Trending up: the challenges and opportunities of industry growth

by | Oct 12, 2021

Irish construction is witnessing the launch of the Government’s Housing for All strategy and a recommitment to delivering the National Development Plan (NDP). Both strategies involve significant levels of public investment.

While funding for the Housing for All plan is expected to reach €4billion annually up to 2030, the Government has already set  aside an unprecedented €10.1billion for infrastructural investment in 2021. The intention is to continue with this level of investment over the next decade, particularly in the areas of water, energy and broadband.

The success of Housing for All is intrinsically linked and interdependent on the delivery of the NDP. Therefore the planning of both must be aligned to effectively deliver on housing targets.

The necessity for this kind of public investment is essential to deliver the necessary infrastructure such as water, energy and connectivity to support housing development for the nation.

Years of underinvestment in this area has resulted in a serious back-log, particularly in the areas of water services, transportation, public services and urban town development. Overcoming this, while also creating a more environmentally sustainable built environment, will require government to put in place planned and resourced multiannual funding mechanisms in critical areas of infrastructure.

The move by government to a countercyclical investment model will support this and help both public and private construction to find an optimal equilibrium during economic cycles.

The Government’s commitment to this type of investment will also maintain Ireland’s attractiveness to foreign direct investment, support industry and commercial development and help support regional growth – critical to supporting the climate action plan.

Attracting high-value talent

Growth in Irish construction appears to be the likely trend in the coming years. But growth presents its own challenges, which the CIF members are best placed to overcome. Many of these challenges are already being addressed through members ability to innovate, learn new skills and attract high value talent into the sector.

Many members have increased their productivity and are lowering their labour intensity on projects through the adoption of modular and offsite manufacturing technical in combination with digital technology.

According to the CSO, the construction sector was one of the most competitive sectors in 2019, with declines in unit labour cost of 1 per cent and 0.6 per cent respectively.

According to sectoral productivity data published by CSO in June 2021, the construction sector recorded higher GVA growth than the manufacturing sector, with a result of 7.2 per cent.

The main contributing factor was the substantial increase in capital input, from 4.5 per cent in 2018 to 5.9 per cent in 2019.

According to CSO data, the labour input only grew by 1 per cent in 2019, down on the 8.4 per cent result in 2018, evidence of a trend towards higher levels of capital intensity in the sector.

Since 2015, the labour composition contribution has increased on average by only 1 per cent, indicating that for these years, higher-skilled workers have joined the labour market in the sector.

The pandemic has accelerated this increase in productivity and the adoption of new methods of construction, which offer more certainty and shorter construction times.

Construction as a career for life

With the expected development of a dedicated centre of excellence for the industry, which is supported by the CIF, it is expected that Irish construction will rise to escalating demand for its services. The horizon created by the above presents the Government and private investors with opportunities to deliver greater value to their stakeholders.

The integration of Innovation, Sustainable Construction, Digitalisation and Modern Methods of Construction will require public and private clients to move away from the transactional model of construction to one of delivering higher value over the life cycle of the built asset and an increased focus on quality.

This can be done through the recommitment to the National Development Plan, better and more accurate design, early supply chain engagement and more collaborative contracts, which aim to sustainably manage risk while incorporating digital and offsite construction into project execution.

Through the marketing of the NDP and government support for the CIF’s Construction Careers Campaign we can get the message out to the public that construction is a key partner in Ireland’s success and a potential ‘career for life’ for our young people.

Many CIF members are already multinationals that export Irish expertise. The next few years could see this export capacity rise on the back of CIF members developing and growing their Irish businesses.

Their growing portfolios will increase their confidence and capacity to export to new markets and support Ireland’s economic and social development.

Paul Sheridan is the CIF’s Director of Main Contracting

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