Our industry will build on trends that have emerged in the past 12 months and we will get even better at coping with turbulent times, predicts Richard Steer
In this time of constant change it is a brave person who is prepared to cast forward and predict what 2022 has to offer for those operating in the built environment. Especially when your assumption that covid-19 could be consigned to the past has been so badly shaken by new variants coming along with irritatingly regularity. Perhaps this is the time to leave construction consultancy and get into the vaccines business instead?
On the assumption, however, that we are beginning to learn to live with covid, I think 2022 will build on the latter stages of this year, when we started to see our sector get back to the new normal – by which I mean labour shortages, materials price increases, planning regulation confusion and increased government interference.
Let’s look at some trends. The green genie is out of the bottle and, as a sector, we are going to adjust and adapt to the clamour for improved and less environmentally damaging construction methods. This is apart from it simply being the right thing to do for our planet.
If we don’t, then our shareholders, clients and investors are all going to suffer. How this will manifest itself in 2022 is through heightened government interference in mandating where we build, but also how we build.
Watch out for more announcements in the next 12 months as the government tries to shift the burden for achieving net zero onto industry
Ministers have already started doing this, with news just before Christmas of the imposition of electric car chargers for new build, plus the provision of electric sub-stations now being necessary as part of the planning process, all seemingly at the contractor’s cost.
Watch out for more of these announcements in the next 12 months as, following COP26, the government tries to shift the burden for achieving net zero away from its responsibility and onto industry.
With concrete contributing to 8% of the world global emissions, I suspect that low carbon alternatives will soon become compulsory. The concrete industry will find that it needs to accelerate its good work to offer green alternatives.
One impactful announcement made at the end of last year was the call for submissions during 2022 by the National Infrastructure Commission (NIC). It is due to announce the costed policy recommendations to the government covering the next 10-30 years.
Its input could represent additional public investment of billions of pounds in construction projects following Rishi Sunak’s decision last month to increase the budget for the NIC’s recommendations from 1.2% to 1.3% of GDP per year. Since its remit covers the transition to net zero, this means it is looking at nine key areas which include road and rail, as well as renewables. Those in the built environment must have a voice when submissions are taken.
We will see prices level off towards the end of next year as the supply chain issues are resolved and we catch up production
This year our industry’s financial performance was impacted by availability and cost of both labour and materials. Looking at the latter, I am of the view that while we are currently seeing the largest hike in some materials costs since the 1970s I do not think this is sustainable in the long term and we will see prices level off towards the end of next year as the supply chain issues are resolved and we catch up production.
Also I think the Chinese economy will continue to stutter, thus affecting demand. Here in the UK, labour supply is more problematic as anyone who has tried to recruit is finding. Salary inflation is inevitable in 2022 as need outstrips supply and flexible working will be a core driver for many wanting to move jobs. Employers will need to be adaptable on working conditions.
While the labour force will want the option to work from home, 2022 will ironically see many return to the office, demanding a hybrid workplace offering. The latest Deloitte crane survey indicates that the London office market continues to rebound as confidence grows that office working is back to stay. It records that 37% of developers now think working from home will have no effect on future leasing demand, up from 25% this time last year.
Around 65% of developers expect their pipeline to increase compared with just 7% last January, and some 3.4 million ft2 of office space started construction in London between April and September last year.
The spotlight will be focused on the Middle East for both the World Cup in Qatar and COP27 in Egypt. There will be pressure on both for more openness
On the global stage, I see 2022 as a period when the spotlight will be focused on the Middle East for both the World Cup in Qatar and COP27 in Egypt. There will be pressure on both for more openness.
Saudi Arabia will continue to expand, develop and invest and I suspect will – more likely, behind the scenes – embrace climate change principles on a gradual basis. This is something that it was less willing to accept in Glasgow in the full glare of publicity.
Finally productivity improvements adopted during the covid years will consolidate during 2022 in the UK. This includes greater use of artificial intelligence in areas such as project management.
We are not yet at the stage where the Terminator will appear on site wearing hi-viz and hard hat issuing orders to nervous subbies, but this year we will see greater and greater transparency through enhanced data capture and sharing.
It will be a year of evolution rather than revolution but perhaps, after the upheaval of the past two years, that is not such a bad thing.
Richard Steer is chairman of Gleeds Worldwide