Reduced workloads are the biggest challenge facing Specialist Contractors according to the latest National Specialist Contractors Council (NSCC) State of Trade Survey.

Despite 39% of respondents reporting an increase in enquiries and 37% an increase in orders in the first quarter of 2011, difficulties in converting enquiries into orders means that less than half of Specialist Contractors are operating at over 75% capacity, down from 62% in the previous quarter, and just one in five are working at 90% capacity or more.

The number of Specialist Contractors reporting an increase in supplier prices has rocketed to 89% compared with 74% last quarter and 62% this time last year. Although tender prices have improved slightly, with 17% of respondents reporting an increase compared to 13% in the previous quarter, the disproportionate rise in the cost of materials means that margins in the specialist sector are under ever increasing pressure with only 11% anticipating an increase in margins in the next quarter.

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Poor payment practices are exacerbating the situation with 83% of respondents having monies withheld against them in retention. More than one third of all retention monies were overdue for release at an average of over £50,000 per Specialist Contractor, 17% of which is ultimately written off as bad debt. NSCC believes that cash retention is an inefficient and outdated practice, and the NSCC No Retention Policy provides Specialist Contractors with the support they need to resist retentions.

With almost half of Specialist Contractors expecting an increase in workload, there will be a renewed focus on skills as businesses look to make sure they have a qualified workforce in place to deliver new projects. 38% of respondents are planning to recruit an apprentice in the coming 12 months and NSCC will be recognising those that invest in apprenticeships with the new NSCC Roll of Honour.

NSCC Chief Executive Suzannah Nichol MBE said: "The continued rise in supplier prices is putting the squeeze on Specialist Contractors. Whilst more respondents are saying that they expect an increase in workload, this could be due to the desperately low levels of work available at the moment with businesses anticipating that it can only get better."

NSCC contributes its findings to the State of Trade Survey published by the Construction Products Association, enabling the experiences of the specialist sector to be compared with the wider industry.

(CD/KMcA)