Infrastructure work fails to pick up

Infrastructure workloads remained flat throughout the second quarter of this year, despite the government’s ongoing attempts to boost the sector through private investment, the latest RICS Construction Market Survey has found.

The RICS survey found that infrastructure workloads across the UK were flat during the three months to June, with little movement now seen in the sector since the end of 2009.

Simon Rubinsohn, RICS chief economist, said this was despite attempts by the government to stimulate the economy through privately funded infrastructure projects.

“Infrastructure workloads failed to pick up despite the government’s attempts to boost the sector through private investment. More action to back up the rhetoric is urgently needed if the construction industry is to play a meaningful role in driving the economy forward over the next few years.

“Ominously, profits continue to be squeezed with some surveyors are reporting that increasing levels of competition are leading some companies to bid for work at a below cost price in order to secure contracts.”

The RICS said the low level of activity was reflected across the entire construction sector with 4% more respondents reporting falls rather than rises in workloads, but it was the public sector where the pressure continued to be greatest.

The survey found profit expectations continued to deteriorate, with the net balance falling from -18 to -26%, reflecting the continuing pressure on margins as input costs rise more rapidly than output prices.

Surveyors also noted that increasing competition was leading some companies to bid for work at below cost price in order to secure contracts.

The survey revealed that regional variations were again evident across the UK, as the South, Wales and the Midlands saw overall workloads stabilise, while the North, Scotland and Northern Ireland experienced further declines.

However, the survey found that despite the downbeat picture for the sector over the three months to June, surveyors were “cautiously optimistic”, with a net balance of 16% more surveyors predicting workloads to rise over the coming twelve months.