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March 2023 - Construction

A quarter of Tier One contractors in London are struggling to fill order books: A survey has found that in London, a quarter of Tier One contractors (25%) are finding it difficult to fill order books, up from 15% last year. In comparison, Tier 2 contractors were experiencing a boost to their workloads compared with last year.

The survey by Aecom polled contractors working on schemes over £50 million in the London market, with a combined turnover of £6bn. It found that according to respondents, the greatest challenge to the industry is inflation, which is having a knock-on affect on everything from labour and materials to outputs on sites and procurement routes.

When asked to consider what was causing their order books to be behind the levels of 2022, reasons cited included the Ukraine invasion, followed by the rising costs of labour and of materials, as well as political instability here in the UK. Another reason cited was the increased cost of financing schemes which took a hike following former Prime Minister, Liz Truss' mini-budget last year. 

Also revealed by the research was that contractors had seen jobs being delayed or pulled altogether in the last 12 months, while M&E, steelwork, drylining, façades and cladding were in high demand.

Tier 2 contractors

When it comes to Tier 2 contractors, workloads were up on last year, found the research, with respondents to the survey saying they had 88% of their order books filled. This is up on last year's research when books were three-quarters full (74%) at this time.

Jo Streeten, Aecom’s managing director for buildings and places in Europe and India, spoke of a slowdown in the sector in London, as well as highlighting that contractors expect refurbishments to be a key growth market.

She said: “The signs of a slowdown in construction will hamper growth in London, with more construction businesses going through insolvencies and less output on some projects that are already on site. The next 12 months will test main contractors’ business models, with the ones able to collaborate with their clients and supply chains most likely to thrive.”

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