DIGITAL TRANSFORMATION

Barry Duncan

The UK construction sector endured a torrid time during the enforced COVID-19 lockdowns. In spite of government support, the welcome extension of the Help to Buy scheme and attempts by companies to manage the immediate impacts, many contractors lost work and some companies were forced to close down completely, with over 2,000 insolvencies recorded across the industry in 2020.

In broad terms, the UK housebuilder sub-sector has recovered well from the initial shock to business caused by the pandemic, but still accounted for over 11% of all construction insolvencies in 2020, with 234 such events recorded. As the segment continues to emerge out of the difficult environment they have had to endure in 2020 and 2021, a good many companies are still struggling to recover and face the very real possibility of closure. If anyone needs convincing of the real and persistent risk to housebuilders, shortly before publication a Stewart Milne subsidiary, that had been formed to deliver over 3,000 homes at a development near Aberdeen, called in administrators after revenue halved. That example was largely due to local factors. The pandemic, combined with the UK’s departure from the European single market has further crystalised challenges for many businesses relating to the restricted supply of building materials and skilled labour. Those challenges, combined with ever more onerous safety compliance and regulations with regard to sustainability, quality control and many other factors, has created an unwelcome perfect storm for less well-prepared housebuilders.

Scale and a strong balance sheet can provide a degree of protection but large numbers of housebuilders continue to work with old operating models and consequently generate low profit margins. Most of those housebuilder owners and company leaders are well aware of many of the ongoing factors that have historically, and currently, face their hard-pressed businesses, yet often do not have the time, knowledge or capital to improve profitability. Some of these factors might be addressed by wise strategic shifts or more efficient utilisation of limited resources. Panamoure’s work in providing technology solutions to address some of the challenges affecting housebuilder clients demonstrates that this is one further lever to help reduce the impact of those adverse factors. Pragmatic implementation and integration of appropriate IT applications will advance operational efficiencies and help construction and housebuilder clients operate more effectively in a sector that is still only slowly recognising the value of digital solutions.

In this paper we look at some of the positive steps that can be made through digital application to IT services which, for far-seeing housebuilders, has made a significant difference to efficiency and consequently improved profitability. For those that might not be aware, in the second half of this paper, we show how the UK housebuilding market has become more competitive over the last decade. There are growing numbers of housebuilder companies, fighting to secure a greater share of national home building output that has not increased at a similar pace.

As the number of insolvencies indicate, it is an unforgiving sector for hard-pressed operators, or even for those simply meeting with some bad luck. But just as there are unfortunate corporate losers, there are also great examples of well-deserving winners and examples of companies implementing digital IT optimisation to contribute to securing that sought after increased market share and profitability.

In this report, you can expect to find:

  • A Technology-First Approach Will Help Improve Performance
  • Digital Opportunity in the Housebuilder Sector
  • Digital Transformation and 20-Plus Optimisation Roadmap Considerations
  • The Digital Optimisation Roadmap and a Complexity / Benefits Matrix
  • Cultural Change is Essential to Embracing 6 Core Components for Successful Digital Transformation
  • Digital Optimisation Helps Housebuilders to Grow But Challenges Will Persist

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