Construction Confidence Index – Impediments to growth

WHAT IS STOPPING CONSTRUCTION COMPANIES FROM GROWING THEIR BUSINESSES?

By Ruth Baily, CIF 

The Construction Industry Federation (CIF) recently carried out a confidence survey amongst its members; one of the key questions asked was ‘what were the key impediments to growing your business?’ The two areas of greatest concern were the lack of tenders along with the access to credit.   

The current lack of tenders is the matter that is most worrying members. Whilst there is a recovery, it is not uniform and there are few tenders coming on stream in certain parts of the country and in certain sectors.  If the number of tenders does not increase the recovery may stall, this is a cause of some concern to members.

Members report that as with other industries, access to credit is both a serious and common problem. Currently banks are looking for between 40% to 60% capital from companies wishing to finance a project.  Those companies who have been able to keep going during the downturn no longer have these kinds of reserves available.  In order to kick start building projects banks need to be more flexible and release more credit in order to allow sustainable development to ease the current supply shortage.

The cost of building was also reported as worry for many companies. In some parts of the country the construction costs are higher than the likely selling price for any end product. This is due in part to the combination of Part V costs and the fact that levies are still pegged at boom time levels. These levies need to be looked at urgently and revised to reflect the current reality. 

Finally, planning is still an issue amongst members, currently there are 30,000 live planning permissions in the greater Dublin area, however 21,000 of these are for apartments and other than in the city centre there is little appetite for this kind of development. Construction companies and builders would like to engage meaningfully with the planners to deliver the kinds of homes and offices required to help ease the current shortage and plan properly into the future.