The Construction Index Top 100 for 2020 has been released. The reading is pretty grim, and there are some notable - likely negative - filings still to come.
The Top 10 contractors have a margin of -2.1% between them.
Across the Top 100, it is only 2.1% - given this includes specialist suppliers and subcontractors (who traditionally always perform with higher margins than the Tier 1s), it is a stark warning to the industry.
These companies can no longer go on absorbing disproportionate risk allocation in return for margins this low. If we believe, as the UK Government does, that key to recovery is in "Getting Building", we're going to need all of these contractors, and we're going to need them to be performing at their most efficient, innovative and collaborative best.
The current model, with contractors gambling on how much they estimate a project will cost, and driving down costs thereafter, is not fit for purpose.
We were already talking about disruption in the industry, from the need for vertical integration to the growth of modern methods of construction, and more recently the pressure of Net Zero, but perhaps the COVID-19 pandemic has made that discussion more urgent and more crucial to survival.
I don't think we are still talking about 'evolution rather than revolution' - the former moves too slowly for what is needed now.
Those same 100 companies generated profits before tax of £734m, which is down 38% on the figure for the previous year. Given that these accounts cover periods before the virus outbreak caused the construction industry to grind to a halt, this is a major concern.
https://www.theconstructionindex.co.uk/news/view/top-100-construction-companies-2020