Taking the long view

IRELAND ANNUAL REVIEW 2019

What major challenges face the construction industry in the island of Ireland in 2019 and beyond? While the immediate outlook is positive, as confirmed in our survey results, a number of complexities and changes lie ahead.

Taking the Long View provides insights and expert opinion from industry professionals on the big issues affecting construction project delivery across the island and how we can best address them.

FOREWORD

TAKING THE LONG VIEW

Welcome to our new look Ireland Annual Review 2019. As a company committed to building a better world, we’re always looking to improve and strengthen how we do things from our delivery of infrastructure projects to the research we conduct and conversations we share with colleagues, clients and organisations. Our goal is to unlock the transformational change and innovation required to move the industry forward.

This year, to get a better understanding of the long view of the construction industry in the island of Ireland, we’ve changed things up a little by asking senior industry professionals to tell us what their biggest challenges will be over the next 10–20 years. We also wanted to know how prepared they feel to respond. Our survey results on the following pages reveal an industry that is optimistic, with 77 per cent of respondents anticipating growth. The results also indicate an industry that is feeling the impact of a deepening skills shortage, political upheaval and lack of public funding.

Furthering the long view conversation, we’ve included thought leadership articles written by AECOM experts addressing a number of key issues affecting the industry as it moves towards becoming more sustainable, resilient and digitally-enabled. We hear from Mark Gantly, President of the American Chamber of Commerce Ireland, about the topic of foreign direct investment, and interview the economist, Jim Power, who comments on housing, economic growth and international market changes and shocks in the Republic of Ireland (ROI). We’re also delighted to include an interview with Belfast City Council Chief Executive, Suzanne Wylie, who offers her insight into foreign investment, the changing face of retail and smart city initiatives in Northern Ireland (NI).

In this year’s industry spotlight commentary we take stock of the island’s 2018 economic and construction performance and reveal the changes we see ahead, including our prediction that in 2019, tender price inflation in NI will increase by around 2.5 per cent and moderate slightly to an average of six per cent across ROI. We also anticipate construction industry output in ROI to grow by 20 per cent in 2019 to €24 billion and by six per cent to £3.2 billion in NI.

By taking a long view of the construction industry now, we can speed up the development of innovations and ideas needed to design and build tomorrow’s infrastructure, buildings and places that respond to the challenges ahead. By keeping the conversation going and by working together we’ll be better prepared for the future and able to make the most of tomorrow’s opportunities. Enjoy this year’s read. We look forward to working with you to build a more resilient future for construction in the island of Ireland.

EXECUTIVE SUMMARY

TAKING THE LONG VIEW

AECOM’s survey results and thought leadership-led discussion reveal and respond to some of the big issues facing construction across the island of Ireland. Despite complexities and changes ahead, we can report that the general outlook is one of positivity, with a commitment from industry professionals to keep building the resilience required to forge ahead. 

Construction professionals across the island of Ireland see their businesses growing on average by as much as a quarter in the coming two decades. That’s one of the key findings in our annual survey.

Amid such optimism, and despite differences around planning, governing bodies and tax, among other factors, we see that ROI and NI face similar challenges. These range from population growth and skills shortages, to increasing resilience and environmental and cyber threats.

So, to the specific challenges and how the industry is preparing to meet them.

With a greater desire for regional connectivity, the rapid introduction of smart technology and continuing population growth, industry and governments need to adapt. However, many respondents told us they felt that the industry is not evolving fast enough to meet these changing needs.
The availability of people with the right skills, too, remains a significant challenge not only across the island but the world. And while most respondents see engineering as the most crucial skill required to keep the industry moving forward over the next 10–20 years, only 15 per cent feel they are fully prepared to source the right talent.

 

AN OVERALL POSITIVE OUTLOOK

Almost eight out of 10 respondents anticipate their business to increase in 2019, with almost half of them expecting a growth rate of 5-25 per cent. However, almost half of our respondents see resources as the most significant challenge in growing their business over the next five years.

