Since the start of 2008 Leading Edge has been running our 'State of the Industry Barometer' on a quarterly basis to find out how construction businesses are dealing with the market conditions. The survey is run in association with the Chartered Institute of Marketing's Construction Industry Group and Construction News.

1. ‘The State of the Industry’
Construction Market Barometer
February 2014
Prepared by Leading Edge Management Consultancy in association with
Chartered Institute of Marketing's Construction Industry Group
(CIMCIG)
Construction News

2. Contents
1. Introduction
2. Executive summary
3. Key findings
4. Detailed findings
5. Sample size & methodology

3. 1. Introduction
The Construction Market Barometer is produced by Leading Edge Management Consultancy in
conjunction with the Chartered Institute of Marketing's Construction Industry Group (CIMCIG) and
Construction News
The barometer has been running on a quarterly basis since 2008 Q1 and is completed by senior
directors and managers working for companies across the construction industry supply chain
The aim of the barometer is to provide insights into how the construction industry is performing in
terms of sales and market conditions and to find out what is happening to marketing budgets and
recruitment
Background to the authors
Leading Edge - specialise in market research, analysis, forecasting & marketing strategy in
the construction and building products industries. www.lead-edge.co.uk
CIMCIG - work to raise the status of the marketing profession within the construction
industry. www.cimcig.org
Construction News – provide construction industry news and insights. www.cnplus.co.uk
To find out more about the barometer please contact Nick Hollaway at Leading Edge:
nick.hollaway@lead-edge.co.uk Tel: 01252 279990.

4. 2. Executive summary

5. Marketing focus & strategic outlook
Conclusions from research
The outlook over the next 12 months continues to remain positive for many companies’ marketing departments:
o 69% are set to grow their marketing spend, with the lowest number recorded since the survey began expecting to make cuts (4%)
o 62% expect to see no change in their marketing headcount, with 33% of companies expecting to make increases.
There are four strategic areas that are now considered to be more important than they were 12 months ago:
o Recruiting staff / training & retention of best staff (175% increase in the number of responses)
o Breaking into new markets / regions (89%)
o Reviewing company’s strategy (40%)
o Managing cost rises (39%)
’Winning new work’ remains top of the strategic agenda. However, the increase in the number of businesses
focusing on ‘recruitment, training & retention of staff’ compared to 12 months ago indicates that companies’
resources are continuing to be stretched by the upturn in activity
When asked which barriers would prevent them from winning work over the next 12 months, 62% of companies
said it would be due to ‘aggressive tendering from competitors’. 46% cited a lack of resources to meet demand
The outlook
The positive results over the last 9 months indicate that the recovery continues following the low point of Q1 2013,
Encouragingly, 70% of marketing budgets are set for growth as increased demand drives investment in marketing
spend
Construction companies remain concerned that the level of ‘aggressive competitor activity’ and the loss of so many
key personnel during the downturn is now stretching almost half of companies resources as activity picks up.

6. Sales performance & the market outlook
Conclusions from research
Sales performance has now improved for four straight quarters, with 79% of companies improving their sales in Q4
2013, compared with the same period in 2012. The figure last quarter was 76%
79% of companies are positive about their sales performance for the next 6 months. This is the highest ever figure
and indicates increased optimism
The new build housing market continues to lead the growth in the industry, although the rate of growth slowed in
Q4 2013. Encouragingly, the outlook in all 4 of the main sectors has improved with the new non-housing sector
showing the greatest improvement over the last quarter
The North / South divide remains, with London and the South East set to deliver the greatest increase in sales for
companies over the next 6 months. However, the outlook for the Midlands the Northern regions and, in particular,
Scotland has improved when compared to last quarter
The outlook
This quarter delivered the best growth in year on year sales since the survey began and also a record positive level
of expectation about sales and market growth for the next 6 month period. With the private commercial sectors
starting to drive growth alongside the new housing market, the outlook for 2014 is more positive
The regional outlook for the areas away from the South East and London continues to improve, following years of
decline as investment levels dried up. This offers more opportunities for companies to grow their sales across GB.

