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Skills and payment concerns temper building services optimism

Survey compiling data from a range of trade bodies finds that challenges to ensure timely payment and sufficient skills across the industry risks undermining recent confidence around turnover

Reforming skills training and poor payment practices remain pressing concerns for the building services sector despite some optimism around the industry’s fortunes in 2019, new research has found.

A survey of hundreds of organisations working within the building services sector found a broad pattern of stable or increased turnover during the first quarter of this year, compared to the last three months of 2018. The findings were based on data from a range of UK-based trade bodies.

Of 442 responses received for the latest Building Engineering Business Survey, 75 per cent of businesses surveyed said their turnover was steady or has risen since the last quarter of 2018.

The latest findings compiled by BESA, the Electrical Contractors’ Association (ECA), SELECT and SNIPEF focused on the performance of their members from January 1 to April 30 this year.

The survey also looked ahead to predicted performance during the second quarter of 2019, resulting in 29 per cent of respondents expecting an increase in turnover during the period.

The survey also looked at the impact of payment performance for both public and private sector work.

81 per cent of respondents working in the commercial sector said that the average number of days to be paid for work was at least 31 days or more. In the public sector, 63 per cent of companies responding to the survey said the number of days they were waiting to receive pay was longer than 30 days.

Over the same survey period, 58 per cent of companies surveyed had between one to ten per cent of the turnover held in retentions during the first quarter.

These findings build on campaigning by organisations such as BESA and the ECA for legislation and stricter policies to mandate the use of project bank accounts and ringfenced retentions programmes.

The survey also indicated a continued rise in costs for businesses that had carried over from 2018. 73 per cent of respondents witnessing higher outgoings on materials for the first three months of the year, compared to the fourth quarter of 2018.

Over the same period, 58 per cent of the survey group faced higher labour costs.

Rob Driscoll, the ECA’s director of legal and commercial, noted the survey reflected a strong performance for the sector despite tighter margins for business.

He said, “The sector appears to be regaining confidence as we head into summer, but key cultural shifts that were identified after a challenging 2018, such as fairer payment practices, do not seem to be taking hold just yet and we have not seen out the uncertainty that the Brexit shadow may cast across the economy.”

David Frise, chief executive of BESA, also noted that the findings reflected an apparently more confident outlook within the building services sector. However, Mr Frise highlighted a vital need to address the issue of industry skills to ease high labour costs.

He added, “This illustrates the increasingly critical need to encourage young people into the industry via apprenticeships.”

SNIPEF chief executive Fiona Hodgson said the survey showed there were clear challenges yet to be addressed.

She said, “Poor payment practices will continue until the sector as a whole, along with government, takes action with meaningful change. Equally, the sector must focus on the recruitment of apprentices to address the skills gap and slow the increase in labour costs.”

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