Brexit’s impact on costs: how this affects the UK construction industry

Recent talks revolving around the negotiations for Brexit may be a cause of worry for the majority of businesses operating in the construction industry, in the near future a gap in the labour market is expected to be seen as the migration of workers out of the UK takes place.

Due to our specialism in the construction industry and speaking to our clients we have found that changes in the labour market could have a serious impact on the bottom line for many business owners operating in that industry. This is as a result of the available labour force dwindling resulting in demand for skilled workers to rise, meaning a higher cost for these staff solely due to their scarcity.

We may find that the healthy profits seen in the past could turn to barely breaking even, the key to this balance will be in the form of having a large enough pool of existing labour. Studies carried out by the Royal Institute for Chartered Surveyors confirms this issue and has found that due to an ageing population and lack of an adequately skilled labour force many businesses may find this as a major obstacle to growth in the future.

As businesses wait for the labour pool to recover attention should be placed on increasing cost efficiencies so that profitability is not affected in the short term. By paying attention to the bottom line businesses can offset the higher cost of labour which will result due to the reduced availability of migrant workers.

At CRM we are able to offer clients the opportunity to scrutinise costs and perform sensitivity analysis, which means that we can help to predict how changes in costs will affect profitability. Through the use of sophisticated modelling techniques combined with sensitivity analysis tools we can also help to forecast profitability at differing levels related to economic growth in the marketplace. Many of our clients feel this information is essential to support their planning and day to day operations.

Through the use of our expertise and tools we can perform a “what if” scenario allowing us to help you predict your future financial performance and help align your business with your future long-term goals. If you would like to talk to us about your business please call us on 01865 379272.