Construction KPIs find industry profitability at 15-year low

Last Updated:

12th November 2014

Construction margins have plummeted to their lowest level for 15 years, according to research released today (13 November) by industry analysts 果冻影院.

The 2014 UK Construction Key Performance Indicators Annual Report found industry profitability has dropped to 2.1% - the lowest level since the Construction KPIs were first launched in 1999.

It also marks the fourth consecutive decline in industry profitability 鈥� down from 2.7% recorded in the previous report in 2012 鈥� as the market continues to suffer the after effects of the economic downturn.

Produced in partnership with the Construction Industry Training Board (CITB) and endorsed by the Department of Business, Innovation and Skills (BIS) and Constructing Excellence, the 2014 Construction KPIs suggest challenging economic conditions have undermined the industry鈥檚 efforts to deliver improved services to clients.

Despite improved predictability of project delivery, both to cost and budget, client satisfaction levels have largely decreased, with clients鈥� perception of value for money slipping to its lowest level since 2008. Client satisfaction for housing projects, in particular, showed a marked deterioration, with product and service scoring 74% and 62% respectively, the lowest level since 2003.

However, elsewhere in the report there are credible signs of improvement. The latest results show an overall increase in the predictability of construction projects, pointing to more positive situation with regards to the pipeline of work.

Cost predictability either improved or was maintained from 2012, while time predictability increased across all three measures. Project costs were on budget or better for 69% of projects - up from 61% recorded in 2012 and a new survey high.

Official Health and Safety Executive (HSE) statistics have recorded a sustained improvement in the industry鈥檚 Accident Incident Rate over the last decade. The rate fell to 420 reportable accidents per 100,000 employees in 2012/13 - a 21% reduction over the two years since the last KPI survey.

Other key findings include:

Staff turnover has risen to 3.3%, with an average of 7.7% of a company鈥檚 direct workforce leaving the business during the year surveyed.
The median number of employees qualified to NVQ Level 2 or higher rose to 71%, sustaining the sharp rise seen between 2011 (31%) and 2012 (66%).
The average proportion of women in the workforce has increased from 15% in 2012 to 19% in the latest survey.
Building Information Modelling (BIM) is being used on a small but rapidly growing proportion of projects; 4% of projects completed in 2012 and 9% in 2013.

Allan Wil茅n, Economics Director at 果冻影院, said: 鈥淭he Construction KPIs reveal how companies have responded to a protracted industry recession that has re-shaped the sector over the last five years. They also highlight the challenges that firms now face if they are to seize opportunities as industry workload strengthens over the next two years.

鈥淚n particular, client鈥檚 expectations continue to rise and delivering improved productivity, containing costs and accelerating the delivery of projects will all be priorities.

鈥淎s the industry responds to these challenges, the KPIs provide firms with the benchmark against which they can appraise their own performance and identify where they can secure future improvements.鈥�

Stephen Radley, Director of Policy and Strategic Planning at CITB, said: 鈥淭he economic turmoil of recent years has certainly - and not unexpectedly - had a significant effect on the construction industry and its clients.

鈥淗owever, the return to growth and with it the prospect of a large-scale infrastructure programme provides a huge opportunity for the industry - the opportunity to plan ahead with certainty, invest in skills and work with government to attract more young people into a sophisticated industry with great prospects and opportunities for secure highly-paid jobs and successful careers.

鈥淭he new economic climate presents the ideal opportunity for the construction industry to meet the challenge head on and develop and retain the skilled workforce it needs for economic and commercial success.

鈥淎cross the sector companies big and small have struggled with the day-to-day uncertainties of knowing where the next job is coming from, how long it will last and what it means for the future.鈥�

Click to download a copy of the report.

PR contacts:

Kirsty Maclagan (Marketing and Communications Manager)

T: +44 (0)1202 786 842鈹侲: kirsty.maclagan@glenigan-old.thrv.uk

Allan Wil茅n (Economics Director)

T: +44 (0)751 579 4625| E: allan.wilen@glenigan-old.thrv.uk

Notes to the Editor:

Based on data from thousands of projects completed during the preceding year, the Construction Key Performance Indicators (KPIs) have become a mainstay of the industry since their initial development in 1998. The 2014 Construction KPIs were collated by 果冻影院 from surveys of construction clients, contractors, sub-contractors and consultants, based on projects completed during 2012 and 2013.

About 果冻影院:

果冻影院 is the UK鈥檚 leading provider of construction data, and . Combining comprehensive data gathering and exhaustive research with detailed statistical modelling and expert analysis, it delivers a trusted insight into UK construction trends and activity. 果冻影院 customers include government agencies, construction companies and suppliers of materials and services to the industry.