According to the latest state of trade survey by the Building Engineering Services Association (the BESA), building engineering services contractors saw turnover increase in the six months from July to December 2015.

The new report indicates that the industry remains 'in good shape', although the rate of increase in order books and enquiries has slowed compared with the previous six months. Tender prices continued to rise throughout the period, but at a slower pace than during the first half of the year.

Problems with late payment improved slightly but remain a serious impediment to business growth, according to BESA members, who also reported that increasingly severe shortages of skilled employees, particularly design engineers, quantity surveyors and planners has led to a sharp rise in labour costs.

Although the findings suggest that the market is cooling, the BESA survey indicates that the ‘net optimism measure’ remained positive, albeit down from +45% to +24%. With the exception of Ductwork Group members, companies of all sizes, specialisms and geographical location remained optimistic, although to a lesser extent than at the time of last summer's survey.

Employment levels remain healthy, but smaller companies (those with an annual turnover under £1m) are not as active in recruitment as their larger counterparts. Overall, a net of +37% expected to employ more staff in the coming six months of this year, a similar level to the last survey. There was also a net increase in those engaging agency labour.

BESA president Jim Marner (right) said that the next three years would be hugely challenging, but also potentially rewarding, for building engineering services firms. He said: 'Skills shortages, labour costs, project risk, procurement and quality control will all become even more significant in the coming months along with efforts to adopt more modern design methods.'

Mr Marner added that the industry was facing its second 'perfect storm' in recent years, with the growth in workload coinciding with skills shortages and pressure on cash flow - and that contractors would have to 'step up to the challenge once again'.

The market drivers and technical challenges faced by firms in recent times would be 'magnified times ten' between now and 2018, according to the president.

The next three years would also be full of opportunity, however - the secret of future success lying in the creation of a 'smart' workforce 'equipped with tomorrow's skills, but operating in today's marketplace'.

'The wider use of BIM, along with offsite manufacturing, means we will need new kinds of skills,' Mr Marner explained. 'We will be spending less time on-site, but that doesn't mean we will need a smaller workforce. What we will need is a smarter one.'