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2004: another chart topping year - There may be trouble ahead. .

2004 REVIEW

Construction has, on the whole, had another good year.During the past 12 months the industry broke through the £100 billion output barrier and further growth appears to be assured.But a few clouds remain on the horizon.The number of construction workers killed this year remains worryingly high and with poor morale afflicting the HSE the prospect for tighter site safety does not look promising

IT IS ALMOST 10 years since construction began its steady climb into the longest period of sustained growth in living memory. In this unrivalled recovery, construction grew by a third, dramatically restructured and senior managers forced a cultural change about being realistic about risk.

That's how it seemed. But this week a top 100 contractor collapsed and the past few weeks were marked by some of the country's better-known firms unveiling humiliating writedowns after being caught by problem contracts.

These difficulties are not written into the steady recovery story and suggest a creeping sloppiness about risk.The old adage about never agreeing a variation without evidence in writing needs to be reinforced.

Construction is entering the New Year facing a great deal of uncertainty. Consumer debt is riding high and nobody really knows what the fall-out from high oil prices will be.

Closer to home, materials price rises show no sign of abating and workloads in civils and office building remain very patchy.

Such political and economic uncertainty means that the Government should not be relied upon to drive work along in the long term; the next wave of sustainable growth will need to come from the private sector.

For management, the watchwords of 2005 must be 'prudence' and 'good governance'.

It is definitely not the climate to overstretch or hatch risky plans for fast expansion. Even in areas like multistorey private housing, which look appealing, the risks are high.

Beyond this it is fast becoming clear that 2005 will see a tough crackdown by tax and safety inspectors.While this is not bad news for properly-run companies, it is incumbent on all senior managers to be more vigilant.

Economic forecasters predict construction growth of 1 per cent next year - the lowest for some time, so it will not be an easy ride.