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A letter from 15 trade federations has been sent to Sajid Javid MP, the chancellor of the Exchequer, asking for the 1 October 2019 introduction of domestic reverse charge VAT to be delayed until April 2020.

Reverse charge VAT means that the customer receiving the service will have to pay the VAT to HMRC instead of paying the supplier. The reverse charge applies through the supply chain where payments are required to be reported through the Construction Industry Scheme. Making the payment of VAT the responsibility of the customer rather than the supplier, there is no opportunity for the supplier to avoid paying VAT.

The National Federation of Builders, together with the other trade federations, has highlighted the effect the change will have on cash flow and administration costs for an industry already facing increased material and labour costs.

The guidance issued by HMRC was delivered late, is not clear and leaves some questions unanswered. A delay before introducing the charge would give the industry and government time to properly prepare the industry to understand the changes and update systems.

Richard Beresford, chief executive of the National Federation of Builders, said “For an industry facing lighter workloads, increasing pressure on cash flow and an already high rate of insolvency, reverse charge VAT could not have come at a worse time. By delaying the introduction of this measure, the industry will have more time to properly prepare and make their businesses more resilient, and more detailed guidance can be provided to ensure a smooth introduction.”

The UK construction industry is worth nearly £100 billion to the UK economy each year. But tighter restrictions, increasing build costs and a lack of skilled labour are threatening the sector’s future growth.

But where there are challenges, opportunities can also be found, and the sector has seen several innovative solutions come to the fore in recent years. This is particularly true when it comes to prefabrication and offsite construction products.

These “pod” solutions are being deployed across a wide range of new and refurbishment build projects, from hotels and leisure to education and research facilities. And with the backing of the Government, their usage is only set to increase further.

But why are offsite solutions becoming more popular, and why is the Government keen to back them? In short, they deliver quality at scale, and help projects of all sizes complete on time and to budget. Currently the demand being placed on the construction industry continues to rise, but the number of projects completing on time and to budget continues to fall. This is not just due to tighter regulations and labour shortages, but other factors like the weather and delays in the supply of materials.

Factor in housing shortages, an aging population, an increase in speciality housing needs, a lack of suitable student accommodation and an uptick in the number of build to let homes, and it’s clear to see why prefabricated solutions are being more widely used.

Modern pod solutions are therefore becoming more popular as they can be designed, manufactured and pre-assembled off site, and then simply dropped into place for ease and speed in new build projects but still provide the high quality expected. Specialist manufacturers design and build tailored pods, to perfectly meet client specifications and these are simply delivered whole ready for installation and fitments or re-assembled onsite quickly and easily for refurbishment. Installation does not require skilled labour, significantly reducing time and costs.

When it comes to bathrooms and showers; these can be the most complex part of a build and require wet trades and a range of skilled labour, from designers to plumbers, electricians and tilers. Pre-fab pod solutions however, can be completely bespoke and designed to fit into any space – whether a Grade II listed manor house, an office block, a refurbishment or a new-build.

Sectional pods are ideal for limited spaces, and bespoke designs can be completed from concept to delivery much quicker than manual builds, where a whole host of factors can slow down the build, from the late delivery of materials to several contractors having to work together, in confined spaces and reliant on other trades’ staged completions.

Health and safety is another concern for contractors, and moving construction off site into a factory environment significantly decreases the risk of an accident. Purpose built construction lines have been designed specifically for pod manufacture, and are the safest environment.

There are other benefits, too. When pods are manufactured offsite, the on-site assembling process is far quicker and quieter with less people needed, thereby reducing labour costs. Not only is this cleaner and safer, but it keeps disruption to a minimum – there are less materials and vehicles on site, making the site more efficient and easy to manage.

Pod solutions also deliver on quality and efficiency. A traditional building site can be a source of wasted materials because of finishing, fixing and snagging errors. Prefabricated pods eliminate this; bespoke and resourceful design keeps wastage to a minimum, and their longevity (most come with a min 25-year guarantee) means they are a green alternative to traditional build materials.

Often pod materials can be recyclable, reducing the carbon footprint of the build and providing a sustainable, quality assured building solution, for the future. The best quality pods are designed so that they do not even require sealant, yet are still 100% water tight and the materials used greatly reduce bacteria growth and therefore maintenance costs.

