02
Employment growth The construction sector is bouncing back following difficult years and heavy impact on profits
01 Construction
Navigating the talent crisis Employment growth
The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations 05 Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s
All industries were blindsided by the experience of the COVID-19 pandemic three years ago, and the impact on the global construction sector was no less significant. BDO’s research shows that the construction industry faces a legacy of challenges arising both directly and indirectly from the pandemic. These challenges have been further complicated by the difficulty in recruiting and attracting skilled talent to meet current vacancies and anticipated future demand. THE LEGACY OF THE PANDEMIC ON CONSTRUCTION When asked to rate the biggest issues negatively impacting their profitability, construction sector executives cite disruptions to supply chain as the leading factor. Supply chain issues have caused delays in receiving building materials on site and have led to spikes in prices for raw materials in high demand. Nearly two thirds (63%) of survey respondents place this within their top four factors – see Figure 1. Executives report that the fragility of industry supply chains have resulted in a direct hit on their profit. For example, just over half (52%) of construction industry companies
surveyed by BDO reported a financial loss over the last 12 months due to the insolvency of a contractor, supplier and/or subcontractor. This happened with greater frequency across the most mature markets in our research, such as Norway, Belgium, Australia and USA, and among mid-market construction companies (i.e. those with revenues between $250 million and $1 billion). Alongside supply chain disruption, other issues top of mind for industry decision-makers include the real time impact of unprecedented high inflation on project budgeting, late payments by clients and ongoing site restrictions associated with COVID-19 safety policies. While macroeconomic factors such as inflation and supply chain disruption are likely to ease over the short to medium-term in many markets, executives say they are also concerned about the long-term recruitment crisis facing the industry. Staffing difficulties and labour shortages - both attracting young professionals and retaining skilled workers - is the second most frequently cited negative impact on profitability for industry leaders in our survey, as shown in Figure 1.
Disruptions to supply chain causing delays in receiving building materials and parts (and/or) causing increases in price and material costs
63%
Staffing difficulties and labour shortages (attracting young professionals, but also retaining skilled workers)
49%
Project budgeting vs. real time price increases on the construction site
47%
Delays in one or more project timelines/one or more projects suspended or placed on hold
approach to recruitment, retention and diversity
44%
07 Conclusion
Late payments by clients compared to 12 months ago (and/or) more requests for longer payment terms in new contracts
BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus
42%
Australia Belgium Brazil Canada Latin America The Netherlands New Zealand Norway South Africa USA 09 About BDO’s research 10 How BDO can help
Subcontractors and suppliers seeking shorter payment terms compared to 12 months ago
35%
Restrictions to the number of tradespeople on-site at a given time due to COVID-19
35%
Clients imposing more contractual risks on the construction company (especially for design and build contracts)
34%
16%
Intensified competition
3
Figure 1: Rate the most negative impacts affecting your profit in the last 12 months, if any. Anything else (please specify)
4%
Figure 1: Rate the negative most impacts affecting your profit in the last 12 months, if any (Top four aggregated).
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