2023 priorities: Supporting SMEs

Just a few weeks into the New Year, and we are already seeing that significant challenges lie ahead for the construction industry.

The sector has succeeded against the odds for the best part of a year – largely due to its resilient nature and ability to swiftly adapt to changing market conditions.

However, December saw the fastest drop in construction activity since the early days of the pandemic, according to the latest Purchasing Managers’ Index (PMI) data. Perhaps more concerningly, it also found firms were running short on optimism for the year ahead, as they cut back on labour amid weaker client demand.

With this in mind, it’s more important than ever that we strive to support one another to keep the sector healthy while ensuring projects continue to progress effectively. The construction industry needs to renew and maintain its commitment to protect and nurture SMEs throughout 2023.

SMEs are the lifeblood of the economy and play a central role in the performance of the construction sector at large. As such, they are likely to be the hardest hit by rising prices and labour shortages in the current climate, not to mention poor behaviour, such as delayed payments.

In short, if SMEs suffer during the imminent recession, everyone suffers. From principal contractors and public sector clients to communities and the economy.

My request at the start of this year is that we all follow the lead that gold standard procurement frameworks take by providing confidence for SMEs with a regular supply of work, whilst supporting the pressures they face through clear and open dialogue.

I was interested to read the news last week that the government is expected to miss a key target to spend one-third of its national procurement budget on medium-sized enterprises by 2022. Complex rules have long been the major challenge for SMEs trying to win work and the new Procurement Bill will go some way to help address this and allow SMEs to carry out more work on public contracts – particularly at a local and regional level.

At SCAPE, SMEs are crucial to the successful delivery of projects across our frameworks. Each framework has a stringently fixed requirement for the engagement of SMEs which in turn creates a positive impact on local economies and job creation. All of our delivery partners share the same vision and passion to promote SMEs within their project teams which helps our public sector colleagues to deliver real-term socio-economic benefits within communities right across the UK.

Ultimately this is how we measure success.

Last year, our partners recorded an 88.2% SME engagement rate, demonstrating our overarching commitment to actively engaging the most diverse and talented local supply chain in the country.

SCAPE’s new ￡750million Regional Construction framework is just one example of how our frameworks aim to provide dedicated opportunities for local contractors. The four-year framework builds on the success of our previous framework which delivered 400+ projects, with local spend and labour within 20 miles of each project both accounting for 60% of the framework’s output.

Many will look to the construction industry as a key barometer for signs of growth in the UK economy during the first half of 2023, which only heightens the importance of SMEs in the sector. It is vital that we don’t lose access to talented SMEs and the millions of people they employ as a result of poor project management or a race to the bottom on price and margins.?