UK Construction – The Importance of Diversification of Products & Services
Whilst construction is a vital sector for the UK, it is not immune to pressures and downturn in the wider economy. Over the years, the industry has continued to offer a wide range of career opportunities, competitive salaries and work experience but, like other sectors, is vulnerable to economic forces and government restrictions. With this understanding, why is the diversification of products & services for a UK construction business so important?
One of the most valuable strategies for surviving economic slumps and maintaining a steady income stream during a slowdown is diversification. Diversification for a construction business may include taking on public or private projects, branching out into new service work or expanding a team's skillset with new trades and investment.
The diversification of types of projects and targeted client base is also critical for the success of businesses during a recession. The COVID-19 pandemic exposed the industry's vulnerability to economic forces and government restrictions. Public projects offer stability but require strict adherence to regulations, tight bidding and low profit margins. Private projects, whilst offering more flexibility in pricing and negotiation, are more volatile. Therefore, a balance of both public and private projects is often the best approach.
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In addition to projects and clients, diversification of products, services or even sectors is also essential. Strategic diversification into other construction-related opportunities often helps cushion the effect of economic downturn for a business. For instance, a residential construction company can diversify its services to include commercial projects or service work. A company can also expand its repertoire with new trades or skills to remain competitive in a challenging environment.
Despite challenges such as increased material costs, supply chain disruptions and labour shortages, the industry continues to grow, however, the importance of diversification cannot be overstated for the UK construction industry.
Group Facilitator at The Construction Network
1 年I think diversification and innovation is the key. Construction companies also need to be less risk averse in relation to attracting different work. Too many are driven by one bad experience, which normally they are culpable in and there is an air of them being comfortable in their discomfort rather than risking change. Different thinking is required at all levels. In the case of SME's their expertise is sometimes ignored as contractors think they are just trying to increase the cost, where in fact, what they are actually trying to do is get the job completed faster so they can manage their resources better and move onto the next project without a hangover from the last one.