July saw the publication of the UK Government Construction Strategy designed to re-invigorate the industry to deliver short-term economic stimulus, as well as the innovation required for the built environment of tomorrow. The policies developed to deliver this strategy are instrumental to the reality of achieving the strategic goals. To provide insight into the finances of construction firms, the Department for Business, Innovation and Skills commissioned Graham Ive (Senior Lecturer) and Alex Murray (Teaching Fellow), both from The School of Construction and Project Management, to undertake an empirical analysis.
The study focuses on the use of trade credit as a form of current liabilities for construction contractors and the forms of capital they use to finance their total assets. The findings include that the majority of a contractor’s total assets are financed by money they owe to other firms for the supply of goods and services. This is higher than the rest of the economy and so highlights how construction contractors are distinctive in terms of their business models, an important factor to consider when developing policy to influence their output.
The Department for Business, Innovation and Skills was delighted with the study and there is potential for a follow-up analysis to advance the understanding of very small construction contractors.
Read the BIS Research Paper 2013
For more information on the study, contact Alex Murray - alex.m.murray@ucl.ac.uk