7. Capitalising on the upturn
Conclusions from research
86% of companies indicated that they are in a ‘good’ or ‘very good’ position to take advantage of the forecast
upturn in construction activity during 2014
To help drive further growth in construction activity, companies indicated that they want the UK Government to:
o Work harder to secure private investment to finance major projects (56% of companies mentioned this area)
o Do more to identify a forward pipeline of projects so the industry can plan and invest (48%)
o Streamline and shorten the obstacles to obtaining planning approval (42%)
o Invest more in skills and training - eg apprenticeships (35%)
Alongside this, companies are looking for trade and industry bodies to assist them with a number of areas to help
ensure a sustainable recovery. The main areas include:
o Helping to attract talent into the industry to ensure demand can be met long-term
o Help educate clients to focus on ‘life time’ value rather than ‘lowest build cost’
o Lobbying government with a ‘single voice’ to help remove planning approval and procurement barriers and produce a
better investment pipeline of projects for the industry
o To encourage greater and more effective use of apprentices in the industry
o To encourage more collaboration in the supply chain to deliver a better product and service
The outlook
The majority of companies appear to be in a position to take advantage of increased construction activity. However,
without the support of the Government and trade / industry bodies in a number of key areas it will be difficult for
companies to take full advantage of the opportunities available.

8. 3. Key findings

9. Sales Comparison Overview
The average sales increase recorded its highest ever figure (+7.4) since the survey began in 2008 Q1,
continuing the upward trend which started in Q1 2013
The Sales Comparison Index shows the average % change in sales for all responses, compared to the corresponding quarter from
the previous year.
Note: No survey figures available for Q2 2010
-2.1 -2.2
-3.2
-7.5
-10.1
-12.0
-6.6
-4.4
2.0 1.7
3.2
2.4
4.8
2.3
3.1
1.4
-0.2
0.9
-1.0
0.3
4.2
5.3
7.4
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
Average%change

10. Sales Outlook Index
The index recorded its highest ever level in Q4 2013 (63.4), as companies indicate increased optimism
about the next 6 months
The Sales Outlook Index is the difference between the % of companies who have an improved sales outlook minus the % that have
a declining sales outlook for the next quarter.
Note: No survey figures available for Q2 2010
5.9
-21.8
-32.8 -31.4
2.6
26.7
14.8 16.0
40.0
0.0
38.3
27.8
32.2
4.0
20.4
35.0
27.0
-10.0
15.8
21.0
45.1 41.4
63.4
-50.0
-30.0
-10.0
10.0
30.0
50.0
70.0
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
Indexfigure

11. Marketing Spend Outlook
The average % change remained stable in Q4 2013 at +4.5, indicating a more positive outlook for
marketing budgets over the next 12 months
The Marketing Spend Index shows the average % change in marketing spend for all companies over the next 12 months,
compared to the previous 12 months.
Note: No survey figures available for Q2 2010
-1.6
-4.0 -4.2
-8.5
-10.3
-10.8
-2.1
0.7
-1.2
-0.6
1.0
-1.0
1.2
-0.1
0.1
0.7
-1.5
-0.1
-2.1
0.6
1.7
4.6 4.5
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
Average%change

12. Marketing Headcount Outlook Index
Marketing headcount expectations continued to remain positive, recording another relatively strong
figure (+26.9)
The Marketing Headcount Outlook Index is the difference between the % of companies who are looking to increase their marketing
headcount over the next 12 months, minus the % that are reducing their headcount.
Note: No survey figures available for Q2 2010
-13.3
-24.1
-19.4
-30.7
-19.5
3.4
11.5
20.8
16.0
37.9
27.8
25.5
-4.0
7.4
12.0
-4.0
0.0
-9.0
7.0
14.0
28.0
26.9
-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
2008
Q2
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
Indexfigure

