Subcontractors have 30% less work in the pipeline compared with 2018, according to your research. What needs to change for subcontractors to reach their full economic potential?
Many subcontractors and small building firms expect wages and salaries to increase in line with the rise in the price of materials. This is bad news as construction projects, large and small, become more expensive to deliver as a result.
Cash is becoming tighter at a time when the number of funders prepared to support the industry has reduced. Continued access to funding, especially for larger projects, is essential if subcontractors want to compete for the more lucrative jobs.
The number of people starting construction apprenticeships almost halved in March 2019. What can be done to reverse this trend?
Taking on an apprentice is a significant investment for employers, and we are aware that the Construction Industry Training Board has recently introduced an uplift of over 30% on the grants available. However, while that is great news, further investment and support is required to close the skills gap in the industry.
The Federation of Master Builders blamed Brexit uncertainty for a fall in construction output. Is this the main reason?
Uncertainty has led to an exodus of skilled EU operatives at all levels, which has exacerbated the existing industry skill shortage and introduced a significant hike in wage inflation. The most recent industry forecasts predict significant tender price rises. These issues — together with the wider macro effects — have introduced a cautious approach to property development by both the tier 1 funders and the developers.
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How have you been able to overcome the challenges in lending to the construction sector?
We’ve been supporting subcontractors through our specialist finance division for over 15 years and, as a result, we have a much better understanding of the sector and its specialisms than most.
Construction contracts can be quite complex and so it’s important our clients properly understand the challenges each contract presents and the impact on them if something should go wrong. We have partnered with several specialists who support our processes and offer support to the businesses we fund with contract law.
What one thing would you like to change about the property development industry?
Industry bodies should be setting an example by improving the often applied and highly onerous amendments to the Standard Building Contracts by both the employer and the main contractor.
Contracts often pass all the risk on to subcontractors. This is a particular problem in terms of both the payment and termination provisions, the latter in the event of insolvency of the main contractor and/or subcontractor.
How did you get into the industry?
I had always worked in the finance sector, but when I was made redundant in 1997, I applied for a role in the industry. I was successful and haven’t looked back since. I love what I do and feel a great sense of achievement when I see what a difference we make to our clients.
If you weren’t in the industry, what would you be doing?
I would be working in some area of finance, but it would never be as rewarding as this role is.