So what’s ahead for the construction industry in 2009?
As I see it there will probably be three main stories. In no particular order, these are:
- The changes to the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996); and
- The credit crunch (one of the most over-used phrases of 2008).
The raft of environmentally friendly measures being introduced will greatly impact construction methods. This includes site waste management plans, the way the Building Regulations deal with new structures, the use of materials and so on. Of course these issues aren’t new, but previously we’ve seen a lot of people “talk the talk” but not “walk the walk”. That will change in 2009, as legislative developments ensure that these issues become mainstream.
After the JCT’s major consultation in 2008 we will also no doubt see guidance and policy documents being published to take into account the changes in legislation, and also to generally reflect the wider focus on sustainability within the construction industry.
Amended Construction Act
After a long consultation, the Government published its draft Construction Contracts Bill in July 2008 which amends the Construction Act 1996. In the 2008 Queen’s Speech, a revised version was published and introduced to the House of Lords. In 2009 we will see whether the Bill continues to find parliamentary time and whether it proceeds to the House of Commons in its current form.
If the Bill goes through it will bring important changes to construction contracts, for example dispensing with the need for construction contracts to be wholly in writing and changing the payment rules. It is fair to say that the proposed changes are getting “mixed reviews” at present.
My main conclusion here is that it’s time to stop talking about it quite so much!
There is no doubt that a number of factors have caused a major decline in economic conditions. However a bad situation is made even worse by a lack of confidence, especially when we become overly focused on the negative without acknowledging that that there is still activity in the market.
While there has been a deterioration in buyer sentiment, the fact is that there is, for example, still a shortage of housing and the need to make improvements to our transport infrastructure. (I’ll not mention the Manchester Congestion Charge vote!)
I’m seeing developers changing their strategies to focus more on public sector or “affordable” housing. In addition, buildings still need to be refurbished and, in fact, this is a very good time to buy construction services.
Public sector spend should also offset, at least to some extent, the slowdown in the private sector. There are plans to spend money on the Olympics, schools, Crossrail, green energy developments, nuclear power stations, and a “possible” (if rather controversial) third runway at Heathrow. It remains to be seen whether the deflationary/inflationary worries in Robert Peston’s blog actually deter the government from “printing money”.
So let’s (in a cautious way) start focusing on the opportunities available and on life after the recession, and resist becoming part of a vicious circle.