13. Strategic Issues
’Winning new work’ remains top of the strategic agenda. The sharp increase in the number of businesses
focusing on ‘recruitment, training & retention of staff’ compared to 12 months also continues over from
last quarter. ‘Managing cost rises’ and ‘breaking into new markets or regions’ are also key issues
Cells in green indicate a strategic issue is now significantly more important than it was 12 months ago, with cells in orange
indicating a fall in importance.
Note: table contains rounding errors
Multiple responses allowed.
Strategic issues
% of respondents
selecting responses -
Q4 13
% of respondents
selecting responses -
Q4 12
% change year on year
- number of mentions
Winning new work 58 46 24
Recruiting staff / training & retention of best staff 44 16 175
Managing cost rises 42 30 39
Breaking into new markets / regions 40 21 89
Managing cash flow 31 NA NA
Reviewing company’s strategy 25 18 40
Managing impact of more aggressive competition 25 36 -30
Increasing marketing effort to win more work 23 21 8
New product development 21 20 8
Focusing on core business 19 32 -40
Managing the impact of falling margins 14 38 -64
Key supply chain members going into administration 14 NA NA
Managing the impact of falling market prices 12 27 -57
Adapting the business to falling market demand 2 27 -93
Ability to source building materials & equipment 2 NA NA
What are the main strategic issues facing your company over the next 12 months?

14. 62%
46%
32%
24%
22%
12%
10% 8%
6%
2%
0%
10%
20%
30%
40%
50%
60%
70%
Aggressive sub-
price tendering
from competitors
Lack of resource
to respond to
market / client
demand
Length of time /
resource required
on pre-
qualification
process
Not on clients'
core list of
suppliers / not
winning places on
frameworks
Lack of
established
reputation in new
market(s)
Not yet adopted
BIM
Core markets
shrinking in size
None - we are not
facing any barriers
Ability to raise
finance
Unable to offer
'whole-life' service
%ofresponses
What barriers is your company likely to face when trying to win work over the next 12 months?
Barriers to Winning Work
’Aggressive tendering from competitors’ continues as the main barrier that companies face when trying to win
work. The number of companies indicating that a ‘lack of resources’ is likely to hold them back remains the
second most mentioned area. Almost a third cited the resources required to pitch for work as a barrier
Multiple responses allowed.
Other issues mentioned included;
strategic changes to national
merchants buying policies, clients
looking only at cost price and not
whole life costing, material and
labour price rises.

15. 4%
0%
10%
39%
47%
0%
10%
20%
30%
40%
50%
1 - poorly positioned 2 3 4 5 - well positioned
%ofresponses
On a scale of 1 - 5, please can you rate how well positioned your company is
to take advantage of the predicted upturn in construction activity in 2014 -
where 1 is poorly positioned and 5 is well positioned?
Company Sentiment on the Upturn
86% of companies say that they are in a ‘good’ or ‘very good’ position to take advantage of the forecast
upturn in construction activity during 2014
The average score across all
responses is 4.3 out of 5.
Question new to report - Q4 2013.
“We have been building for this
since the down turn in 2008/09.
We quickly adapted then and will
now.” – Manufacturer

16. 56%
48%
42%
35%
31%
19% 19%
8%
0%
10%
20%
30%
40%
50%
60%
Work harder to secure
private investment to
finance major projects
Do more to identify a
forward pipeline of
projects so the industry
can plan and invest
Streamline and shorten
the obstacles to
obtaining planning
approval
Invest more in skills and
training - eg
apprenticeships
Reduce the VAT rate on
repair and maintenance
work
Focus on making the
Green Deal work and
promoting it more
effectively
Despite the growing
deficit, raise public
capital spending levels -
eg education, health
Nothing (the
government is doing all
it can at this time)
%ofresponses
In 2014, what actions should the government take to support growth in the construction industry?
Government Support Required for the Industry
56% of construction companies want the Government to ‘work harder’ to secure private investment into
the industry and almost half want more clarity on the forward pipeline of work to help them plan
“Don’t limit public sector funding to completion of projects by a
specified date. It means that bids are rushed and there is an
oversupply of projects followed by an undersupply.“ - Contractor
Multiple responses allowed
Question new to report - Q4 2013.
“Look at procurement, since the
East Coast debacle. ‘Procurement
Professionals’ and the complex and
inflexible processes they apply have
become one of the biggest threats
facing construction contractors.” -
Contractor

