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Contractors’ Corner


Weather disruption and the demise of Carillion has resulted in a mixed performance for the UK construction supply chain, according to the Construction Products Association’s Construction Trade Survey for 2018 Q1. The latest research found that although activity continued to increase for main contractors and SME builders, there was a smaller proportion of firms reporting a rise. Civil engineering firms reported a second consecutive fall in workloads, while heavy side product manufacturers’ sales, a leading indicator of structural and groundworks, fell for the first time in five years.


On the upside, more than one quarter of surveyed firms expected orders, enquiries and product sales for the year ahead to remain positive, but contractors reported that orders were concentrated in the housing and infrastructure sectors. Combined, these sectors account for over 35% of total construction output. Rebecca Larkin, senior economist at the CPA, said: “The industry’s run of growth was halted by a quarter that combined the liquidation of Carillion


and the snow disruption in February and March.


“Encouragingly, order books throughout the supply chain suggest activity will pick up again throughout the year. This appears to be driven by just two sectors, housing and infrastructure, which are reliant on a ‘steady state’ of government support. “Private sector house building continues to benefit from Help to Buy, housing associations are commencing activity under affordable homes funding programmes, and contract awards for major strategic infrastructure projects such as HS2 are lining up a pipeline of longer- term infrastructure activity.” Civil Engineering Contractors Association chief executive, Alasdair Reisner, said: “2018 has seen challenging market conditions in the UK’s infrastructure sector, where the aftershocks of the Carillion liquidation continue to be felt. “We believe there is more the Government can do to support the sector, by committing to projects outlined in the National Infrastructure Delivery Plan and continuing to develop this pipeline to secure


economic growth. At the same time, our members are reporting that they are expecting orders to turn into activity, as schemes come forward to market in the coming year.” Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “While the largest players are suffering, SMEs and regional contractors have reported increases in both workloads and enquiries. Figures show that clients could be splitting their risks away from just main contractors to regional contractors and SMEs.”


Public sector contracts should no longer be given to the lowest bidder but awarded to ‘social business’ companies that agree to share profits with staff and employ local workers, a leading businessman has said. Phillip Ullmann of Cordant Group, one of the country’s biggest recruitment firms, said that British business needs to fundamentally change its approach in response to growing public distrust.


In a paper published by the Social Market Foundation think-tank, Mr Ullmann said that the law should


be changed so that public service contracts are awarded on the basis of ‘social value’ and not just financial cost.


Company rules should also be overhauled to put executives under a legal duty to consider the interests of workers and local communities alongside those of shareholders. Mr Ullmann, who has capped his own pay and is setting up a ‘profit pool’ to share with his staff, said that only radical changes in the rules for companies and public procurement can address populist arguments that the market economy is “rigged”. Highlighting the collapse of Carillion Group, Mr Ullmann said that public sector contracts that appear to favour companies must be ditched. He said: “Flawed public procurement deals that leave taxpayers bearing all the risk are the best way anyone has yet devised to persuade voters that the modern economy really is a rigged game. New rules are overdue.


“Public services should be delivered by accountable social business that employ locally, share profits, and cap pay and dividends.”


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