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A five-point growth plan for the construction sector in 2012

As the veil draws over another turbulent year for infrastructure and construction, thoughts turn to 2012. What might be the key differentiators in the challenging economy to come?

There are some clues from this year. It has been a time of contradictions - there were the gloomy prognostications for the future from the Construction Products Association and visible evidence of continuing falls in construction output, yet we finished the year with hope engendered by the National Infrastructure Plan.

Moreover, some contractors continued to post excellent results and ended the year with upbeat trading statements.

What characterised success? The ability to re-work delivery methods, service capabilities and identify regional target areas in the UK or globally were all contributory factors as was critical mass.

Was it a year of reduced opportunity? The focus remained on operating cost reductions, but the fact is that in many areas our infrastructure remains in need of fundamental overhaul to respond to the demands of the 21st century.

Increased infrastructure expenditure also offers a remedy for an economy seeking to escape prolonged stagnation and desperate for some green shoots.

Then there are opportunities overseas, be they in particular growth hotspots or in more mature jurisdictions seeing the benefits of public-private partnerships or developing urban infrastructure.

So what does 2012 hold, and how will market players differentiate themselves in putting in place the building blocks for profitable growth in the years ahead? Here are 5 factors I believe will be key:

  • Get close to clients and targets. Deliver what they tell you they want, not what you think they want. That means a shift in the level of face-to-face engagement and the ability to offer solutions to ‘burning platform’ agenda items.
  • Innovate. Investment in researching and developing new construction methods and processes will be critical, as will embracing market-wide sector developments (BIM and beyond).
  • Identify and seize opportunities early. If you wait for an OJEU notice, you have probably missed the boat. Those opportunities might be new projects, potential acquisition targets to broaden service offerings or even sources of funding. The potential for a seismic shift given the interest of sovereign wealth fund and pension scheme capital is tantalising.
  • Think brand and team. The brand is inextricably linked with the team. Unlocking latent potential within organisations will be critical, especially people who do not fit stereotypical norms of age, gender and cultural background.
  • Don’t compromise on governance. In a world of heightened regulation, where the cost of failure might be terminal, those that stand out will create and maintain effective risk management frameworks; address delivery, financial and probity concerns; and calibrate cost and risk appetite.

Adrian Mulea, is executive director, construction, at Ernst & Young

 

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