Lack of productivity causing falling profit margins, says report

Published:  24 July, 2018

Six major construction firms have issued profit warnings during the first half of the year, according to a new report by Ernst & Young.

The professional services firm says that the companies, the names of which it does not release, are blaming low productivity, delayed contracts, and economic and political uncertainty for lower than expected profits.

It say companies should become more innovative and address construction’s skills gap, with government help, to get their profitability back on track.

It also pinpoints diligent risk management and discipline building as ways to reduce risk.

Seventeen percent of the construction sector has issues profit warnings so far this year. Problem contracts are a big contributor, says EY. It recommends companies “bid selectively and concentrate on their strengths, rather than just seeking to build turnover.”

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