Construction Industry KPIs UK Industry Performance Report 2018 - PowerPoint PPT Presentation

Construction Industry KPIs – UK Industry Performance Report 2018 Presented by: Allan Wilén, Economics Director Date: 30 th January 2019

About Glenigan

About Glenigan Glenigan provides market intelligence on the UK construction industry. Glenigan uses a robust research process to deliver timely and comprehensive construction project, company and market intelligence: ▪ Database over 17 years totalling almost 10 million planning applications ▪ Planning application data collection from all 464 UK local authorities ▪ A dedicated team of over 100 expert web & telephone researchers ▪ 10,000 unique non-planning projects a year from industry contacts ▪ Expert analysis, detailed market interpretation, data-driven forecasts and bespoke analysis 3

Market Conditions Construction Activity ▪ Private sector led recovery 170 Output ▪ Costs have risen alongside New Orders improved volume Underlying Project Starts 150 New Work Output ▪ Output growth, but weaker project starts in 2017 & Current Prices - Index 2006 = 100 130 2018 ▪ Cost pressures expected to 110 remain ▪ Brexit additional risk to 90 labour and material availability 70 ▪ Changing pattern of workload forecast 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Sources: ONS, Glenigan

Weak growth in UK economy hitting construction spending Construction starts fall 6% last year 3.0 and fall a further 2% in 2019 as… ▪ UK economy grows slowly ▪ Political uncertainty persists, deterring 2.5 investment ▪ Business investment decisions delayed 2.0 ▪ Weaker consumer spending growth GDP Annual Growth ▪ Cooling housing market ▪ Government finances under pressure 1.5 ▪ Capital spending v front line services 1.0 0.5 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Budget - October 2018 OBR - March 2016

Construction Output & Economic Growth

Improved Customer Satisfaction Key indicator ▪ Drop from peak levels last year 95% ▪ Client satisfaction KPIs on upward 90% trend Proportion rating 8 out of ten or better 85% ▪ 87% rate satisfaction with finished 80% product 8 out of 10 or better ▪ Year on year decline in satisfaction 75% with service and value for money 70% ▪ Improved satisfaction on defects 65% ▪ Reduced contractor satisfaction with 60% client, provision of information and payment 55% 50% Product Service

Projects delivered on time & to budget Cost Predictability Time Predictability 90% 80% Design Construction Project Design Construction Project 80% 70% 70% Proportion on budget or better 60% Proportion on time or better 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% KPI results KPI results N.B. KPI results relate to projects completed during previous year N.B. KPI results relate to projects completed during previous year

Proportion of projects completed to budget Sample of completed new orders and their budget outcome 5% 33% Projects under budget Projects completed on budget Projects exceeding budgets 62% Source: Office for National Statistics 9

Mixed environmental performance 250 200 Index 2010 = 100 150 100 50 0 2010 2011 2012 2013/14 2015 2016 2017 2018 Energy Use Mains Water Use Waste Commercial vehicle movements 10

Firms eager to replace staff 10% ▪ Fewer staff leaving 9% ▪ Increased staff turnover 8% ▪ Firms keen to replace 7% Percentage of employees departing staff 6% ▪ Small drop in skills 5% base 4% ▪ Increase in training 3% days per employee 2% 1% 0% 2012 2013/14 2015 2016 2017 2018 Median % staff turnover Median % of employees who left employment

Health & Safety ▪ Long term Accidents & Fatalities 800 4.0 improvement in accident rates 700 3.5 ▪ Change to data 600 3.0 collection in 2012/13 500 2.5 Fatalities Rate Accident Rate ▪ Stabilisation in 400 2.0 accident rate in last 4 300 1.5 years 200 1.0 Accidents 100 0.5 Fatalities 0 0.0 Source: HSE N.B. Break in accident rate series from 2012/13 12

Industry Profitability Remains Under Pressure Profitability & Productivity ▪ Margins remain under 20% pressure Profitability Productivity ▪ Jump in productivity 15% growth ▪ Volatile workload and Median profitability 10% structural changes over next two years 5% ▪ Industry will face increase pressure on margins and capacity 0% 2009 2010 2011 2012 2013/14 2015 2016 2017 2018 -5%

Construction Output & Economic Growth

Construction Prospects ▪ Brexit uncertainty inhibiting investor and consumer confidence ▪ Slower UK economic growth ▪ Government has looked to private sector to lead the recovery ▪ Business investment hardest hit by Brexit ▪ Consumer confidence also vulnerable ▪ Weaker housing market growth ▪ Retail property facing structural change ▪ Office development pipeline vulnerable ▪ Industrial starts - manufacture caution v demand for logistics space ▪ Civil infrastructure potential growth area ▪ Construction back in recession – falls in project starts & output ▪ Longer term opportunities - adapting to post-Brexit environment

Allan Wilén Economics Director, Glenigan T: 0207 715 6433 E: allan.wilen@glenigan.com