New report raises potential concerns on Northern Ireland construction market

Turner & Townsend warns of inflationary and political brakes to buoyant Northern Ireland construction market.

Northern Ireland’s buoyant construction sector risks being offset by concerns over inflation and political uncertainty, according to Turner & Townsend.

In its latest Northern Ireland Market Intelligence Report, the global professional services consultancy calls for the construction industry to make use of digital ways of working and modern methods of construction to manage rising material and labour costs.

The report points to a positive outlook for the region’s private and public sectors following the disruption of the pandemic. The construction output in the region has increased by 7.8% year on year, despite a small drop in the quarter overall.

Almost 60% of firms surveyed by Turner & Townsend are reporting productivity levels to be at least 90% of pre-Covid levels, with over 65% expressing confidence that they will have returned to full productivity in the next six to 12 months. 

However, organisations are expressing concerns around capacity and inflation which are constraining the ability to take advantage of these market opportunities. Materials and labour shortages have resulted in 60% of project programmes being lengthened by between one and four weeks over the past three months. At the same time contractors are battling with live fixed priced contracts, with rising costs being absorbed rather than passed on, in order to meet delivery objectives.

The report also points to political uncertainty as the backdrop to the industry’s long-term success. The recent collapse of the Northern Ireland executive at Stormont, upcoming elections in May and ongoing negotiations between the UK and European Union over the terms of the Northern Ireland trading protocol post-Brexit bring potential risks to the sector and could delay public expenditure on capital projects.

Andy Outram, director at Turner & Townsend, said: “We’re seeing strong recovery in the construction sector in Northern Ireland, but it is clear that these market opportunities will not be without their challenges. Amidst ongoing supply chain issues, rising labour costs and geopolitical tensions, our clients are facing a number of difficulties in meeting this resurgent demand. Sharing ideas and experience across the sector will be critical to managing these risks, as well as to reaching net zero goals which will also need to be a priority as we recover from the impacts of Covid.”

Click here to read Turner & Townsend’s latest Northern Ireland Market Intelligence Report.

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