The Government have also recognised the benefits of offsite construction. It has said it will support ‘building long term collaborations’ with the industry, ‘exploiting digital technologies such as the adoption of offsite construction techniques’.

In addition, it said it would ‘adopt a presumption in favour of offsite construction by 2019 across suitable capital programmes’. This stands as further evidence of the rising popularity of offsite modular construction.

As more and more projects are completed, construction management will recognise that modular design can be commercially viable alternative to traditional builds.

Sleek designs and high specifications mean they can be used from high-end projects such as hotels, right down to student accommodation, and still deliver a solid ROI.

In fact, the high specification, unrivalled quality, offsite checks and lower maintenance can extend the longevity of the bathroom environment way beyond those offered by traditional builds which often require on-going maintenance.

Hostile environments are no longer such an issue, either. From city centre apartments to rugged surroundings, installations are no longer a logistical nightmare. From oil rigs to research centres in Antarctica, there is nowhere bathroom pods can’t be installed.

Offsite construction currently accounts for less than 10% of total construction output. But this means there is tremendous scope for further expansion in the building sector. The Government is on board, a growing number of construction managers are on board – what are you waiting for?

Written by Jeanette Parker, Sales & Marketing Manager at TAPLANES

The construction sector is no stranger to a challenge, but as Mark Farmer – author of last year’s “Modernise or Die” report – identified – “we are now facing a set of problems that we haven’t seen before”.

However, is there a solution? Are the problems out of our control as individuals? Or is there a turning point ahead? As Novo, a UK leader in recruitment for the construction sector explains, the problem and solution lies in attracting, recruiting and retaining the best staff.

Factors out of our control?

Many of the problems in the industry are outwardly obvious. Economic uncertainty in light of Brexit, discontent in poor quality building and poor productivity, are all having a negative effect before the problems can even start to be addressed.

One area that people may not be as aware of is the problem of an ageing workforce. The Building Services in particular is where we are in severe danger of losing a generation of knowledge with a distinct lack of talent to take up the mantle. The simple fact is that the construction industry as a whole is failing to attract the requisite amount of people to the industry. In the case of Building Services, from what we see in the market, the problem is even more alarming.

Develop passion from an early age

This of course stems from school years. Students still perceive construction as workers on a site laying bricks, digging foundations and sitting in hot vehicles. They don’t see the rich tapestry of careers the construction sector offers, on and off the site. From designing iconic buildings, buying materials for projects, managing logistics, health and safety, electrical installations – the list goes on and on. Like any other industry, construction needs to be shouting about variety.

This lack interest or education at an early stage, has led to the building services community, in particular, being heavily weighted towards the older end of the spectrum with a huge void left in the middle and at the bottom. Instead, we are finding candidates in their late 20s and 30s step up into management roles but without the benefit of the vast bank of knowledge from their older peers.

Yes, there are some extremely talented younger individuals working in the sector but in a market that has increased by 25% in the last 5 years, there simply isn’t enough at present to carry through a smooth succession plan for the continuity of the industry. Indeed, Building Services could take a leaf out of the Mechanical and Electrical systems industry which has seen increased growth after past struggles.

What can the industry do?

So, what is being done? Apprenticeships obviously offer a gateway to the industry but uptake for Building Services apprenticeships remain dangerously low. While work is being done to attract students to careers in STEM, the fields of science, technology, engineering and mathematics are so broad that funnelling potential candidates through specifically to the building services sector is not straightforward. Again, the solution may lie in making the sector a lot more attractive to the younger generation, so they actively seek out opportunities.

It may be that M&E Contractors themselves need to invest more time in making the sector more appealing to the younger generations– “sexing it up” for want of a better phrase. After all, working as part of a great team on iconic buildings that shape skylines across the world is an exciting occupation to be involved with, it just needs to be promoted more.

The state of the industry

It certainly makes for an interesting sector in which to recruit. Skills shortages may lead to a competitive but ultimately unsustainable bubble where large premiums are paid for senior staff and businesses squabble for the best of the limited young talent pool.

While the future of the building services sector will certainly be interesting to follow, the unsustainable question must be addressed. If it isn’t, we may find our landscapes and skylines will be dramatically changing as the generations go on.

