November 26, 2021

Construction industry faces challenges beyond supply issues in post-Covid recovery

  • 51% and 44% in Construction are suffering the impact of material and labour shortages, respectively, dampening growth
  • Yet, 95% of UK SMEs with 4+ staff are set for growth and seeking new contracts despite these challenges, with 93% in the Construction industry
  • 2 in 5 UK SMEs within Construction (42%) have experienced situations where they were unable to tender

A recent survey1 undertaken by Alcumus SafeContractor highlights the challenges SMEs2 face in the post-Covid recovery, particularly in the construction industry, in light of material and labour shortages the UK is dealing with.

The survey assessed priorities for the near future for many smaller businesses in the wake of the pandemic. Whilst smaller SMEs are focused on the challenge of customer retention, larger firms within the SME segment are looking more to recovery from the impact of Covid and future business growth for the next 12 months that lie ahead:

The current supply chain disruption faced by UK companies is hitting the construction industry particularly hard. While the biggest challenge at present, impacting on all business sizes, is the availability of materials and labour, in the construction industry this was more prominent than in any other sector. Over half cited the shortage of materials as a problem area (51%), and two in five (44%) raised labour supply as a major issue.

This matters particularly with a view to recovery and growth as most businesses are looking to gain some new business contracts in the next 12 months.

What adds to this is that a very high proportion of construction businesses themselves said that working for other construction companies is a key area for them (80%) which causes issues for the primary buisnesses in the sector and the supply chain.

Gemma Archibald, COO for SME at Alcumus said: “The UK is feeling the implications of Brexit and Covid at a time when many SMEs are looking for growth opportunities. And the unfolding energy crisis will further add to the challenges the sector faces. As an industry that sits at the heart of the value chain and acts interdependently with many other areas of business, we must find resources for the sector to return to growth and flourish. Once this crisis is overcome, the challenge that follows for many companies will be the ability to enter and win new business tenders to return to growth.”

Tenders are viewed as the primary conduit to winning new contracts by UK SMEs, and the significance of tenders increases with business size. Yet, 2 in 5 (42%) businesses within Construction have encountered situations where they were unable to tender for a contract they thought was suitable because they do not meet pre-qualification criteria.

Gemma Archibald continues: “Accreditation to showcase companies adhere to highest industry standards can be the starting point for expansion and the post-Covid recovery for many firms, including those in the construction industry. At Alcumus we help SMEs of all sizes ensure standards are met, paving the way for the growth journey that hopefully lies ahead for many companies.”