Although there are signs of jobs on the horizon, 2011 will be a year of some concern to most mechanical and electrical (m&e) contractors.
This is one of the main conclusions of the latest m&e intelligence report focusing on m&e contractors from research organisation BSRIA.
The report's author, Gerry Samuelsson-Brown, said: 'Most major firms started laying off staff at the start of the recession in order to work 'leanly'. Although a sensible decision from the company's view point, when combined with other external factors, such as general economic constraints and fewer projects around, a number of problems now face m&e stakeholders.'
She reported that her discussions with m&e contractors and their clients had flagged up a number of issues, including:
· More reliance on subcontract labour ('yet clients repeatedly state their preference to use an m&e firm's own staff on the grounds that they consider them better committed, trained, and more likely to stay the course in terms of resolving snagging, etc').
· Concerns from a contractor that the supply chain might compromise safety and quality as costs are driven down in the current economic market.
· To enable a snag-free / timely hand over, phased hand over of projects, area by area, might help.
· Contracting firms are stretched: 'Many personnel are doing the job of two or even three people, making for a fraught workplace.'
· Some m&e branches have shut down and the need to go for whatever jobs can be won will necessitate more mobility of the workforce ('this will compound issues for contractors working long stretches away from home').
· Many partnering type set-ups have fallen by the way and m&e contractors find themselves bidding against a larger number of firms, with more uncertainty over whether the bid will be successful.
· The above creates an environment of 'lowest bid being attractive over best solution / best value'.
· In order to fight their corner, some clients have commented that contractors are more contractual and more inclined towards being confrontational.
· The above suggests that when times are tough, one reverts to type. The 'blame' culture serves in no-one's best interest.
· Payment terms have always been a moot point - cash flow will be increasingly important. There are indications that debtor days have increased.
· It is taking longer for clients to make decisions to commit to work / turn enquiries into real work.
Ms Samuelsson-Brown concluded: 'Although this makes for depressing reading, actually the future holds massive opportunities for m&e contractors, but only so long as it is appreciated that mainstream work might not be in new building, but could well shift to energy solutions and raising the calibre of systems within existing buildings.'
www.bsria.co.uk