Housebuilding is facing unprecedented times.
In the last 24 months, the industry has suffered from both COVID-19 and the repercussions of Brexit. The results have caused dramatic instability in your supply chains and the ability to source workers.
More recently, economic instability is having an impact on the day-to-day running of your business, too.
Rising costs, a falling pound and unstable markets are causing concern for your bottom line. Combined with the rocketing rate of oil and gas, materials are more expensive and harder to source than ever.
While it might seem like doom and gloom, there are ways to take the pressure off.
Working with suppliers that are focused on making your projects a success and addressing these challenges is the start.
This post has been written in order to not only highlight the challenges the sector is facing but also provide you with considerations that need to be made in order to take them on.
Challenge 1: Skill Shortages
The pool of workers in the construction sector is getting smaller.
A report by the Manpower Group states that “skill shortages have been a major issue in the construction industry for the last few years”.
With the highest proportion of workers aged between 45-54 years, there’s only a short amount of time before their skills and experience will need to be replaced.
After the Great Resignation, rising wages, high staff mobility and a general lack of skilled workers, it’s no surprise that 83% of businesses are feeling the added pressure of finding these skilled workers.
Construction News estimates that 2.78m construction workers will be needed by 2026, with a call from CITB Chief Exec Tim Balcon that the sector desperately needs to “attract and retain top-level talent”.
The demand for construction work is there, it’s just the workforce isn’t.
For your business, paying over the odds for staff isn’t a short-term solution. Instead, there’s a need to focus on specifying materials that can be installed at a low skill level or with ‘fit-first time’ commitment.
Challenge 2: Material Shortages
The availability of materials has a direct impact on your business's cash flow and getting paid on time.
From COVID, Brexit, The Ukrainian War and the shipping container crisis, there have been extended lead times on everyday materials.
It’s no surprise that in the last 12 months 78% of tradespeople have admitted they have struggled to source materials.
Home Building highlights that the shortages of timber, plaster, and steel since early 2021 have contributed to supply chain issues. But despite claims that availability has improved in 2022, there’s still a backlog which you’re experiencing first-hand.
Instead of sticking to international suppliers or those ‘household names’, look closer to home. Local suppliers have streamlined supply chains built on long-term relationships.
Working with these suppliers means that if problems do arise, they will be responsible for their own network.
Challenge 3: Cost Control
Inflation is expected to peak at 11% before remaining above 10% for a few months according to a recent report from the BBC.
While it’s affecting everyday essentials such as tea, sugar and pasta, it’s also being felt in the built environment with costs increasing on all materials.
The BCIS forecasts that by the end of 2022, costs will have increased by 17.6% year on year on top of the 11% rate of inflation.
These concerns are beginning to undermine business confidence, as access to finances becomes more and more restricted, your margin is slowly diminishing.
While no one is immune from uncontrollable costs, working with those partners who are finding means of managing their own help takes away the risk of cost increases on each project.
A ‘fit-first time commitment’ and flexible deliveries are two key factors to consider when cost control is of the utmost importance.
Challenge 4: Low Productivity
With the lack of skilled workers, it’s no surprise that productivity in the construction sector is below other UK industries such as manufacturing.
Beyond the workforce, itself is a general lack of productivity growth. With a marked deterioration in the last 50 years, a time for increased productivity in other sectors, there are significant gains to be made.
We’re entering a period many experts call ‘stagflation’ (a combination of stagnation and high inflation), and improving productivity and combating skill shortages is a technique tipped with addressing this issue.
Another is addressing manufacturing techniques themselves. With modular building and off-site manufacturing, a huge time saver, many suppliers are transitioning into this form of construction.
Marginal gains made here can have a significant improvement on your productivity and work with suppliers that focus on enabling you to maximise operational efficiencies on-site can help you address this.
Challenge 5: Quality Control
95% of new home buyers reported snags in their builds since moving in. That’s according to the latest NHBC customer satisfaction report.
Although minor, snagging can have a negative impact on overall customer satisfaction, damaging your reputation.
It has commercial repercussions, too.
The average snagging visit can cost in the region of £300 - £600. Multiplied across tens of homes on multiple developments, you can see the financial impact it can have on your business.
