Business Environment

 

For the construction industry to flourish and achieve its undoubted potential, there are a number of critical issues with affect its business environment…

Issues of note impacting the business environment 

Capital Budget

Issue: The capital budget is stagnating, leading to reduced return on investment due to inflation.

Challenges:

  • Inflationary Pressures: Over the last 24 months, significant inflation has eroded the value of the capital budget. This has made it increasingly challenging to achieve intended outcomes with the allocated funds.
  • Allocation to NI Water: While a substantial portion of the budget is directed towards NI Water, this allocation has implications for the budgets of other government departments, requiring a balanced approach to ensure efficient resource distribution.

Solutions:

  • Mutualisation: Implementing the mutualisation of the Housing Executive and NI Water, which would streamline operations, reduce resource consumption, and increase available capital funds.
  • Multi-year Capital Budget: Introduce a multi-year capital budget to encourage a longer-term approach, allowing for more effective infrastructure planning and minimising inefficiencies caused by annual budget fluctuations.
  • Enhanced end-year flexibility: Negotiate an agreement with the Treasury to enhance end-year flexibility within the annual budget, providing room for adjustments in response to changing economic conditions.
  • Maximising RRI Borrowing Facility: Fully utilise the Executive's Resource for Results Investment (RRI) borrowing facility, providing additional financial resources for capital projects.
  • Leveraging FTC Money: Explore opportunities to leverage Financial Transaction Capital (FTC) funds more effectively, which can be instrumental in supporting various initiatives, including Co-Ownership Housing.
  • Co-Funding with Local Councils: Engage with local councils to participate in co-funding or partially funding NI Executive projects, facilitating more projects.
  • Reforming Business Cases: Reform the existing business case structure for capital projects to make budgets more responsive to inflationary pressures, as the current 10% tolerance rules may not suffice in an environment with rapidly changing costs.
  • Infrastructure Commission: Establish an independent Infrastructure Commission for Northern Ireland, which can contribute to long-term decision-making and planning, ensuring projects align with broader strategic goals.


Government-Industry Engagement

Issue: The disbandment of the Construction Industry Forum (CIFNI) and the absence of a suitable engagement body

Challenges:

  • Lack of Collaboration: The absence of a collaborative forum between the construction industry and the government has hampered effective communication and cooperation.

Solutions:

  • Re-establish Engagement Body: Re-establish an engagement body to facilitate communication between government entities (such as CPD and CoPEs) and the construction industry, aiming to foster collaboration and partnership.
  • Retain Procurement Board: Maintain the Procurement Board, which plays a pivotal role in public procurement, ensuring that procurement processes remain effective.


Carbon Reduction and Climate Change

Issue: Emerging trends and targets to reach a net zero economy impact and disrupt every sector and will necessitate upskilling and adapting to new technologies and material use.

Challenges:

  • Just Transition: The path to net zero needs to be gradual, well-resourced, signposted, and proportionate to enable sectors to reduce emissions and meet targets, ensuring a ‘just transition’ is achieved.
    Investment: An ambitious approach needs to be matched by appropriate investment and coordinated action across government departments.
  • Silo Approach: It is imperative that departments work together and share appropriate information to avoid a duplication of efforts and for the avoidance of undue strain being added to industries and businesses across the local economy.

Solutions:

  • Collaborative Approach: Collaborating to ensure various strategies from a number of departments knit together to ensure effective and timely progress.
  • Passivhaus: Drive forward, through their procurement, the number of new public sector construction projects such as schools and colleges that are built to Passivhaus or equivalent standard.
  • Building Regulations: Deliver over the next decade the extensive uplift of Building Regulations detailed in the Energy Strategy.
  • Retrofit Strategy: Bring forward an ambitious housing energy efficiency retrofit strategy, co-designed with the construction industry, that includes a combination of loans and grants to incentivise homeowners.
  • Retraining: Provide government support for industry retraining programs in new carbon reduction technologies, such as the installation of heat pumps.
    Smart Metering: Take forward a significant program of smart metering installation in our housing stock, given how far behind the rest of these islands we are on this.

 

Findings of latest NIAO report demand immediate focus from NI Executive

Posted on 27/02/2024
CEF comment on the publication of the NI Audit Office’s follow-up report on Major Capital Projects

 


 

Material Supply Chain Group Statement

Posted on 22/02/2024
The Construction Leadership Council have issued a further Material Supply Chain Group Statement

 


 

NI Apprentice Week: 2023 CEF Apprentice of the Year, David Reid

Posted on 07/02/2024
As part of NI Apprenticeship Week 2024, we're celebrating the vital role apprentices play in the construction industry. In this article we look at the career journey of 2023 CEF Apprentice of the Year Winner, David Reid from Charles Brand.

 


 

CEF's Patrons

 

Northern Ireland Electricity Networks PKF-FPM ABL Group Mills Selig