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Engineering services on path to recovery, but challenges remain 

Published: 24 May 2019 - Carly Wills

The latest sector-wide Building Engineering Business Survey, sponsored by Scolmore, shows that the sector appears to be showing signs of recovery after a challenging 2018.

The survey, which included data from industry trade bodies ECA, BESA, SELECT and SNIPEF, found that:

  • Three in four businesses (75 per cent) said their turnover had increased or remained steady in Q1 2019, compared to the previous quarter
  • Outlook for Q2 2019 is largely positive, with almost one third (29 per cent) of businesses estimating their turnover will increase

However, costs are on the rise, continuing trends seen in 2018:

  • Three in five businesses (58 per cent) saw higher labour costs in Q1 2019 compared to Q4 2018
  • Three quarters (73 per cent) saw higher materials costs in Q1 2019 compared to Q4 2018

Payment terms and retentions remain largely unfavourable for the sector:

  • For commercial work, over eight in ten businesses (81 per cent) said the typical number of days to be paid for a project or job was 31 days or more
  • For public sector work, two thirds (63 per cent) of businesses said the typical number of days to be paid for a project or job was 31 days or more
  • Three out of five businesses (58 per cent) had between one and ten per cent of their turnover tied up in retentions in Q1 2019

ECA director of legal and commercial, Rob Driscoll said: Although sector margins continue to be squeezed, businesses have started the year with a strong performance. The sector appears to be regaining confidence as we head into summer, but key cultural shifts that were identified after a challenging 2018, such as fairer payment practices, do not seem to be taking hold just yet and we have not seen out the uncertainty that the Brexit shadow may cast across the economy.”

The survey received 442 responses from companies across the multi-billion-pound industry, mainly regarding their performance in Q1 2019 (1 January to 30 April 2019), and expectations for Q2 2019.



 
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