Guest post courtesy of Novo UK, construction recruitment specialists.

A report looking at the role that technology will play in the construction industry in the future, has revealed that 3D printed walls, drones and a roof made from recycled plastic bottles from the Ocean will all be possible by 2025, thanks to advancements in technology.

The report, written by renowned future gazer, Dr. Ian Pearson BSc DSc(hc) and commissioned by Colmore Tang Construction and Virgin StartUp, also revealed that floating buildings or apartments will be possible by 2050 thanks to carbon foam, which is lighter than air.

By 2025, drones will be able to carry large materials up construction sites and even more remarkably, plastic bottles recovered from the world’s oceans will be recycled to create a roof.
Over the next decade, artificial intelligence (AI) will be commonplace, linking to sensors and cameras around construction sites, ensuring that buildings are being developed according to the architect’s plans. Humans will work alongside AIs and will not only see these robots as clever tools, but also colleagues and even friends as they start to develop unique relationships.

Looking more than 50 years into the future, by 2075 Dr. Pearson suggests that self-assembling buildings under AI control will allow a new form of structure – kinetic architecture – where a structure is literally thrown into the sky and assembled while gravity forms the materials into beautiful designs.

However, it is 3D printing that will steal most of the construction headlines in the immediate future, according to the future-gazer. Cheap homes, built quickly using 3D printing, will essentially put an end to the housing crisis.

The report was launched by Colmore Tang Construction, who has partnered with Virgin StartUp to deliver a £10m innovation fund that is open to entrepreneurial companies in a construction industry-first technology accelerator programme called ‘ConstrucTech’.

The fund will be provided to those companies that can successfully show how their innovation and technology could improve the sector’s productivity, sustainability and skills issues.
Futurologist, Dr Ian Pearson BSc DSc(hc), said: “By 2025 we will already see huge changes in the construction industry thanks to technology with drones, AI and 3D printing all becoming commonplace.

By 2050, we could see floating buildings or apartments that could save the housing crisis using carbon foam that’s lighter than air – the possibilities for this really are endless.”

Andy Robinson – Group CEO, Colmore Tang, said “The forward-thinking report has shown that technology can have a positive impact on the construction industry, however, we need to discover those exciting and innovative start-ups, whose products and services could deliver the technologies and innovations that will be the key to future success.

“We are hopeful that our partnership with Virgin StartUp to create the ConstrucTech programme and £10m innovation fund will be the start of a new dawn within the industry, where the future innovations predicted become a reality.”

Virgin StartUp is a leading business support organisation which has run a number of successful accelerators and supported 11,000 entrepreneurs across the UK. Construction in the UK has been slow to embrace innovation and adopt new technology and Colmore Tang has identified a number of key areas within its business, and the industry as a whole, which it believes could benefit from the contribution of enterprising start-ups.

Colmore Tang and Virgin StartUp are calling for businesses to apply to the ConstrucTech programme to address the following problems:

  • People: improving analysis of performance, sharing best practice across building projects, measurement of quality and also implementation of health and safety.
  • Data: using data to pre-empt potential delays, more efficient material ordering, more effective use of labour along with use of performance data to improve cost, timescales and estimates of new projects for future clients.
  • Smart Materials: design and implementation of materials to improve sustainability; improve safety and finding materials which are digitally connected.

Colmore Tang is providing start-ups with the opportunity to use the programme as a test bed and development platform to bring products and ideas to the construction sector. It’s hoped the £10m innovation behind ConstrucTech will be the spark to improve lacklustre productivity levels and also begin addressing the need to re-skill over half a million construction workers to suit the industry’s future Mace Report – Moving Construction 4.0.

A private company in Shanghai used 3D printers to print 10 full-sized houses in just one day.

Many believe 3D printing could a viable solution to alleviate slum housing in the world and provide shelter to disaster-stricken communities. Is 3D printing the future of construction?

The video shows a 3D printer creating a structure using a special material, comprised of recycled rubble, fibreglass, steel, cement and binder. Once pumped into place, the material takes just 24 hours to dry completely.

Behrokh Khoshnevis, a pioneer of 3D printing at the University of Southern California, who is currently working with NASA on 3D-printed lunar structures, believes that we could one day live and work in 3D printed cities. “I think in about five years you are going to see a lot of buildings built in this way.”

