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The future of construction: five threats revealed

Last week the government released details of a new industry report ‘Construction 2025’, a joint strategy which sets out how both industry and government will work together to put Britain at the forefront of global construction over the coming years. But what future threats could still be in store for UK construction firms and how difficult might we find achieving these government-envisioned ambitions to be in practice?

15th July 2013 published by


Future of construction - threats revealedThe construction sector is a fast-moving industry, and UK construction firms must face new challenges every year if they are to expand and experience widespread success. The new industry report ‘Construction 2025’, recently unveiled by the government, is a joint strategy which sets out how both industry and government will work together to put Britain at the forefront of global construction over the coming years. It forecasts a global construction industry growth rate of over 70% and an increase and improvement in innovation, sustainability, economic growth and leadership in years to come.

While the strategy outlines promising aspirations, the recession has represented a significant obstacle for UK firms over the past few years. Practical construction accounting software has helped many firms to overcome issues revealed by the economic crisis, but what future threats could still be in store for UK construction firms? How difficult might we find achieving these government-envisioned ambitions to be in practice?

1. Environmental issues

One of the four key measurable ambitions outlined in the Construction 2025 strategy and thus expected to be met by both government and industry is a 50% reduction in greenhouse gas emissions in the built environment. It is understandably difficult to work in an industry with a focus on changing horizons and landscapes without casting a thought to the environment. Sparked by the emerging fear of climate change two decades ago, construction has changed dramatically to better cater for environmental needs. From the initial conception and architecture of energy-recovery buildings through to the growing use of eco-friendly materials, these changes are likely to increase further in future, particularly as ever-dwindling supplies of non-renewable resources are likely to present compelling cost-and-supply arguments in favour of ‘greener’ alternatives.

2. Increased expenses

If there’s one thing we can be certain of happening in the future, it’s that inflation will continue to drive prices higher and higher. By 2025, however, it is hoped that there will be a 33% reduction in both the initial cost of construction and the whole life cost of assets. The changing shape of the financial sector may well have an impact on the availability of credit in the future, which could lead to an increased reliance on alternative lenders and cash reserves. As your company’s overheads are likely to increase over the years, with rent, wages and the cost of manufacturing materials conspiring to create significant expenses for your firm to overcome, accurate accounting and job costing is likely to prove crucial. The Construction 2025 strategy has targeted speed of delivery as an area with room for improvement within the construction sector. Should UK construction firms meet the government’s targets in years to come, they’re likely to experience a reduced average job cost as a welcome fringe benefit.

3. Population growth

Population expansion is an issue set to affect us all, not only those in the construction sector. Population growth will put increased strain on the world’s resources, with physical space representing one of the most precious resources on the planet. It’s up to architects and construction workers to figure out how to use urban spaces more efficiently and effectively, accommodating more and more people in comfort without depleting resources too drastically. Domestically, expanding populations and burgeoning economies overseas are likely to have a knock-on effect on Britain's construction industry, too. Britain has a globally-recognised aptitude for design, architecture and engineering, but according to the 2025 strategy report, we’re yet to exploit fully this asset through aggressive export. One of the key ambitions of the Construction 2025 strategy is improvement of export, so UK firms will be expected to better pursue trade in global markets in future.

4. Urban sprawl

While it’s important that we make the most of what little space we have available to us, we can’t do so at the expense of green spaces and our nation’s natural resources. Urban sprawl has been gradually encroaching upon the countryside, suburbs and rural orbital spaces surrounding our cities, but we can’t allow these resources to be subsumed entirely. It’s important that the construction industry is allowed to expand without rural Britain having to pay the price.

5. Compliance

Governments and lawmakers impose industry legislation for a reason, but it’s sometimes difficult to see past the red tape as a construction firm here in the UK. Industry legislation is a major driver for change in a number of different sectors. With safety engineering, H&S, employee rights and numerous other business management practices affected, construction companies can often find the red tape constrictive and counter-intuitive. From an accounting perspective, compliance in RTI and pension reforms have required major alterations to be made, and we fully expect the challenge of keeping pace and remaining compliant with government legislature to continue unabated in future.

While some of these issues may not materialise for years to come, many others are more than likely to cause imminent concern amongst construction firms here in the UK. In order to alleviate the stresses of threats such as compliance, increased expenses and reduced demand, as well as stick to the strategy put in place for 2025, accurate accounting is crucial. Integrity Software’s construction accounting software solutions can help construction firms to operate more efficiently and cost effectively than ever before, so contact us and see how we can help you prepare for the challenges of the future today.

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