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News * GF Partnership State of the Economy Survey

News

GF Partnership State of the Economy Survey

08 February 2010

The GF Partnership asks construction professionals their experiences and opinions on the impact of the economic downturn

The GF Partnership recently launched a State of the Economy (2010) Survey to find out how construction companies are dealing with the affects of the current economic downturn and to get individual opinions about where the industry is headed over the next twelve months. The survey was sent out to 1071 individuals, generally at Commercial Manager and Commercial Director level.

State of the Industry
The general feeling from respondents was that 2010 is going to continue to be a challenging time for the industry. In general, 50% felt downbeat about the coming twelve months, with 34% feeling neutral and 16% expecting there to be an improvement.

Comments included:

  • We are concerned about a change in government and the effect it may have on the recovery.
  • We cannot see our approach being any different in 2010 and must continue to retain our competitive edge.
  • Securing the balance of workload will be challenging. Margin will be a bonus.
  • We have a very full order book so the future looks promising.
  • We can all talk ourselves into a further dip if we try, but we prefer to rise to the challenge.

Frameworks
59% of respondents said that they were not experiencing clients, developers and other bodies ignoring framework agreements, with 41% saying that they were. Generally there was sympathy shown for those who were with several people commenting that everyone is under pressure and so you can't really blame them.

Contract Terms
With regards to the New Rules of Measurement introducing additional conflict between contractors and their supply chains due to the JCT contracts all being worded with reference to SMM7, 77% of respondents did not envisage any problems.

54% of respondents felt that changes made in Revision 2 of the JCT 2005 would be of no real benefit to them, particularly in view of the payment provisions. 25% felt that it was difficult to call at this stage and that they may possibly be of benefit in the long run, and 21% felt that there would be a benefit. One respondent said that, while there was no real benefit to him, they would provide an enhanced JCT, more compatible with collaborative partnering and another felt that they may help draw final accounts to an earlier conclusion.

75% of respondents said that they undertake works pursuant to Letters of Intent with very few admitting to encountering problems.

Payment
There was a reasonably even divide between contractors experiencing more problems getting paid from clients (44%) and those experiencing no issues (56%). Most respondents attributed their lack of problems to good credit control, while others said that they were having to issue suspension notices in order to get payment. One noted that they were having to go the adjudication route but, when asked whether they had experienced an increase in adjudications over the last six months, 85% of respondents noted that they had not.

Derek Mynott, Manager Director of GF Partnership, commented that "2009 was one of the most challenging times any of us in the industry have seen. It is interesting to see how different companies have been affected and how each is dealing with the situation in their own way. We are very grateful to all those have taken part in the survey".

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