He also suggested that the innovative technology could help tackle a worldwide shortage of low-income housing. “I think it is a shame that at the dawn of the 21st century, about two billion people live in slums. I think this technology is a good solution.”

Watch the video below and see for yourself. How to you think 3D housing will affect the construction industry? Will its impact be good or bad? Let us know in the comments section below!

A vital independent review into understanding why hundreds of thousands of homes haven’t been built – despite having planning permission – is now underway, according to the Government.

Originally announced at Autumn Budget, the review, led by Sir Oliver Letwin will look to explain the gap between the number of planning permissions being granted against those built in areas of high demand.

Currently, after planning permission is granted a variety of factors can prevent development from starting and slow down delivery and the review wants to determine why.

As of July 2016, just over half the 684,000 homes with planning permission had been completed.

The review will seek to identify the main causes of the gap and will make recommendations on practical steps to increase the speed of build out. Latest evidence shows that residential planning applications are up and that time to process major applications continues to be at a record high.

Sir Oliver Letwin, Chairman of the Review Panel, said “This government is serious about finding ways to increase the speed of build out as well as tackling the complicated issues surrounding it.

“That’s why we have set up this diverse panel to help me test my analysis and to make practical, non-partisan recommendations, as we look to increase housing supply that’s consistent with a stable UK housing market.”

Housing Secretary Sajid Javid said “We are determined to build the homes this country needs, but currently there is still a significant gap between the number of planning permissions being granted and the number of homes built.

“This review is vital to helping us understand how we can build more homes quickly.

“All parties have a role to play in closing the gap and I look forward to receiving Sir Oliver’s findings.”

The review will be conducted in 2 phases:

Phase 1 – currently under way – will seek to identify the main causes of the gap by reviewing large housing sites where planning permission has already been granted. This will include information-gathering sessions with local authorities, developers, non-government organisations and others. Early findings will be published in the interim report.

Phase 2 will make recommendations on practical steps to increase the speed of build out, which will be published in the full report.

The review will also consider how to avoid interventions which might discourage house building or hinder the regeneration of complex sites.

Sir Oliver will be assisted by a team of leading experts:

  • Richard Ehrman – author, small commercial property developer and former journalist. Former special adviser to the Secretary of State for Employment and subsequently Northern Ireland, onetime Chief Leader Writer of the Daily Telegraph, and former Deputy Chairman of Policy Exchange
  • Lord Jitesh Gadhia – Member of House of Lords and investment banker
  • Lord John Hutton – (Labour) Peer and former Secretary of State
  • Rt Hon Baroness Usha Prashar CBE, PC – (Crossbench) Peer with a career spanning public, not for profit and private sectors, currently Deputy Chairman, British Council and a non-
  • Executive Director of Nationwide Building Society
  • Christine Whitehead – Emeritus Professor of Housing Economics at London School of Economics

Demand for industrial property space in Wales is significantly outstripping supply, according to the RICS Commercial Market Survey, Wales, Q3 2017.

Chartered surveyor respondents are reporting increases in occupier demand for industrial space and falling availability. They are also pointing to strong rises in interest from investors to purchase industrial property assets.

As a result, both rents and capital values in the sector are expected to keep rising in the three months ahead.

This is contrast to the retail sector, where occupier demand is reported to have been falling, and investor interest flat. As a result, short-term rent and capital value expectations in the retail sector have declined, according to the balance of surveyors.

Whilst there is variation between sectors, overall the commercial property sector in Wales remains stronger than in other UK regions, according to the survey. Like the industrial sector, office continues to perform well, with occupier demand and investor interest rising and expectations for rent and capital values in the three-months ahead still positive.

Chris Sutton, RICS Commercial Property Spokesperson said “With a growth in ‘last-mile’ logistics and steady demand from trade counter operators, the industrial sector has been very buoyant. This has mirrored activity in the capital markets with multi-let industrial investments in demand. In terms of the office sector, the announcement of the 266,000 sq ft public sector hub for HMRC in Central Square, Cardiff is the largest office pre-let ever agreed in Wales and this has given a further boost to the Central Cardiff Enterprise Zone.”

