For publication in Specify Magazine, September 2020
To date, 2020 is a year that few will forget. Many construction companies have experienced their most challenging year since 2008. Most Managing Directors had to temporarily close their businesses for the first time in their lives - that’s a very difficult thing to do as it goes against the grain of what they have been striving for. Although there have been challenges, there are also opportunities ahead. See below for some of my thoughts on the implications of the last few months.
Impact of the Pandemic:
Employment contracts: Many people have been working from home and may well continue to work from home 2-3 days per week going forward. Chances are their employment contract was written based on the ‘head office’ being their place of work. This will need revisited by many employers to ensure their employees are insured to work from home.
Remote working: I think at some stage a construction company is going to take the bold step to have all its staff working remotely and no longer have a head office. The staff will need to be trained on operating a paperless office and cloud computing. This will reduce their overheads as rent/rates/utility costs/photocopier expenses etc. will no longer be required. The company will hire a meeting room in a business park for essential face-to-face meetings. This could make the company leaner and better positioned to undercut their competitors when tendering for work. Undoubtedly there are pros and cons with such an approach, but regardless, I think sooner rather than later we will see a company go down this road.
Opportunities:
Marketing: In a challenging economic climate many companies make the decision to reduce their marketing budget to reduce costs. I believe this is the wrong decision. If anything, more time should be focused on marketing as now more than ever you need to be stealing a yard on your competitors to make sure your business is being presented to the widest possible audience.
Sectors: The two sectors I think there will be growth in are social housing and commercial refurbishment. I think there will be more managed service office spaces opening up to allow office workers to work in a shared business environment in proximity (5-10 miles) of their home. The growth areas will be outside of Belfast in towns where people previously would have commuted to Belfast from such as Ballymena, Dungannon, Cookstown, Newry, and Ballymoney.
Staff training: Many employers have used the recent time to focus on staff training. In particular, many companies have prioritised getting management staff chartered during 2020 to help compete for future public sector contracts.
Income:
Now is a time when contractors should maximise every income stream that is available. Three simple opportunities that are available, that often get overlooked, are:
R&D Tax Credits: The UK government is pushing hard for a greener construction industry. Even so, many innovative firms are not getting the R&D tax relief they deserve. Construction businesses often see themselves as problem-solvers, but not innovators. You are likely to be eligible for R&D Tax Credits if the following applies to your business:
1. You are eligible to pay corporation tax.
2. You have spent time, money or expertise improving or creating a product, service or process for your industry.
3. You have tackled technical challenges and used an element of trial and error.
4. A solution to this problem did not exist before.
I have been working with a company called RIFT Group Ltd and recommend their services. Their technical team specialise in hunting down qualifying R&D costs and turning them into a serious financial boost for businesses. To date I am surprised that more companies have not availed of this.
Invest NI: Many local construction companies export their services to Great Britain. For those that are a client company of Invest NI there are various grants and financial support mechanisms on offer. A simple example is the Technical Development Incentive (TDI). This offers up to £10,000 in financial support towards developing new products, improving processes and testing/certification. For companies that have achieved certification to ISO standards or are migrating to the new ISO 45001 standard for their health & safety management system, there is financial support available.
CITB NI: For levy payers, the CITB NI has a service offering that is worth revisiting every year to see what is on offer. Examples of grants that are available include:
1. Apprentice grants.
2. Industrial placement grants.
3. Assessor & Internal Verifier grants.
4. NVQ achievement grants
5. Business Certification grant available for initial certification on a recognised scheme including Investors in People, Quality, Environmental, and Health & Safety, - for example ISO 9001, ISO 14001, ISO 14550, and Safe-T-Cert to name just a few. A £500 grant is payable upon evidence of award by the appropriate recognised body. What are you waiting for!
Current Mood:
There are many public sector PQQs and ITTs that seem to be stalled or on ‘pause’. This seems to be as a result of meetings with key decision makers being postponed as well as client bodies reviewing their budgets to re-prioritise resources as a result of the pandemic. Such projects need accelerated to ensure there is a pipeline of work for the immediate future.
On a positive, I have spoken recently with many people who are very busy. For example, the owner of a medium size demolition company told me during late August that his company is busier than ever and has a strong pipeline of work for the remainder of the year. Some NI Housing Executive contracts have been awarded in recent weeks which have been welcomed, and there are various new-build school projects which have advanced to PQQ stage. That can only be good news.
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