Industry issues

Key issues facing companies in the UK engineering & construction sector include:

Public/private partnerships

PPP projects are an important source of construction and investment income for many of the largest construction companies, however, they can also be high risk. There is a time-lag between bidding for a project and receiving earnings. Project over-runs are common and can present a significant risk.

Read more: Partnering in practice: New approaches to PPP delivery

Fraud/ethics

A large proportion of engineering and construction companies report being the victim of serious economic crimes. While theft of assets might be regarded by some as an accepted risk of doing business, regulators are taking a hard line on companies who turn a blind eye to these activities. Companies should also be aware of the impact this can also have on their reputation and share price.

Risk management

Construction projects are high risk. They present enormous fiscal requirements and unusual logistical challenges for companies constructing new office buildings, plants or production facilities. Underestimating risk can lead to poor procurement strategy or the lack of skilled resources to actively manage the risk of project implementation may lead to poor decision-making.

Resolving disputes

The inherent and often unexpected risks on a new construction project present key challenges to engineering and construction companies. For example, if a project is delayed or disrupted, significant resources are engaged and management time consumed. The outcome can have serious consequences on corporate value.

Sustainability

Engineering and construction companies are demonstrating varied responses to the new range of pressures, expectations and drivers of developing a sustainable business strategy. The more forward-thinking companies are addressing the issues and actively engaging with their range of stakeholders to understand the risks and opportunities. However, most companies to date have only taken a compliance-driven approach, thus missing the wider opportunities sustainability presents.

Relationships with sub-contractors

Construction contractors are under constant pressure to improve margins, reduce costs and improve predictability. Developing long-term relationships with key strategic suppliers is a key part of delivering this strategy. This involves construction companies motivating their contractors to be pro-active, develop new approaches, solutions and work with them to reduce risk.