17. Trade Body Support for Construction – comments from the industry
“Encourage and
publicise the benefits
of collaboration and
supply chain
involvement in
driving down prime
costs and enhancing
value.” - Contractor
Question new to report - Q4 2013.
What main activities would you like to see industry
and trade bodies focusing their efforts on to help drive
growth in construction industry in 2014/15?
“Encouraging companies to prepare
for the upturn so they can hit the
ground running. Encourage
companies to review their use of
assets and be proactive and creative
in satisfying their customers’ needs
rather than just cutting cost all the
time. Encourage more and effective
use of apprenticeships.” - Architect
“Lobbying, with one voice, for a
more streamlined planning process,
and a proper strategic plan for
infrastructure. Improving service
from Statutory Authorities, who are
completely unaccountable for their
poor performance - it's a complaint
on every site.” - Contractor
“Training and
apprenticeships are key.
Lobbying government to
improve spend in
building as well as
infrastructure. Promote
grant funding to help
future projects get off
the ground.” - Contractor
“Stricter application of appropriate UK
specification standards allowing manufacturers
who invest in the required quality and product
standards to recover the outlay. Attract real
talent into the industry to make it more dynamic
and ambitious. This needs a joined up
programme of making the industry attractive
and offering rewarding careers.” - Manufacturer
“Cutting through the myriad of new
legislation and giving clear and simple
guidance. Lobbying for 'whole lifecycle'
costings of buildings, not lowest cost
suppliers or the industry will continue to
be driven by lowest cost solutions that
deliver poor quality buildings that are
costly to maintain and control.” -
Manufacturer

18. 4. Detailed findings

19. 2% 2% 2%
6%
10%
21%
23%
25%
10%
0%
5%
10%
15%
20%
25%
30%
<-20% -20% to -
11%
-10% to -6% -5% to 1% 0% - flat 1% to 5% 6% to 10% 11% to 20% >20%
%ofresponses
How has your company’s overall sales volume changed over the Q4 period (Oct
– Dec 2013) compared with the same period in 2012?
Sales Volume
79% of companies improved their sales in Q4 2013, compared with the same period last year, an
increase on last quarter’s figure of 76%
“The company is getting bigger, doing
better, selling more products and we're
introducing new products to the UK
and Irish market.” – Manufacturer
Note: Table contains rounding error.
“We have focused our efforts on
achieving sales with a sustainable
profit rather than chasing turnover.” –
Contractor

20. 4%
12%
6%
56%
23%
0%
10%
20%
30%
40%
50%
60%
Very unconfident Fairly unconfident Neither - flat Fairly confident Very confident
%ofresponses
How confident are you that your overall sales performance will show
signs of growth over the next 6 months?
6 – 12 Month Outlook
79% of companies are positive about their sales performance for the next 6 months, an increase from
the Q3 figure of 63%
“We are winning incremental export contracts and our
UK trade base are being fairly bullish about their
prospects for 2014. Whilst still very fragile there is a
growing confidence that the growth seen in Q4 2013
will extend into at least the next two quarters.” –
Manufacturer
“We see a good
deal more
activity in the
architects,
engineers and
developers
offices.” –
Contractor

