Scotland’s construction sector confidence crumbles

Ian Honeyman spoke of employer concerns. Picture: Getty
Ian Honeyman spoke of employer concerns. Picture: Getty
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SCOTLAND’S construction sector has yet to get fully back on its feet, with confidence taking a tumble over the summer, according to a report out today.

The latest construction monitor from the Scottish Building Federation (SBF) will come as a blow to the industry as it follows three consecutive quarters of rising confidence, culminating in a record high of +35 in the second quarter. That confidence barometer has fallen 14 points in the three months to September to stand at +21.

SBF commercial director Ian Honeyman said: “The decline in industry confidence this quarter underlines employer concerns about the long-term sustainability of the growth in construction output we’ve witnessed over recent months – and the growing issue of skills and capacity shortages within the industry.”

The survey also asked a series of questions about employers’ experience of being subject to performance guarantees or bonds as a condition of carrying out new work.

Typically, these guarantees require the contractor to hold a defined percentage of the total contract value on deposit with their bank. This can then be paid to the client in the event that the contractor defaults on the terms of its contract.

Most respondents who had experience of being subject to these terms reported that they took the form of performance guarantee bonds. Almost half of those firms that asked to provide a bond reported that its wording had created difficulties in obtaining the bond from the guarantor, typically a bank.

B added: “Our survey suggests that too many contracts are still subject to bank guarantees and this is having a negative impact on cash flow.”