SCSI / PwC Construction Survey 2018

Confidence in the Irish construction sector is increasing, with the growth in housing and infrastructure driving positive sentiment.

Positivity tempered by pragmatism

This sentiment is set to continue with the Government's commitment to capital investment in Project Ireland 2040, a €116 billion plan which aims to guide Ireland’s development over the next two decades.

However, it is clear that the lack of skilled people to fill key managerial and trades roles is stopping construction reaching its full potential. Planning and regulatory delays and the availability of finance are also creating challenges.

Of the 300 chartered surveyors polled this year, the overwhelming majority are positive about the year ahead. With Brexit set to arrive in those 12 months, the construction industry needs to rise to these challenges. If it does, it will reap the benefits that businesses relocating from the UK would deliver.

“A lot of skilled trades are not moving back to the residential market from the commercial market and this is leaving a shortfall.”

Dublin-based surveyor

Operating at full capacity?

There is a notable increase in general business activity from those canvassed for the survey. Both housing and private commercial construction are two of the sub-sectors seeing the greatest growth in activity.

With a severe housing crisis and infrastructure deficit in the Irish economy, the SCSI/PwC research suggests that those offering professional services to the construction industry have capacity to take on additional work. More than 20% of respondents said they had spare capacity in March 2018.

New technology, such as building information modelling, is an important factor in delivering more capacity in the marketplace.

Supporting the infrastructure strategy

The incremental increased activity in infrastructure construction indicates that Project Ireland 2040 may have the effect the Government plan for. Investing in physical infrastructure, including the construction of 500,000 new homes laid out in the strategy, should alleviate some of the issues the national economy is experiencing.

However, to deliver the Government's plan and see Irish construction firms achieving full capacity, it is important that there are enough talent and labour resources in place.

Project 2040 also envisages infrastructure development in terms of public transport, road networks and continued investment in our ports and airports, particularly in the post-Brexit environment.

Seeking the essential skills

The skills shortage across most construction related trades and professions is the single biggest obstacle holding back construction output, with eight out of ten respondents reporting constraints. Shortages are particularly acute for those looking for plasterers, carpenters, electricians, bricklayers and plumbers.

Despite attempts to address planning and regulation issues, over three-quarters reported that they continue to be a challenge. Over half of respondents still find it a challenge to raise finance, although this has eased since the last report.

Respondents indicated that cash flow, liquidity and delays in payments are issues for them. The survey results show an overall healthier position in terms of accessing finance. 

Facing Brexit with optimism

The SCSI/PwC Construction Market Monitor reveals an industry that is upbeat about the future. Nine out of ten (90%) respondents expect activity to increase in the year ahead, slightly more upbeat than in 2017.

While Brexit will likely bring many challenges, it also brings opportunities. In order for Ireland to realise any dividend from Brexit, it will be important that the economy and the national infrastructure can support any relocation of operations from the UK to Ireland.

However, Ireland will need to have the skills in place to secure this growth - the recent Central Bank report reveals that the number of people at work in the Irish construction sector is less than half of 2007 levels.

Contact us

Joanne Kelly

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6774

Niall Cogan

Director, PwC Ireland (Republic of)

Tel: +353 1 792 5478

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