Retention and retraining should be the focus of construction firms, say Turner & Townsend in their latest analysis
The Turner & Townsend construction report warns firms that they must focus on their skills and workforces.
The report also warns that construction costs are unlikely to change any time soon due to global disruption.
The Turner & Townsend construction report predicts TPI will not fall
The report, officially titled the Spring 2025 UK Construction Market Intelligence Report, or the UKMI, predicts that the Tender Price Inflation (TPI) is not likely to fall soon in spite of the recent easing of construction materials price inflation.
In fact, the UKMI report predicts that TPI will remain the same for the next three years in the face of the government’s push for real estate and infrastructure development.
Real estate inflation from 2026-2029 is also predicted to remain constant at its current level of 3.5%, and infrastructure is the same at 5%.
The report states that the key reason there should be concern for this is the skills shortage causing stiff competition and rising wage growth, as the pool of qualified workers for various jobs is slim.
The share of the UK labour force active in construction is at a record low with employment down 3.4% per year. While the government is establishing initiatives to combat this, including Skills England and £600m skills package, the future is still uncertain as to how much of a difference this will make.
The report produces a foul mood for the industry
A key issue in the report is the fact that wage rises are rising while work is falling, particularly new work which is used as an indicator of construction demand. The Office for National Statistics (ONS) recently published new figures showing that new work has fallen by 2.4% in the most recent quarter, as well as a drop in key material prices.
The Department for Business and Trade have reported a 3.1% quarterly decline for structural steel and a 2.4% decline for sawn wood.
As such, the UKMI is recommending that construction firms focus on skills and training for their workforce to combat the skills shortage, as well as opening up to hiring new labour.
Martin Sudweeks, UK managing director of cost management at Turner & Townsend, says: “One only has to look at the slate of current and upcoming announcements to see how central the construction sector is to the UK’s economic and social goals – from the recent Planning & Infrastructure Bill to the hotly anticipated industrial and infrastructure strategies. However, multiple headwinds will challenge our ability to deliver against these ambitions.
“All eyes are set particularly closely on US tariffs. But while there remains significant uncertainty around how these tariffs will evolve and the resulting impacts across the globe, we need to ensure we are not taking our focus off those issues which are within our power to solve – our people problem being one of the most critical.
“Half a decade on from the disruption of the Covid-19 pandemic, year-on-year employment is still shrinking. We need to radically rethink how we attract talent – looking to a wider set of disciplines, backgrounds and skills that will deliver the modern, digitally-enabled, creative construction workforce of the future.”
