Construction—state of the industry review

Construction—state of the industry review

Our panel of experts from Eversheds, Fenwick Elliott, Canary Wharf Group, Beale & Company and Silver Shemmings Ash review the state of the construction industry and make predictions for 2018.

First published on LexisPSL Construction. Click here for a free trial.

The experts

  • Rob McNabb (RM), partner, Eversheds
  • Jeremy Glover (JG), partner, Fenwick Elliot
  • Martin Potter (MP), Canary Wharf Group
  • Will Buckby (WB), partner, Beale & Company
  • Tim Seal (TS), partner, Silver Shemmings Ash
  • Ian Masser (IM), partner, Beale & Company

What is the current state of the UK construction industry?

RM: The market remains active despite the uncertainties created by Brexit. We have seen, to an extent, the uncertainties being offset by a weaker pound, which is encouraging international investors who are willing to take a longer-term view to invest. Certain sectors continue to grow, in particular student accommodation, distribution centres and data centres, and there is some upturn in residential new builds. These are generating opportunities in the market in addition to the larger-scale public sector lead infrastructure projects.

The industry is continuing to face both challenges and opportunities in fairly equal measure and, to date, it’s benefiting more from the opportunities than it is being impacted by the challenges.

What are the greatest concerns at the moment?

JG: The biggest concern for the construction industry is the prolonged uncertainty brought about by Brexit. The issue lies in the fact that we do not have any real idea of the government’s expectations of a post-Brexit construction industry, or its key objectives for construction in the ongoing Brexit negotiations. In more tangible terms, one of the biggest concerns is labour supply. The free movement of labour has been a major success factor in the UK construction industry, with EU labour helping to cover an ageing workforce and what some have seen as a failure to invest in training and development to encourage the best home-grown talent in entering construction. This uncertainty makes it difficult to Brexit-proof a contract.

Unless a construction contract expressly addresses Brexit-related risks, it is doubtful that a party will be able to use force majeure clauses or frustration arguments to try and withdraw from what could turn out to be a bad contractual bargain. One reason for this is that it will be difficult to establish what might and might not be considered as being reasonably foreseeable. Nevertheless, we have seen Brexit-related clauses seeking to address which party takes the risk f

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