Skills and uncertainty key challenges for NI construction sector

The report indicates clear concerns over future growth says the RICS
The report indicates clear concerns over future growth says the RICS

Despite the apparent re-ignition of the construction industry in the province, concerns around the lack of both political stability and skills is having an adverse impact on the sector.

That’s the claim from the latest Royal Institution of Chartered Surveyors (RICS) and Tughans Northern Ireland Construction Market Survey for the first quarter of 2017 which indicates Northern Ireland is the only UK to see growth falter while the rest saw the pace of workload growth increase.

Expectations for workloads amongst Northern Ireland respondents looking 12 months ahead also softened, though remain relatively strong.

Surveyors cited the lack of a functioning Northern Ireland Executive and the fact that there are increasingly apparent skills shortages - partly linked to Brexit - as factors holding growth back.

Some respondents also pointed to tender prices increasing due to an uplift in material costs and rising wages, resulting from the lack of available skills.

The survey does report that construction in the province “appears to remain in growth mode,” even if the headline workload balance is at a four-quarter low.

House-building in the public and private sector and private commercial construction were the sub-sectors experiencing workload growth, according to Northern Ireland respondents.

The net balances for infrastructure and ‘public non-housing’ workloads however fell in the quarter.

“The picture painted by the Q1 survey is one of growth, and expectations looking 12-months ahead remain relatively strong,” said RICS construction spokesman for Northern Ireland, Jim Sammon.

“However, there is a clear softening in the data and surveyors remain concerned about the political situation and skills. I suspect there is also divergence in the market, with Greater Belfast perhaps seeing more activity than other parts of Northern Ireland. And local companies continue to do a significant amount of work in GB, and increasingly Dublin, where the market is buoyant and appears sustainably so.

“Locally, we would urge the politicians to agree a deal as soon after the June General Election as possible and to form an Executive so that key decisions in relation to major projects can be taken.”

Michael McCord, construction partner at Tughans said: “Clearly some uncertainty lies ahead, and rising input costs may impact on profitability.

“However, it is encouraging that the local construction sector continues to drive growth in the face of some challenges. This is in part testament to the ability of local companies to secure prestigious contracts in GB. The sector remains crucial to the local economy as well, in terms of employment, investment, and the benefits it delivers to society.”