The wave of mergers and acquisitions in the construction industry could lead to a step change in the sector’s profitability, according to Pricewaterhouse Coopers (PwC).

In its Construction Insights report, PwC says the recent spate of mergers and acquisitions in construction, housebuilding and materials looks set to continue, with private equity becoming a key player in the market.

The report says the greater scale of companies will allow the industry to lock in higher profitability, as firms look to maximise opportunity and price work effectively to account for skills shortages and inflation in materials prices. The report says this raises the possibility of pushing margins above the historic average of 2%.

Jonathan Hook, head of construction and housebuilding at PwC, said: “This is a time of opportunity for the UK construction sector, with order books full and major projects set to come online. Risk and reward needs to be rebalanced and contractors should look to be more fully rewarded for the value they bring to the sector.”