FPDC’s second quarter of 2012 State of Trade survey confirmed that specialist contractors are more optimistic about the future than 12 months ago but the flow of new orders is sluggish, a reflection that Government cuts are beginning to bite deeper and investor confidence in commissioning new work is low.
More than half of FPDC members are reporting fewer new orders than at the end of 2011. And margins are continuing to be eroded as contractors seek to secure forward work.
One of the positive findings, however, was FPDC members saying tender enquiries are beginning to strengthen; and opportunities suggest that real work is appearing. Fourty four per cent of respondents said tender enquiries are on the increase compared to only 26 per cent at the start of 2012.
Over a quarter of survey respondents wait 90 days for payment. The new Construction Act and the introduction of project bank accounts in public work doesn’t seem to be having an effect.
Industry sources suggest the market seems to be picking up again with lots of enquiries for large office and apartment blocks coming through. Some south east based contractors are reasonably optimistic for the future with prospects for future work appearing. Despite pockets of optimism trading conditions remain very difficult.
New tender enquiries appear to be less speculative which is an improvement on 12 months ago when almost all tenders were unsecure. However at the heart of all activity is getting the right price to win a job.
Paul Jessop, chief executive at FPDC, said: “Flow of new work remains a long term concern. But what is more worrying is the continuing issue of late payment, withholding retentions and the spectre of insolvencies, which are all having a detrimental effect on business activity which appears to have weakened further since the turn of the year. Measures that create more demand are essential if the sector is to be able to respond when recovery picks up; vastly expensive civil projects are not helping at all.”