Construction is a very diverse industry that includes activities ranging from mining, quarrying and forestry to the construction of infrastructure and buildings, the manufacture and supply of products, as well as maintenance, operation and disposal.

Construction output in the UK is more than £110 billion per annum and contributes 7% of GDP.

Discover More

Approximately a quarter of construction output
is public sector and three-quarters is private sector and there are three main sectors.

The Opportunity 

Approximately 60% of construction output is new build, whilst 40% is refurbishment and maintenance. The industry accounts for approximately 3 million jobs, 10% of total UK employment and includes both manufacturing and services.

Construction is a high-cost, high-risk, long-term activity, and so its performance is a good indicator of the heath of the wider economy. When the economy falters, construction investment grinds to a halt, but when the economy begins to recover, the construction industry can quickly overheat.

The Structure

Construction comes within the remit of the Department of Business, Innovation and Skills. However, planning and building regulations fall under the Department for Communities and Local Government. To further confuse matters, the Government Construction Board reports to the Minister for the Cabinet Office and the Cabinet Office is also the home of the Efficiency and Reform Group which includes the Major Projects Authority.

It is far more cost effective for companies to specialize in making certain components than for one company to generate and market products end-to-end. Therefore, the supply chain in Construction is tiered.

Tier 0

A single company assuming responsibility for the delivery of the contracted requirement on time, within budget (and over the lifetime of the project) and for the purpose for which it was intended. These organisations are sometimes referred to as prime, general, or main contractors.

Tier 1

A company that has been sub-contracted by the primary (Tier 0) contractor, to perform specific works that aid in the completion of a project.

Tier 2

A Tier 2 contractor is hired by a Tier 1 contractor to perform specific tasks that aid in the completion of their works. A Tier 2 contractor is generally hired by a Tier 1 contractor to perform services that it is unable to complete because of a lack of ability or a tight deadline.