The CPAs Summer Forecast predicts construction output will grow 4.7% this year and 4.8% next year, this is good news but what does this mean to your business and how can you use it to plan?
Start by looking at the forecast in more detail
It is important to keep informed of changes in the construction market and its sectors. For example there is good news if you operate in the housing, commercial offices or industrial warehouse sectors. All of these will go up by more than the average. In the case of industrial warehouses it is predicted to be up 20%. The news is not so good if you work in Education or Health, both of which are predicated to perform below the industry average.
“It is important to know which sectors are growing and specifically which are growing the quickest. This is where the opportunities are.” Noble Francis, Economics Director at the CPA
Then value the opportunities for your business
To get a sense of the value to you, think about some typical projects. What value does a £1 million project represent to you in each sector? In this way you can create a multiplier that converts the forecast of construction into a forecast of opportunity for your business. Now you can understand what your market share is, if it is going up or down, and what you can expect it to do in the future.
“When the industry is actually growing, you can spend time as a forecaster concerned about whether construction output will grow 2.3% or 2.5% but for a lot of companies they are more concerned with getting on with work. It is at times like these companies can use forecasts to identify opportunities.” Noble Francis, Economics Director at the CPA
Finally, with this level of detail you can do some serious planning
Smart companies look at the market and where it is going in order to make sure they are doing business in the right places.
- You need to understand how individual sections of the market will impact your business.
- For each sector, what proportion of projects have a need for your services? For each project, what business value does it represent to you?
- Forecasting is also important in providing a benchmark of your own performance. As construction activity increases, you might see a 3% increase in your business. But you need to benchmark to know if that is good or bad?
Competitive Advantage has developed a tailored construction forecasting model, based on reliable data published by the CPA but personalised to reflect your business profile. Click here to view a report sample.
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First published by CN Plus September 2014.