Irish Construction Industry Projected to Grow by 14% in 2018 - Construction Network Ireland - Construction Network Ireland

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Published in Construction on 17/01/2018

Irish Construction Industry Projected to Grow by 14% in 2018


CNI Editor reports

The Irish construction industry is projected to grow by 14% in value terms in 2018 – after expanding by 18% in 2017 – according to the AECOM Ireland Annual Review. John O’Regan, Head of Buildings and Places, AECOM Republic of Ireland, while welcoming this continued strong growth in Irish construction, highlighted ongoing concerns over the country’s slow infrastructure development in relation to homes, transport and utilities.

Some of the headline figures from the AECOM Ireland Annual Review include:

  • The value of construction output across the Republic of Ireland rose by circa 18% in 2017 and is expected to increase by 14% to approximately €19.5 billion in 2018;
  • This increased construction activity is now extending beyond the Greater Dublin Area;
  • Tender prices rose by 7% in 2017 and are expected to increase on average, across the country, by 6.6% in 2018 (7.5% rise in Dublin as compared to 5% in the rest of the country);
  • Construction costs are likely to increase by 3.5% in 2018 due to increases in the cost of labour and materials;
  • Employment rose by 10,500 between Q2 2016 and Q2 2017 or 7.5%;
  • Recruitment of construction staff will continue to be a challenge especially in the residential sector which is more labour intensive.

Looking at the bigger picture for the Irish construction industry, John O’Regan said that the growth in construction output in the Republic has been focussed on the commercial and Foreign Direct Investment (FDI) sectors as infrastructure continues to lag behind.

“The residential sector, transportation and utilities infrastructure have not kept up with the demands of a growing economy. There are plans and initiatives in place to address Ireland’s infrastructure problems, however, it is hard to identify which projects, due for completion in 2018, are going to significantly alleviate immediate pressures.”

John O’Regan said that while it is very positive that there is an 18.5% increase in value terms in the public capital programme, there is a concern around the delivery of this significant increase.

“Do the various government departments have the ‘shovel-ready’ projects available to implement the planned increase in public capital spending in 2018? The pace of development of public infrastructure is likely to continue to be hindered by a lack of internal resources, a challenging planning process, inappropriate procurement routes and time-consuming approvals structures.”

In relation to residential development, John O’Regan welcomed the proposal in the Draft National Planning Framework to put in place Metropolitan Area Strategic Plans – which will cross local authority boundaries – for the country’s five cities.

“The recent success of the Dublin Docklands Strategic Development Zone shows that where demand exists, developers can respond quickly. But to achieve similar success in the vital residential sector, suitable statutory processes and advanced physical infrastructure across utilities and transportation are needed.”

John O’Regan said that a survey they conducted for this Annual Review indicates that the industry sees the two most significant challenges being resource shortages – especially construction workers – and tender inflation.

“Ordinarily, the rate of tender price increases we’ve witnessed over the past few years would not be sustainable, but we are coming off the back of the most significant construction industry crash in a generation. Competition for resources is likely to continue in 2018, which will continue to put pressure on tender prices,” John O’Regan concluded.