Guides & Advice

What will the construction sector look like in 2021?

Published: 11th January 2021
Area: Real Estate & Planning

As one of the hardest hit sectors of 2020, the construction industry has been forced to adapt to survive, potentially changing the shape of construction in the long run.

However, is there more change on the horizon in 2021? Here are our five predictions for the coming year:

  1. Brexit and beyond

It was clearly very welcome news that a trade deal with EU was agreed prior to the end of the transition period. However, despite this,, the construction sector still faces three major issues:

 

    • The skills gap - EU labour has helped bolster the construction worker pool for years. Post Brexit hiring EU workers will require navigating a lot more bureaucracy, with EU nationals arriving after 31 December 2020 needing a visa or sponsorship to secure employment.
    • Changes to the trade in goods – The deal with the EU provides that trade between the UK and EU will not be subject to tariffs or quotas, providing that the goods originate in either the UK or EU.  Notwithstanding this, there is going to be an increase in regulatory red-tape and border controls which may lead to price inflation from EU suppliers.
    • No more open borders between the EU and UK - With supply chains having to adapt, the construction sector can expect increased delays and longer processing times at the border for any incoming materials or tools.

To help the transition period to go as smoothly as possible, contractors should open effective channels of communication with third parties, so any issues can be resolved quickly. It’s also vital to plan construction work carefully, including a buffer zone (or float) to account for any delays, if possible.

Our Brexit & Beyond hub contains the latest news, articles, briefings, commentary and webinars concerning the legal implications of Brexit, ensuring that you have all the information you need to drive your strategic thinking now and in the future.

  1. Health and safety concerns in construction 

COVID-19 has put safety at the top of the priority list for the construction sector. On 4 January 2021, the prime minister announced another national lockdown in England. The construction sector can remain open for business but to ensure staff safety and mitigate the spread of the virus, the industry has had to implement social distancing, enhance cleaning protocols and improve equipment. This is likely to remain the case until the pandemic is over.

Although it can be hard to ensure proper social distancing is being followed in an industry where close contact working and cooperation is essential, working in smaller teams and staggering shifts can help to keep workers safe.

Although not a new concept for 2021, as the winter months, take hold, freezing temperatures may also cause the working environment itself to be less comfortable for employees – particularly those in the construction sector.  Therefore it’s important that employers know where they stand when it comes to cold weather and their health and safety responsibilities.

  1. Modular construction is the future

The use of Modern Methods of Construction (MMC), such as modular, is on the rise. We’ve seen the uptick in this sector particularly in social housing providers switching on to the benefits of MMC. We consider that 2021 will likely see this trend continue and probably gather even more pace.

MMC promote lower worker density and is often carried out in large airy buildings, keeping people safe and reducing labour costs. Prefabricated building also offer both long and short-term solutions, and being flexible is currently a very attractive option for the sector.

  1. Controlling cash flow

The pandemic has put huge financial pressure on the sector, and as such, some companies may not be in a position to pay. Should that happen, parties may be forced to either bring or defend a claim for non-payment.

If the correct processes are not followed, this could escalate to a ‘smash and grab’ adjudication, where a party claims the whole amount of the payment applied for simply on the basis that no payment/ pay less notice was issued. However, by having the appropriate procedures in place across all projects, businesses can ensure that payment deadlines are met.

Read more about the steps you can take to improve your cash collection.

  1. Becoming greener

To meet the 2050 net-zero target, the UK construction sector needs to continue to innovate and adapt. From turning waste into bricks to carbon embedding, the world of sustainable building is growing.

However, the problem is not diversity but the price tag. To cope with higher prices, fiscal incentives would encourage contractors to go greener. It remains to be seen what the Government might do on this front.

Looking ahead

Like many sectors, construction has had to change its practices and procedures over the last year. However, even putting the pandemic aside, the sector still needs to rapidly transform as both Brexit and the 2050 net-zero target approach. Staying flexible and moving with the trends will ensure that the construction sector thrives in 2021.

Contact us

If you’d like advice or guidance on how the construction and real estate sector may be impacted during 2021, our specialist construction law team can help – contact Kate Onions or Adam Watson for support.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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