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Market Conditions
Double dip recession
Sharp falls in private sector construction in 2008 & 2009
Renewed pressure from public sector cuts in 2011 & 2012
Gradual private sector recovery
2006 2007 2008 2009 2010 2011 2012 ytd
50
60
70
80
90
100
110
120Construction Activity
New Orders Output
Underlying Project Starts New Work Output
Cur
rent
Pric
es -
Inde
x 20
06 =
100
Sources: ONS, Glenigan
Construction’s clients
Government funded work has supported output
Recession hit private sector workload hard
Private non-residential building still a third of output
Private housing stabilised
Infrastructure & Utilities growth sectors
4
Government Policy: Key Department Spending
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
-60%
-45%
-30%
-15%
0%
15%
30%
45%
Education
NHS (Health)
Transport
CLG Communities
% C
han
ge
on
pre
vio
us
year
Source: HM Treasury
Government Policy
Looking to private sector investment to lead recovery
Government prioritising investment in infrastructure
Value of publicly funded new builds to fall over coming years
Focus on refurbishment and improvements
Return of PFI to bridge the gap
Brighter Consumer Prospects?■ Consumers hard hit since 2007
■ Households hit by:■ Weak earnings growth■ Tax rises■ Higher inflation■ Debt levels remain high■ Uncertain employment
prospects
■ Restricted bank lending
■ Improved consumer confidence from late 2012?
■ Lower inflation
■ Moving out of recession
Private Housing■ Sharp fall in project
starts during 2008 & 2009
■ Hesitant recovery in 2010 faded last year
■ Positive start to 2012
■ Further recovery anticipated
■ Gradual rise in household incomes and confidence
■ Improved mortgage finance availability
■ Government initiatives to lift market 2008 2009 2010 2011 2012f 2013f 2014f
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Project Starts
Unit Starts
Unit Completions
Val
ue
of
Pro
ject
Sta
rts
£m
Th
ou
san
ds
of
Un
its
Sources: DCLG, CPA, Glenigan
Industry Prospects
Public sector squeeze as capital funding cut Slow private recovery
– Offices, retail and industrial upturn– Increase in private housing starts
Private sector recovery hampered by access to capital
Improved consumer confidence Refurbishment & retro-fit Regional divide
Customer Satisfaction
2003 2004 2005 2006 2007 2008 2009 2010 2011 201250%
55%
60%
65%
70%
75%
80%
85%
90%Client Satisfaction
Product Service Defects
Pro
po
rtio
n o
f sc
ori
gn
8/1
0 o
r m
ore
On time & to budget
2005 2006 2007 2008 2009 2010 2011 20120%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Cost Predictability
Project
Design
Construction
Prop
ortio
n on
tim
e or
bett
er
2005 2006 2007 2008 2009 2010 2011 20120%
10%
20%
30%
40%
50%
60%
70%
80%
Time PredictabilityProject
Design
Construction
Prop
ortio
n on
tim
e or
bett
er