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An overview of 2010

December 23rd, 2010

2010

It was the year we all knew was going to be bad. It was just a question of how bad. The key events everyone was waiting for, with bated breath, were the general election in May and George Osborne’s Comprehensive Spending Review in October

As we now know, both the election and the CSR have left the industry wounded and plenty of firms have buckled under the pressure, including major industry players Connaught and Rok. Still, some comfort can be taken from the fact that the industry itself is still alive and kicking – but with a lot to kick against. For those that survived the year, it has been a case of reassessing business plans, moving into emerging markets and adopting survival strategies.

From main contractors to architects, consultants and specialists, the ability to adapt has been a saving grace. Firms that didn’t put all their eggs in the public sector basket have best survived its collapse. For those that did, the latter half of 2010 could not have been much bleaker as the coalition government slashed public projects. The cancellation of the £55bn Building Schools for the Future programme in July piled on the pressure.

Firms that had spread their workload across public and private, or had already started to pursue work in emerging markets such as Brazil, India, North Africa and China, were in a far less precarious situation this year. But they too must prepare for a difficult 2011 as the rush to the private sector continues, increasing competition.

A survey of the top 15 contractors, consultants and architects in May showed that every firm was planning to reduce its public sector workload considerably over the next year to three years, replacing it with private sector projects. The question is how sustainable this is. While commercial and retail projects are finally showing signs of life, it is certainly not happening quickly enough, or in sufficient volumes, to support such a huge number of firms desperate for work.

2010 has also been the year of the client – particularly in the private sector where firms have been able to exact a lot more from their contractors and consultants. Hammerson’s Vinod Thakrar has admitted that getting contractors to take on the risk on a project is much easier these days – firms desperate for work will say yes to almost anything. Even so, private clients have also been one of the heroes of the year with lots of work in the pipeline for 2011 and beyond. Not only that, but the vast majority is yet to be sewn up and clients are looking for new supply chain members to deliver it. Some welcome good news.

Not that bad news ever went away. Towards the end of the year, Ireland’s economy came crashing down, bringing its construction market along with it, more redundancies were announced at major UK firms and construction work fell 22% in November as public work dried up.

A grim story indeed, leaving the industry in no doubt that 2010 was the year the public sector fairy tale came to a swift end. But it wasn’t all bad – which is why we have kicked off our review of the year with the heroes of 2010 – something a little more positive to ease you in.

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