Government must convince construction companies to shift commercial focus from international projects to those at home, says CIF Director of Main Contracting Paul Sheridan
While the government dithers over what it needs to do to enable the delivery of critical infrastructure, the Top 50 keep growing their businesses abroad at a faster rate than at home.
Why? For large Irish contractors tasked with delivering key National Development Plan (NDP) projects, ongoing delays, bottlenecks, and uncertainty are disrupting the pipeline of infrastructure and residential delivery.
Simply put, there is not enough domestic work to sustain them. Ultimately it is the lack of a secure pipeline of work and the lack of the government’s ability to tackle the actual obstacles like:
- The lack of sufficient, secure and agile multi annual funding for key government bodies responsible for infrastructure like Uisce Éireann, Eirgrid, TII, NTA and Education
- The use and expansion of existing planning exemptions for public infrastructure that is clearly in the public interest along with the removal of environmental consents, which could be replaced with penalties of noncompliance with standards
- The use of CPOs to secure vital land for infrastructure
- Inefficient, costly, bureaucratic and inflexible public procurement
- Lack of balanced and measurable risk and design management
Much analysis has also taken place about the level of workforce capacity needed by the construction sector to deliver on government housing and infrastructure targets. But this is inaccurate and misrepresents the facts.
The construction industry has responded to increased demand for its services in the past and has not been found wanting. For example, from 2011 to 2021, residential production increased by 94 per cent.
From 2012 to 2023 housing completions increased by 570 per cent i.e. from 4,911 units to 32,732 units. Civil engineering production increased by 56 per cent and non-residential by 98 per cent. Overall Gross Domestic Physical Capital formation at current prices increased by 145 per cent from 2014 to 2023.
Research by the Irish government’s Economic Evaluation Service (IGEES), which looked at labour intensity of public investment relating to the Public Capital programme 2021 – 2030, showed that the number of direct construction jobs per €1million reduced by 35 per cent (12 to 7.8) between 2015 and 2021.
It is notable that despite the growth, the numbers employed in the industry did not increase anywhere close to the same rate. This is because employment levels are not directly correlated to increased construction output due to technological advancement, innovation and off-site construction, alongside modern methods of construction methodologies, including early contractor involvement, lean construction and last planner management systems.
The construction industry has the labour capacity and capability to deliver critical major infrastructure including water, energy, new housing, transport, educational and commercial development.
It has a proven track record of strategically scaling up and transferring staff and skills to projects. Irish contractors will continue to be sought by international clients for their innovation, expert construction capability, safety and commercial nous.
The government needs to convince construction companies to shift their commercial focus from international projects to those based at home by addressing the bottle necks above. Thus, redirecting their surplus capacity, including skilled workers, to the domestic market.
