information Modelling (BIM). The BIM technology;

  • improves productivity
  • reduces project delays
  • enhances the quality of buildings
  • improves safety, working conditions and environmental compatibility.

It is suffice to say that BIM has become so important that many tenders now require contractors and sub-contractors to be able to support and work with this technology.

The Construction Sector – A vital sector requiring strategic overhaul

The construction sector is vital to the Irish economy not just for employment or that it contributes c. 7% to our GDP and rising. But also for the fact that Ireland cannot grow without the success of this industry as it provide the office space we work in, the housing space we live in and the infrastructure we travel on. Major change is required if the building industry is to deliver at a faster pace to keep up with the growing needs of the population.

The strategy change needs to be around technology, materials, tools, processes and operations.

The construction industry could receive a substantial boost from one such recent innovation in productivity; standardisation, modularisation and prefabrication. A prime example in the commercial sector is Broad Group China. In cooperation with Arcelor Mittal, they are using a system of modular building components that enables very speedy construction. For example, they completed a 57-storey building in only 19 days by moving 90% of the construction work to the factory. This could be mirrored at the housing level.

In conclusion it is imperative that stakeholders along the value chain; individual companies, the industry as a whole and the Government take action to move the industry forward. The Government, as a key project owner should create a fertile environment for the transformation of the building sector. The Department of Housing could push designers and contractors for more modularised houses for social housing schemes in order to meet the 47,000 required to meet current needs. With the role of construction technology growing so rapidly companies that do not invest in the right tools risk being left behind. Construction companies that invest in newer technologies now will most likely be the industry leaders in the next 10 to 15 years. That is, if they match their greater investment in technology with a company-wide commitment to change.

Surety Bonds and the role we play

Surety Bonds is Ireland’s only specialist surety & bonds intermediary. The company was set up in 2012 to specialise solely in bonding. to introduce new markets for clients and to become a leading authority in bonding in Ireland. As surety specialists we represent a large selection of sureties (insurance companies who provide bonds). The real benefit to the client is that they have access to them all. We help to fit our client and the needs of their principal with the right surety provider. Call Surety Bonds to discuss & assess your requirements: 071 9623228 or email bonds@suretybonds.ie

Article prepared by: Colm McGrath, MD, Surety Bonds