Baselining and research into the construction sector in Scotland: final report

This report provides a characterisation of the construction sector in Scotland, looking at the main trends, issues and opportunities for growth in the future. It considers the economic performance of the Scottish construction sector, its future growth prospects and specific market opportunities for the construction sector in Scotland. The report also discusses the Scottish construction industry in relation to the UK and internationally. This report aims to provide an evidence base that will inform the development of a new strategy for the Scottish construction sector in 2012.

The methodology consisted of: a desk-based review of relevant publications, datasets and academic research; consultations with fourteen industry stakeholders (discussing recent trends, strengths, weaknesses, opportunities and threats for the sector in the future); and a survey of twenty-nine businesses from different parts of the sector to discuss the main issues facing the sector from an individual business perspective.

The report finds that Scotland’s construction sector has one of the most productive workforces among the UK regions. The sector is an important driver of the wider economy, due to the impact that construction investment has on other sectors. However employment, sales and Gross Value Added (GVA) levels have all fallen in the sector and supply chain between 2009 and 2011. The construction sector is dominated by micro-sized businesses, which account for ninety per cent of the sector in Scotland. The main strengths of, and opportunities for, the sector include: the acceleration of capital expenditure and a delay in Scottish public sector cuts; the Scottish Government’s continuing commitment to large capital projects; research excellence within Scottish universities; and support for skills development by further education and skills agencies. Problems and threats facing the construction sector include: low levels of private sector demand, a major decrease in house building and continuing decline in public sector investment; weak and complex public procurement practices and procedures; the lack of a national testing facility; a bureaucratic planning system; a loss of capacity and skills to the sector; and concerns about a double-dip recession and low confidence levels in the economy. The two main areas of market opportunities for the Scottish construction sector are likely to be: developing solutions that help address the drive towards a low carbon economy; and a move towards generating efficiencies and improved quality standards through the use of Modern Methods of Construction (MMC).

The report suggests that all types and sizes of businesses in the construction sector should be educated regarding the two main areas of market opportunities, to ensure that the skills and expertise they require are developed in Scotland. To accelerate further development, led by the industry and supported by the public sector, the report outlines various recommendations, which include: establishing a ‘Centre of Excellence for Scotland’, to combine the training and testing of new technologies to ensure that new products can be brought to market more quickly; gearing up skills providers to the main areas of demand; ensuring more information and support on low carbon implications for small and medium sized enterprises (SMEs) in the sector; promoting the economic and environmental benefits of offsite construction and MMC; ensuring that more Scottish SMEs have the ability to access public sector contracts; and assisting in the promotion of Scottish research and industry overseas. The construction sector should also aim to: increase the number of Scottish companies winning work from England; ensure that the procurement process is efficient; and allow for more joined up working between the different sub-sectors and representative bodies.