Forecasting in Construction

Understanding the diversity and scale of the construction sector and its many different elements can be a challenge for anyone, this is where we come to rely on Forecasting.

In 2018, UK construction contributed £117 billion to the UK economy, 6% of the total. The construction sector provided employment for 2.4 million people in Q2 2019, representing 6.6% of total UK employment through 343,000 Construction business – 13% of all registered UK business. In the last year we saw construction activity fall by 12.5% thanks to the worldwide pandemic, despite the final quarter of 2020 showing a 4.6% increase.

At the best of times, forecasting can be difficult to get right as there are multiple influences on the calculations, not to mention considering all the different sectors of construction that are intertwined with one and another.

Many forecasters will look at historic data, also known as ‘lag indicators’, from sources such as The Office for National Statistics (ONS). They then take data for broad economic projections, seasonal trends and news of new projects and initiatives including the Government Construction Pipeline. Generally, there will then be a forecasting panel who will also apply their experience. The key construction forecasters are Experian Economics and The Construction Products Association (CPA), who look at Construction as a whole and then separate out the data broadly for key sectors such as Public, Private, Residential, Commercial and Industrial. There are also a number of smaller specialists such as Hewes & Associates who can tailor forecasts to a client’s specific interests. These forecasts look a couple of years into the future and can be very detailed across all sectors of the construction industry, usually updated and published quarterly.

Construction project database services, such as Glenigan and Barbour ABI also produce construction forecasts. The key difference between these and other forecasts are that they are fact-based, meaning that they are based on measuring the changes in planning applications for the construction industry. These forecasts are shorter term and tend to only forecast forward into the coming 12 months and are updated far more regularly, sometimes as often as every 6 weeks.

Generally speaking, forecasts differ depending on their sources of information and attitude to promised initiatives happening within the construction industry. If you are looking for long term forecasts based on broad construction overall, then The CPA Construction Forecasts are a good place to start. If you are looking for more medium-term forecasts focusing on specific sectors of construction, then Hewes & Associates are the forecasts for you. However, if you only want a quick short term forecast of how construction will change over the next couple of months then you can’t go wrong with Glenigan or Barbour ABI.

Competitive Advantage have partnered with and use Hewes & Associates, as we feel these strike a nice balance between medium and long-term forecasts and are comprehensive enough to help with any planning for the future. The Construction Outlook published by Hewes & Associates provides forecast data for the next 2 years and is updated quarterly for Housing, Infrastructure, Public non-Housing, Industrial, Commercial and Repair & Maintenance.