The Top 7 Challenges Faced by The UK Construction Industry

The UK Construction Industry

The construction industry which provides a plethora of services, products and technologies is an integral and indispensable part of the UK economy. Recent forecast estimates expect a growth rate of over 70% for the construction sector by the year 2025.

As it is already one of the largest industrial sectors in the UK, the construction sector has added nearly £90 billion to the treasury while also constituting 10% of the overall employment figures.

However, like all other important industrial sectors, small construction firms in the UK deal with their fair share of challenges. We have listed some of the important ones below:

Shortage of Skilled Labour

As this sector continues to experience steady growth, the demand for manual labour remains at an all time high despite the numerous technological advancements that have come into play over the past decade.

But, an ageing workforce coupled with an increased demand for manpower continues to provide steep hurdles to the construction industry as skilled labour remains in short supply. Additionally, most young britons don’t view a career in the construction industry as appealing or lucrative.

Therefore, the importance of creating more apprenticeship opportunities and improving current training programs cannot be overstated.

Increasing Raw Material Costs

Due to the speculative nature of home construction rates and fixed rate contracts, contractors have to bear the brunt in the event of any price changes. As we all know rates of land and raw materials can fluctuate rather rapidly.

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Sudden fluctuations in prices place small construction companies in an increasingly compromising position, as they are significantly affected by such variations from the commencement of the project to when it is completed.

Delayed Or Slow Payment Of Due Invoices

Its normal for small construction businesses to be hampered by cash flow problems, and the root cause of most of such issues can be traced back to inefficient invoice systems.

By setting up a progress based payment plan, it will become easier for you to firstly outline the different stages of the project and then ascertain when each stage of the project can be considered complete.

Without a regular stream of revenue, you will find that you are attaching a significant amount of your current resources to one aspect of the job, which will lead to cash flow problems. Securing construction finance can also help you to tide over your current cash flow issues.


It would be foolish to underestimate the importance of surplus capital, especially when you are looking to go after some of the more lucrative projects. Many small construction firms underrate the extent of funds they require to fulfill a project until they start receiving project progress payments.

Working capital is fundamental to ensuring a favourable outcome for any construction project, which means that construction firms should be mindful of taking the right decisions to ensure smooth cash flow within the organisation.

If you are undercapitalised right at the outset, you could end up fighting a losing battle to keep your business afloat.

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Inadequate Planning

A comprehensive business plan is an important prerequisite for the success of any small construction firm. Your business plan should cover all important aspects of your business including finances, marketing, sales and operations among many other important contributing factors.

This will help you evaluate how much capital and manpower you have, which will help you develop specific strategies without in any way underestimating or overestimating your capabilities. Mapping out the specifics of each project stage will help you track your progress accurately.

Inadequate Safety Training

Improper safety training is one the biggest problems plaguing the UK construction industry. Any increase in demand might force some companies to cut corners as they look to enhance their profitability levels.

Unfortunately safety training is one important aspect of the job that is usually deemed as expendable in any cost related cut. However, any such decision is fraught with risks and can in effect be counterproductive, especially if your firm has to then deal with hefty litigation or insurance bills.

Technology Adoption

Any firm that fails to keep up with the latest technological advancements of the industry risks extinction. Technology plays an integral role not only in your business’s daily operations, but will also increase your odds of bagging lucrative projects. Construction technology includes mobile, wearable, cloud-based solutions, estimating and IoT technology. Securing the extra capital required to make tech related investments can be especially tricky for small construction firms.

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