Estimated Read Time: 3 mins 30 seconds
The construction sector has always played an important role in the UK economy, directly contributing approximately 6% of GDP and employing around 2.4 million people[i]. Plus, there’s the industry’s indirect impact on the economy. Without construction there would be no new hospitals, offices, factories and shops, all of which are needed if the UK is going to continue to attract investment.
The most recent economic indicators from the Office for National Statistics show that despite GDP falling 0.4% in April 2019, construction output was up 0.4% thanks to strong infrastructure growth[ii].
We take a closer look at some of the key challenges and opportunities facing the industry at the moment and how NIG can help the sector prepare for the future.
Skills and labour challenges
A shortage of skilled labour has been an issue for around a decade and the problem is likely to be exacerbated when Britain leaves the European Union, with over a third of companies currently employing workers from outside the UK[iii].
According to the Federation of Master Builders, there have been severe shortages of bricklayers and carpenters for some time, and now other key trades such as roofers and plumbers are experiencing shortages too.
Forward-looking companies have been taking steps to re-engage young people with the construction sector by highlighting new roles, particularly tech-focused ones, and opportunities for growth, as well as targeting women and minority groups who are underrepresented within the industry. Companies which aren’t proactive may find themselves struggling to recruit the talent they need in the future.
As the industry, and the types of contracts being awarded, continue to change, it may be that companies see their workforce shifting, as different mixes of skills are needed. NIG has a broad appetite catering for the majority of skilled trades in the sector.
The rise of technology
The role technology plays in the construction industry is set to change dramatically in the coming years. Big data analytics such as BIM are increasingly being used to help businesses forecast and take steps to futureproof, while digitisation is starting to eliminate time-consuming paper and manual processes. Smart machines and robotics are also becoming more common and help to boost productivity and accuracy while doing everything from brickwork to foundation laying.
As well as making the industry more time and cost efficient it’s hoped that increased use of technology will help make the sector more attractive to young people deciding what field to work in.
The benefits of embracing technology are clear, but businesses need to be prepared to make an initial investment, not just in kit, but in staff training.
Demand for housing
Housebuilding is, and looks set to remain, one of the biggest areas of growth for the construction industry, with 60% of the new construction contracts issued in May 2019 being for housing, worth a total of £3 billion[iv].
There are question marks over how the industry will keep pace with demand for new housing, with many companies looking to new methods such as modular construction to help deliver properties faster and in a more cost-effective manner. While this brings lots of benefits including a reduction in materials and time savings, as foundation work and construction work can occur simultaneously, it does have major implications for risk management and control. Underwriters need to be aware to offer adequate protection and price for the risk.
Planning for the future with NIG
There’s no denying that there’ll be some big changes for the construction sector in the coming years and while it’s impossible to predict exactly how the industry will be affected, companies can make sure they have the right insurance in place to protect themselves from the challenges that lie ahead.
Single project cover, which offers protection for a whole specific project, rather than relying on the individual policies of various sub-contractors, is becoming increasingly popular for large construction jobs. It gives the project owner full control and ensures that all liabilities and risks, however diverse, are covered.
In addition to annual combined liability inclusive of contract works, NIG also offers single project cover for a broad range of general contracting trades across both commercial and residential build and maintenance projects over any period.
For more information head to NIG.com to take a closer look at our policy features and benefits, or give your NIG sales contact a call