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Investors and industry need a secure pipeline

Contractors can be quite sensitive about their share prices. No wonder – at the top of the company they are often deemed the most important measure of success. But they should actually matter to all of us.

Major contractors are determined to protect their dividends to prove to investors that they are a sound long-term investment.

But as our analysis of the top contractors’ share prices shows, the performance of the UK’s largest contractors as expressed by their share prices is taken as a marker of the performance of the industry as a whole.

If a top company’s share price falls, it can have an insidious effect on the wider industry. On the other hand, when share prices hold up or improve, it can boost confidence.

And long-term confidence is more important than anything. With the spending review this week, contractors will be hoping there will finally be clarity on the outlook for the industry.

What will be essential is that the announcements from Parliament quickly translate into a hard and fast pipeline of work. Data from construction industry analysts Glenigan this week reveals the combined value of planned projects is almost five times more than the £19.2bn identified by government in its own industry pipeline.

Labour’s pledge to stick to the government’s 2015/16 spending plans if they win the next election should give the industry comfort. Shadow chancellor Ed Balls also said this week that a Labour government would consider spending even more on capital projects such as infrastructure.

Much more quietly, but potentially just as significantly, work has been going into developing the industrial strategy for construction over the past few months.

The government’s chief construction adviser Peter Hansford is due to launch the strategy next week. It has huge ambitions to set out a workable plan for the industry all the way up to 2025.

For the strategy to make a difference, it must be taken on by contractors. It needs to be communicated across the country, particularly to the industry’s rising stars.

The message also needs to be taken into schools to counteract outdated perceptions of the industry and inspire those who have yet to make choices about their careers.

This year’s Open Doors Weekend, taking place in September, will be a valuable opportunity for contractors to show children not only their sites,
but a whole world of possibilities.

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