21. 4.9
4.6
4.4
3.5
7.0
3.6
4.4
3.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
New housing New non-housing Repair & maintenance non-
housing
Repair & maintenance
housing
Average%changeingrowth
Total construction output in 2014 is expected to be 3 - 5% higher than in 2013. In terms of
activity, what do you estimate will happen to your core markets over the next 6 months,
when compared to the previous 6 months?
Average - 2013 Q4 Average - 2013 Q3
Forecast Sector Impact
The new build housing market continues to lead the growth in the industry, although the level of
growth has slowed. Encouragingly, the outlook for the new non-housing sector has improved
The figures shown in the table represent the average % change of all the responses received for each sector.
“Housing starts are increasing and
non-housing prospects are
improving dramatically.” –
Manufacturer

22. 8.0
5.6
3.9
3.6
3.2
7.3
5.6
1.9
2.8 2.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
London East and South England
(excludes London)
Scotland North England (includes
Yorkshire)
Midlands & Wales
Average%changeinsalesgrowth
In terms of sales, what do you expect to happen to the regions in which you operate over the
next 6 months, compared to the previous 6 months?
Average - 2013 Q4 Average - 2013 Q3
Forecast Regional Impact
Companies have a more positive or similar outlook in every region, compared to last quarter, although
London and the South East continue as the main drivers of sales growth
The figures shown in the table represent the average % change of all the responses received for each sector.
Question new to report - Q2 2013.
“I believe London and the South East
are better funded than other areas.
The M62 corridor is another well
funded area.” - Manufacturer

23. 0%
2%
2%
0%
28%
33%
24%
6% 6%
0%
5%
10%
15%
20%
25%
30%
35%
<-20% -20% to -11% -10% to -6% -5% to 1% 0% 1% to 5% 6% to 10% 11% to 20% >20%
%ofresponses
What do you predict will happen to your marketing spend for the next 12
months, compared to the previous year?
Marketing Spend Outlook
69% of companies are looking to grow their marketing spend over the next 12 months, with only 4%
expecting a decline. This continues the positive scores recorded in the last survey
“We have a
steady increase
to meet the
company's
demand to raise
awareness of
brand and
better fulfil
customer
demands.” –
Manufacturer
“Better company performance
will release expenditure from
group to promote the brand in
the construction industry.” –
Manufacturer
Note: Table contains rounding error.
“Pressure on overheads due to
reduced sales preventing mass
marketing - more focused /
strategic marketing strategy
employed to maximise ROI.” –
Contractor

24. 2%
4%
62%
29%
4%
0%
10%
20%
30%
40%
50%
60%
70%
A major cut back in
headcount
A small reduction in
headcount
No change A small increase in
headcount
Increasing headcount
a lot
%ofresponses
Will you be increasing or decreasing the size of your marketing function in
the next 12 months?
Marketing Headcount Outlook
62% of companies expect to see no change in their marketing headcount, with 33% of companies
expecting to make increases
Note: Table contains rounding error.
“We are adding dedicated
resource to drive our
innovation programme having
stood still for a couple of
years.” – Manufacturer
“Department needs
considerable growth, but this
will happen steadily. ROI is
always in consideration.” -
Manufacturer

25. 5. Sample size & methodology

26. Respondent profile
The survey achieved a mix of respondents (52) from across the construction supply chain
The data was collected through an on-line survey during January and February 2014.
The majority of respondents are senior directors, marketers, product managers or involved with business
development.
Respondent split % split
Manufacturer 42%
Contractor 40%
Architect, consulting engineer,
project manager, developer 12%
Supplier / Distributor 6%
Total 100%

27. Public & Private Sector mix
69% of the companies represented in the survey are active in both the public and private sectors

28. Construction Sector Split
23% of the companies taking part in the survey work across or supply all the main construction sectors
Multiple responses allowed.
90%
81%
69% 69%
65%
60% 58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Commercial
(including
offices)
Education Retail &
Entertainment
Housing Health Infrastructure /
Civils
Industrial
%ofresponses
Which sector(s) does your company pre-dominantly work in?

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Delivering a better understanding of customers and markets
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