The latest data released by the Builders Merchants Building Index (BMBI) confirms a continuing positive trend for UK builders’ merchants with Q2 sales increasing by 5.3% (when adjusted for two fewer trading days in period) compared to Q2 2016. Unadjusted Q2 year on year sales figure is still positive at +1.9%. Year to date sales figures to June are 3.8% higher than for 2016, the same number of trading days.

The BMBI tracks builders’ merchants’ sales to builders and contractors using GfK’s Builders’ Merchant Point of Sale Tracking Data. The BMBI includes actual sales over 80% of the value of the builders’ merchants’ market.

The Q2 results appear to tell a different story to the trend reported by the Office of National Statistics earlier this month, in which they report actual sales representing overall construction output fell by -1.3% in the three months to June compared with Q1, and rose by just +0.4% on the same period last year. This may reflect the predominance of housebuilding and domestic repair, maintenance and improvement work carried out by builders’ merchants’ customer base.

Commenting on the results, John Newcomb CEO of the BMF said “The majority of trade indicators are finding that order books are being sustained by private housing and Repair Maintenance and Improvement (RMI) work while commercial sectors are falling behind. Even the ONS reported a year on year increase in house building of +9.4% for the quarter.

“The merchant sector is showing resilience at the moment, but it would be foolish not to consider the possibility of tougher trading conditions as we move into 2018.”

In a quarter characterised by political uncertainty, the Construction Products Association’s Construction Trade Survey shows that despite a strong Q2 the industry’s supply chain are more pessimistic for the year ahead.

The survey of main contractors, SME builders, civil engineering firms, product manufacturers and specialist contractors found that all reported increases in sales, output and workloads in the quarter driven by increased demand. Notably however, order books were sustained by private housing and R&M work, but fell in sectors such as commercial and industrial. This was echoed throughout the supply chain, with net balances weakening for enquiries, orders and expected sales among SMEs, civil engineering contractors and product manufacturers compared to Q1.

After Sterling’s depreciation since the EU Referendum, the strongest cost pressures for the construction industry have been rising prices for imported materials. On balance, 88% of main contractors, 87% of heavy side manufacturers and all light side manufacturers reported raw materials costs rose in Q2. In spite of this, almost half of main contractors and specialist contractors opted to keep tender prices unchanged, leading to a fall in margins.

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said “This was the 17th consecutive quarter of growth for the construction industry, but a cautious stance over future expectations is not surprising. Another quarter of slow GDP growth, rising costs and a near-term outlook clouded by Brexit uncertainty have led to a fall in orders in privately-financed sectors such as commercial and industrial, and this pessimism has also spilled over into infrastructure.

“Perhaps more conspicuous in the survey data is the squeeze on margins for main contractors and specialist contractors. Strained margins had already been acute for some time given skills shortages pushing up construction wages. Now there’s the added pressure of contractors trying to avoid or delay passing on the full cost of higher raw materials prices to clients when tendering for upcoming construction projects.”

Brian Berry, Chief Executive of the Federation of Master Builders, said “Despite rising material prices and a period of political uncertainty, it is encouraging to see the SME construction sector continuing to grow. The industry is demonstrating significant resilience, especially when we consider difficulties in recruiting key trades such as bricklayers and carpenters, and shortages in other trades, such as plumbers and plasterers. Furthermore, there are real challenges ahead for the sector. The possibility of Brexit exacerbating already severe skills shortages and the continuing upward pressure on wages and salaries this brings, means construction SMEs will be cautious in their optimism”.

Richard Beresford, Chief Executive of the National Federation of Builders said “Although SMEs have found more work, project viability seems to be increasingly stifled by spiralling material costs. Construction SMEs are reporting a tightening of profit margins, which may impact productivity in the coming twelve months. The NFB’s house building members appear more confident about their immediate future, despite not having an assured work pipeline. The Government must enable constructors – particularity SMEs – to establish a pipeline of work either through more streamlined procurement or by reforming the planning process. However, the weakening pound shows that, in the long term, constructors either need improved access to material markets or short-term financing for project completions. The Government must deal with the impact of a weaker exchange rate and Brexit more urgently. It must work with industry to understand and navigate more unpredictable and potentially difficult times.”