Current Recession Impacts on the Construction Industry Dissertation

Current Recession Impacts on the Construction Industry - Dissertation Example This resulted in reduction of the average disposable income. The overall negative implications were on the demands of products and goods. The economic cycle was disturbed. One of the most affected sectors by this recession was constructions and engineering sector. Globally the construction industry was at its peak in 2008, when the recession hit it. At this time, the demands of houses and infrastructure were increasing and there was consistent flow of funds within the sector. The demands of housing and new infrastructures and the flow of funds within the construction sector changed (Barrell and Kirby). The reduction in the expected flow of funds and unavailability of the predicted clients reduced the profitability and chances of survival for may construction companies across the world (Property Wire). Research Background According Jakovljevic the construction industry has a worth of nearly $5 trillion globally in terms of total output. This sector is one of the sectors providing high est employment. As per the estimation, there are nearly 100 million people employed in this sector at various levels of jobs. At the same time, contribution of the construction sector to the Global GDP is nearly 10%. This figure is considerably higher than the estimated annual spending in 2008. According to Zeiss (2008) the US$ 2.3 Trillion was the estimated spending of the Global Construction Industry. Global construction industry reached to the peak before recession. PropertyWire (2009) argues that the recession of 2008 was the hardest hit on this sector in last 60 years. Construction industry as such operates in highly complex business environment. The business environment is characterised by high regulations, coordination of various authorities, departments and skill sets, impact of the changing climatic and weather conditions on the construction process, lagging productivity or other issues linked with workforce (Bosch and Phillips). The recession at one hand reduced the dispos able income of the consumers by salary cuts and loss of jobs; on the other hand, this reduced the funds flow in the construction sector. All the intermediaries like equipment suppliers of the construction sector, transport companies, intermediaries and others have experienced the repercussions of the recession. The business environment of the construction sector became more pessimistic. However by the mid of 2009, the impact of recession was reduced and industry started being optimistic again. This was revealed in a global survey conducted by KPMG that by the end of 2009, the Global construction industry started expecting positive growth. This was an important survey that covered more than two-third construction companies of the globe and from the 30 different countries. The study reported that the majority of the construction companies were having positive growth or consistent business performance. However it was evident in the study that the companies working on the long term proj ects have minor impact of recession as compared to the companies who were expecting returns at the shorter duration (Molly). The recession resulted in reducing