CIOB reveals worrying landscape for construction SMEs in Wales
A construction skills crisis coupled with over-complicated tender processes and a lack of local government support have been blamed for a rising number of Welsh construction firms facing administration.
Small and medium-sized enterprises (SMEs) struggle to compete with larger businesses when applying for work, despite making up 99 per cent of the Welsh construction industry, according to the Chartered Institute of Building (CIOB). CIOB says many SMEs feel forced to take the work even though they know it will involve taking a financial hit, just to ensure they have a pipeline of work to keep their business afloat.
The world’s largest professional body for construction management and leadership revealed some of its Welsh members have even opted to compete for work across the border in England instead, where they say the tender process is far less bureaucratic.
A report called ‘The SME Construction Landscape in Wales | Risk Factor Analysis’ was handed to members of the Senedd last week, highlighting the profound impact of construction businesses going bust, including projects delayed to the detriment of local communities.
David Kirby, CIOB’s policy lead for Wales and author of the report, said: “With economic pressures like high inflation driving up material costs, an extremely competitive labour market, and persistent skills gaps in the sector, there is little surprise so many construction SMEs in Wales have experienced significant failures in recent years.
“The effects of these failures are not only felt by the owner and employees of the business, but also their clients, and the wider supply chain. Considering 99 per cent of the construction industry in Wales is comprised of SMEs, these knock-on effects can cause serious delays to vital projects like homes, hospitals and schools and cause both unemployment and socioeconomic difficulties.
“When a contractor goes into administration or collapses, it has subsequent effects on thousands of other people, particularly local communities. We’re laying out clear recommendations for the Government, SMEs and clients alike to consider which can help simplify the process, keep more businesses afloat and drive Welsh construction projects forward.”
The report highlights some of the skills SMEs currently lack in Wales, including employees with key IT capabilities in an increasingly digital world. Other specific roles lacking across the sector include commercial managers, project managers, and quantity surveyors.
CIOB has long called on the Government to work closely with the construction sector to develop long-term policy thinking, giving SMEs more confidence to up-skill their staff and take on more projects. The professional body also revealed SMEs struggle to keep up with ever-changing regulations across the sector.
Kirby continued: “While we accept regulations across the industry are vital, particularly when it comes to the health and safety of everyone using the built environment, we’re urging the Government to make training more accessible to all construction workers so that SMEs can adapt their work practices to the changing regulatory environment.”
Other recommendations for members of the Senedd include more devolution of powers to local governments across the country, affording them more control over their funding and the freedom to plug holes in resource gaps.
The report was handed to Members of Senedd at a drop-in session at the Senedd on Wednesday 2 October, sponsored by Luke Fletcher MS.
Fletcher said: “Many businesses have cited issues such as a lack of skills in key areas like project management and IT, a highly competitive tendering process dominated by larger firms, and financial instability driven by tight margins and rising costs. These challenges speak to those felt more broadly by SMEs across all sectors in all parts of Wales, but in a sector comprised almost entirely of small and medium-sized firms, the Welsh Government must act swiftly and waste no time in extending its support.”
Alex Jones MCIOB, Project Manager – Buildings and Places, AECOM; Sam Rowlands MS, Shadow Minister for Health; David Kirby, CIOB Policy Lead for Wales and Laura Clarke, CIOB Senior Regional Manager. Meanwhile, Mark Isherwood MS admitted the report was a worrying insight into the struggles of small and medium-sized construction businesses across Wales.
He added: “This is a wakeup call for industry, Government, and clients. It lays bare the stark reality faced by construction SMEs. Thankfully, the targeted recommendations provide a roadmap whereby we can address the systemic issues faced by SMEs in Wales."
"The report also illustrates the importance of these SMEs to the construction sector, and the difficulties they face when it comes to new legislation. It is particularly concerning to read that “over burdensome regulations” are forcing many SMEs to leave the housebuilding market in favour of other projects, which is negatively impacting Welsh Government social housing targets. The stakes could not be higher; if we fail to address the systemic issues, we risk jeopardizing our social housing, infrastructure, schools and hospitals."
The report urges SMEs to seek professional legal advice to fully understand contractual obligations and associated risks when applying for projects. It also calls for company bosses to educate themselves when it comes to managing risk. There are resources available through CIOB’s Academy.
Meanwhile, construction clients have been urged to ensure that all terms, conditions, and project scope are clearly defined in a written contract.
Data was obtained through a series of in-depth discussions with SME leaders and CIOB members across Wales.
To read the report in full, visit: www.ciob.me/welshsme
This article appears on the CIOB news and blog site as 'CIOB reveals worrying landscape for construction SMEs in Wales' dated 10 October 2024.
--CIOB
[edit] Related articles on Designing Buildings
- CIOB articles.
- England, Wales, electrical skills, training and net zero in 2023
- Industry welcomes new fire and security apprenticeship for Wales.
- Joint Inspection Team (JIT) for Building Safety in Wales.
- Orphaned buildings.
- Planning (Wales) Act.
- Recharging Electrical Skills in Wales.
- Responsible Actors Scheme RAS.
- Responsible Developers Scheme.
- Welsh planning policy.
Featured articles and news
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.
UK Infrastructure: A 10 Year Strategy. In brief with reactions
With the National Infrastructure and Service Transformation Authority (NISTA).
Ebenezer Howard: inventor of the garden city. Book review.
The Grenfell Tower fire, eight years on
A time to pause and reflect as Dubai tower block fire reported just before anniversary.
Airtightness Topic Guide BSRIA TG 27/2025
Explaining the basics of airtightness, what it is, why it's important, when it's required and how it's carried out.
Construction contract awards hit lowest point of 2025
Plummeting for second consecutive month, intensifying concerns for housing and infrastructure goals.
Understanding Mental Health in the Built Environment 2025
Examining the state of mental health in construction, shedding light on levels of stress, anxiety and depression.
The benefits of engaging with insulation manufacturers
When considering ground floor constructions.
Lighting Industry endorses Blueprint for Electrification
The Lighting Industry Association fully supports the ECA Blueprint as a timely, urgent call to action.
BSRIA Sentinel Clerk of Works Training Case Study
Strengthening expertise to enhance service delivery with integrated cutting-edge industry knowledge.
Impact report from the Supply Chain Sustainability School
Free sustainability skills, training and support delivered to thousands of UK companies to help cut carbon.
The Building Safety Forum at the Installershow 2025
With speakers confirmed for 24 June as part of Building Safety Week.
The UK’s largest air pollution campaign.
Future Homes Standard, now includes solar, but what else?
Will the new standard, due to in the Autumn, go far enough in terms of performance ?
BSRIA Briefing: Cleaner Air, Better tomorrow
A look back at issues relating to inside and outside air quality, discussed during the BSRIA briefing in 2023.
Restoring Abbotsford's hothouse
Bringing the writer Walter Scott's garden to life.
Reflections on the spending review with CIAT.