Warwick Estates recently reported that in 2021 new homebuyers reported 1.6m snagging issues costing UK Housebuilders, and associated trades, over £1.0bn off the bottom line.
Pressures from shorter build times, a lack of skilled trades and over-stretched project management teams diminish the quality and increase the chances of snagging.
Consider easy-to-install products, from suppliers dedicated to nothing but the highest quality. This commitment to high-quality workmanship and end results makes each project more successful for you, protecting your profits.
Challenge 6: Standing Out In A Crowded Market
The housing market is booming. With 205,000 new homes being built in 2022 alone, there’s little differentiation between them, making it harder to make your development stand out from others on the market.
Buyers want some form of personalisation as it provides a greater connection to their purchase.
In fact, Epsilon highlights that 80% of end users are more likely to purchase from brands that provide personalised experiences.
Whether it’s countertops, carpet or paint colour, homes are no different.
It’s important that the products you supply have a level of customisation, helping the buyer feel more engaged with the entire process.
This way, you can turn your stock over and move on to the next developments far quicker than selling the same homes with the same standard products inside.
Challenge 7: Sustainability In The Built Environment
The global pandemic has impacted how end users are approaching their everyday life.
It’s reported that 85% of consumers have now adopted a lifestyle choice with is considerably more sustainable.
When evidence also suggests that the same consumers are willing to pay 25% more for sustainable options, it makes sense to consider more sustainable products in your specification.
After all, there are potentially greater margins to be made if you do.
Considering your business's impact on the planet needs to be as crucial as its finances.
More suppliers are manufacturing products from sustainable sources, certified by recognised organisations. The sooner you start making these sustainable choices, the sooner you’ll meet sustainability goals.
Challenge 8: Reducing Carbon Levels
With the sector responsible for 38% of global energy-related carbon, it falls on individuals like you to begin creating the offset.
As the report by the World Green Building Council declares “the next decade of climate action is crucial.”
Globally there are calls for reduced carbon usage in all aspects of life. This is why the WGBC has committed to a Whole Life Carbon Vision and best practices.
By 2030, the commitment requires “New developments and major renovations are built to be highly efficient, powered by renewables, with a maximum reduction in embodied carbon and compensation of all residual upfront emissions.”
So, what can you do today to start cutting carbon?
Finding partners that are equally as committed to reducing carbon is key to meeting the 2030 commitment and finding greater success in your projects.
Whether it’s through the way products are manufactured on-site, to the efficiency of deliveries, those that are cutting carbon will put you ahead of the competition.
Challenge 9 – Profitability
There’s no denying that times are going to get tougher.
With inflation set to hit 11% later this year, it’s only 2% off of the inflation highs of the 2008 financial crisis.
Combined with the challenges outlined earlier, this creates unprecedented pressure on profitability.
Decisions on the partners you work with now can pave the way for a successful and more profitable future.
Look for those partners who can:
· Design products to be less labour-intensive to install
· Protect your cashflow by offering phased deliveries,
· Are located locally to keep transport costs down and reduce the project’s carbon footprint
· Offer product commitment works to mitigate the risk of costly snagging
· Are well-established and have secure, sustainable, UK-based supply chains.
· Tailor their service to make your life easier and your profitability more predictable
Let’s Solve Housebuilding Challenges Together
Addressing these challenges over the course of the next 12 months will not only be better for your bottom line but for your reputation, too.
Finding ways of minimising snagging, providing sustainable materials for lower-skilled workers, or committing to carbon reductions, will help put your business in a far stronger and more profitable position.
It starts with your choice of partner.
Through 30 years of experience, Multi-Turn has been providing this level of service for all developers through the offering it calls staircase success.
From surveying to manufacturing, dry assembling and delivering locally, Multi-Turn helps ease the pressure felt by developers and the impact they have on the wider built environment.
Whether it’s a bespoke design staircase or a conventional housebuilding project that you’re working on, Multi-Turn’s expert team have the experience and service offered to ensure staircases are a successful part of your build projects.
Find out more by speaking to our team at 01962 712299 or emailing us at web-enq@multiturn.co.uk.