READ ALL THE KEY FINDINGS FROM THIS YEARS SURVEY

The industry will need to continue embracing innovation if it is to respond and adapt to the digital, environmental and societal changes demanding more efficient project delivery. However, it is clear from our respondents that more needs to be done, with almost half believing they are only ‘average’ at adopting innovative delivery models. It is also clear our respondents see Dublin as the city across the island making the most progress towards delivering future-ready, smart civil infrastructure, with Cork and Belfast following behind. 

In response, and to ensure our industry is sustainable and resilient in the long term, we believe we need to deliver projects more collaboratively, design our cites to be smarter and more connected and affordable; invest in more efficient processes; maintain and strengthen our FDI offer; and embed resilience into infrastructure design.

Achieving these will take time, effort and mapping out a shared vision for the future between communities and private and public sectors that sets out the best route forward. The long view starts now.

The industry will need to continue embracing innovation if it is to respond and adapt to the digital, environmental and societal changes demanding more efficient project delivery. However, it is clear from our respondents that more needs to be done, with almost half believing they are only ‘average’ at adopting innovative delivery models. It is also clear our respondents see Dublin as the city across the island making the most progress towards delivering future-ready, smart civil infrastructure, with Cork and Belfast following behind.

OUR SURVEY RESPONDENTS

IRELAND’S ABILITY TO DEVELOP AND ATTRACT TALENT IS AT LEAST AS IMPORTANT TO EMPLOYERS WHO WE SPEAK TO AS A SPECIFIC CORPORATE TAX RATE. THE ATLANTIC ECONOMIC CORRIDOR STRETCHING FROM CORK THROUGH LIMERICK, SHANNON AND GALWAY WILL BECOME A WELCOME COUNTERBALANCE TO DUBLIN AS INFRASTRUCTURE INVESTMENT IS DELIVERED. SURVEY RESPONDENT

In response, and to ensure our industry is sustainable and resilient in the long term, we believe we need to deliver projects more collaboratively, design our cites to be smarter and more connected and affordable; invest in more efficient processes; maintain and strengthen our FDI offer; and embed resilience into infrastructure design.

Achieving these will take time, effort and mapping out a shared vision for the future between communities and private and public sectors that sets out the best route forward. The long view starts now.

KEY FINDINGS

SKILLS REMAIN THE KEY CHALLENGE AHEAD

Top three factors impacting the delivery of major projects in the next 10-20 years.

Almost two thirds believe they are very good to excellent at planning, integrating and collaborating with project partners on project delivery.

Funding shortages and complex procurement approaches are the top reasons why projects fail to ‘get off the ground’.

Engineering will be the most important skill/talent to the industry in the next 10-20 years.

Only 15 per cent feel fully prepared to meet the challenge of sourcing the right skills/talent.

MORE INNOVATION IS NEEDED

Dublin is ranked as the city making the most progress towards delivering future-ready, smart, civil infrastructure. Cork and Belfast follow behind with similar results.

Backwards
Stagnant
Innovatory

Over half believe the industry is not evolving fast enough to meet the changing needs of society.

43 per cent agree their organisations are only ‘average’ when adopting innovative delivery models.

Preparedness for the future

Looking ahead to future challenges, only half of our survey respondents say they feel prepared enough to source the right talent. Fifty per cent also feel unprepared to manage future cyber threats. Meanwhile, some 38 per cent believe they are fully prepared to reduce their impact on the environment.

Not prepared
Prepared
Fully prepared
READ ALL THE KEY FINDINGS FROM THIS YEARS SURVEY

Industry spotlight

There’s no doubt that when we take stock of 2018 construction performance across the island of Ireland it was a case of two varying perspectives. While NI’s industry is growing, Brexit and the collapsed devolved government cast somewhat of a cloud of uncertainty over the region. ROI on the other hand experienced continued positivity.
READ THE FULL SPOTLIGHT HERE