The Farmer Review tells Utility Contractors: 'modernise or die'

Utility Contractors may have been tempted to disregard the bleak picture painted by Mark Farmer's October 2016 Report, but the underlying message to the industry was clear: 'modernise or die', as the sub heading went. 

 

 

Farmer Review Utility Contractors

Farmer's analysis is that the construction industry is not making enough profit and as a result there is an under investment in training and development, in innovation and in raising productivity. But Farmer's is far from being a lonely voice, as evidence of an extreme profit crush shows up left and right. As customers keep mentioning, success in construction and utility contracting comes when you know exactly how much you have made every day.

The EY report “UK Construction : margin pressure”, analysed the accounts of the top 100 UK construction companies, including Utility Contractors, and found that average profit margins have fallen from 4.0% in 2007 to under 1.8% in 2016. This is painfully clear in the graph below (Source: Capital IQ, Financial Markets).

  • Disappearing UK Construction margins

 

Construction News’ annual report in August 2017 revealed that the Top 10 contractors in the UK had an average pre-tax margin of -0.5%.

The analysis is that increasing workloads have put pressure on contractors’ profit margins due to : 

·     Lack of skilled labour available in the market ( due to exodus during recession )

·     Materials prices have increased due to 10% drop in sterling

·     Excess of capacity ( competition ) relative to supply

·     Framework agreements provide stability – but lock in low pricing 

·     Backlog of problem contracts – an ongoing legacy of the recession

·     Lack of investment in R&D and innovation

The Farmer report recommends that now is the time to allow the opportunities from digitisation to offset the risks of continued reliance on labour intensive techniques.

The EY report recommends investment in ERP solutions and innovative technology implementations to increase the visibility of financial performance and increase overall operational efficiency.

At GeoPal, we have built an innovative mobile data capture solution used by Utility Contractors to replace all field paper forms with mobile forms, providing Management with real-time visibility of commercial, operational, quality and Health & Safety performance.

This has become the leading mobile solution for utility contractors in Ireland and is used by many Top companies worldwide,  including Babcock International, Actavo (watch video here), Coffey Northumbrian, FLSmidth and Landis + Gyr.

GeoPal is used by Utility Contractors to increase the profitability of their contracts, meet the reporting obligations of their clients and manage the health and safety compliance of their workforce.

With GeoPal Utility Contractors have increased their operational profits by 3 percentage points by :

  • increasing field worker productivity by 10%,
  • reducing administration costs by 50%,
  • reducing Health and Safety incidences by 75% 
  • reducing the time to invoice for completed work from 30 days to 3 days

GeoPal integrates with existing ERP solutions and for customers looking to upgrade we work with our partners to offer an SAP or Netsuite ERP solution combined with the GeoPal mobile data capture application.

Watch the video on how the digital transformation process that modernises constrution and utility contracting companies. 

If you are wondering how technology could help modernise your business, get in touch

Share This

Make the Connection!

We work with your company to implement workforce mobility solutions that transform the efficiency of your field operations. Get in touch to start developing your own solution today.