Return Of The Boom Or Back To Normal

According to Michael Conroy Harris, a construction expert at law firm Eversheds, the latest construction output figures suggest that the UK market is stabilising at its true size. And, he claims, this isn’t necessarily a bad thing.

We’re all fascinated by reviewing the most recent construction output figures on a monthly basis, trying to figure out what they mean in terms of the overall health of the construction industry. Last week’s ONS figures for May revealed flat growth compared to April, providing ample evidence of this happening.

Typically, we look back and compare to the industry’s highs prior to the credit crunch. However, this runs the risk of us always looking at a fixed point that was quite exceptional, giving us a distorted view of where we are and, more importantly, where we are headed as an industry.

Bill Gates put it succinctly: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” How accurate is that for us?

In 2003, the construction sector’s GVA was £88 billion, or 7.2 percent of the total economy. According to government data published in the House of Commons Library, it was £89.5 billion in 2011, or 6.7 percent of the total economy. It would be incorrect to say that the data indicates that there has been little change in the industry over the period because it has grown by more than 20% and then shrunk again.

So, what will the construction sector’s GVA be in 2023? Who can say? It could still be around £88 billion.

In my opinion, the industry was not a sustainable unit at its peak (measured in terms of output), and it has been adjusting to a sustainable size since then. The industry’s capacity has decreased due to obvious factors such as business failures and business restructuring, as well as sometimes less obvious factors such as improved efficiencies and, in fact, we need less anyway due to different ways of working and living.

Success stories in the industry will almost certainly be those that pioneer innovation, and there is little doubt that more of the industry will operate on a larger global stage. Production methods will result in more units being produced off-site and less labour being performed on-site. End users will expect streamlined procurement processes as well as cutting-edge approaches to things like BIM.

And, for that matter, what will they expect from construction lawyers like me? I expect clear, concise contracts and pragmatic approaches to dispute resolution to be used to settle disputes in a timely and cost-effective manner – because, while I expect the industry to be unrecognisable in another ten years, I still believe there will be some disputes.

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Last Updated on December 28, 2021

Indra-Gupta

Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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