Mr Liam Kelleher is loathe to use the phrase "things have never been so good" but it is one that is becoming increasingly difficult for his industry to avoid.

"It's a phrase which I think was used by Harold MacMillan and soon afterwards the UK, by and large, went into a 20-year period when it lost its position, relatively speaking, in the world. So, certainly this industry isn't going to be complacent," said the director general of the Construction Industry Federation (CIF).

However, the latest figures from the CIF's annual review and outlook would indicate that the industry has been far from complacent over the past five years.

Last year was no exception. It was another year of strong growth in construction activity, with the industry expanding by 10 per cent in volume to £14.25 billion (€18.1 billion). However, Mr Kelleher said growth this year in the sector was likely to dip below 10 per cent for the first time since 1994.

"This year will start generally strong but is likely to slow later in the year, especially as the Dublin office market fills to capacity. The overall growth for the year is likely to be about 7 per cent, down from 10 per cent in 2000. It is likely to be the first year in the last eight when growth in construction is in single figures," said Mr Kelleher.

However, public sector investment is forecast to grow by 14 per cent, based on the financial allocations in the Public Capital Programme. In 2001, new civil engineering work is expected to show a 12 per cent increase in volume, reflecting strong increases coming through the Public Capital Programme and the National Development Plan (NDP).

Mr Kelleher is keen to stress the industry's ability to deliver the NDP in full, adding that the industry has proven its ability to grow and implement big and complex civil engineering projects on schedule.

"I believe that the industry can deliver very comfortably the NDP in an economy growing at rates in the 5-6 per cent range that were assumed at the time the NDP came out," he said.

However, a concern for Mr Kelleher is that, since the NDP was published, a host of additional projects have been added to the plan.

"If this economy was to continue to grow at 10 per cent per annum and all sorts of other investment needs were piled in, I don't think it would be physically possible to deliver all of it," he said.

There is a need for the Government to prioritise on an ongoing basis the projects that are "must deliver" ones within the next five years, according to Mr Kelleher.

"The maximum deliverability would be achieved when the supply side is used to maximum effect," he said. "This means putting out to tender a range of different project types and sizes, a regular and predictable flow of projects, and tendering methods used which are appropriate to the scale and complexity of projects."

Potential delays for the NDP lie elsewhere, he said. "There are all sorts of factors involved, from the capacity and manpower of the planning system to our regulatory process, to the certainty and speed at which we bring projects on stream," said Mr Kelleher.

"The construction time may actually be only a small part of the total process. We seem to take longer to get to the construction stage than other countries. Any project has to take account of the laws but we just haven't managed that process in the past as well as we need to in the future. It is vital that everyone feels the system is fair but it shouldn't be used to hold up for 8-10 years a project which is clearly in the greater good category."

A shortage of trained and experienced personnel in the various planning departments around the country could also hinder implementation of the NDP, he said. "Unless there is a resolution of these problems, there is going to be a knock-on effect on the volume of work the industry is able to work its way through. In truth, we don't have much time. The tasks are there and they're stacking up," said Mr Kelleher.

He said he recognised that the Government and the Minister for the Environment are taking steps to address the planning and manpower issues.

"The Minister for the Environment has taken steps in the Planning and Development Bill to try to streamline the process to ensure the key projects in the NDP will have a more controlled run through the planning process than has been the case up to now," he said.

But the construction industry has not been immune from labour shortages. The industry recognises it needs to recruit 18,000 additional workers in 2001 and 2002. This will be achieved from second- and third-level recruitment, and from immigration, according to Mr Kelleher.

"We have pulled back from the UK significant numbers of people who had emigrated. We have tried further afield in Germany, the UK and Australia. At home, the number of new apprentices joining the industry increased to 6,200 in 2000, up from 1,800 six years ago."

This year, the CIF expects apprenticeship intake to reach 6,500, bringing the construction apprenticeship population to 20,000.

"It would be nice to say we are keeping up with it, but the truth is we are chasing the situation," he said.

Such labour shortages could lead to wage inflation within the industry. Mr Kelleher said he is mindful of inflation and concedes that wages within the industry have risen rapidly in the past number of years - largely as a result of negotiations between the CIF and unions within the framework of Partnership 2000 and the Programme for Prosperity and Fairness.

"If it brings peace and stability to the industry, and if it allows the industry to operate in a high-productivity, high-output manner with certainty and predictability, then the industry is making productivity gains," he said.

On the housing front, Mr Kelleher feels the industry has taken the rap unfairly for the high house prices and shortage of houses.

"I wouldn't think it is fair or accurate to blame the construction industry for the housing crisis," he said. "Demand has increased strongly as the Irish economy has grown. The increases in supply have predominately come from the private house building sector. The construction industry has prevented this crisis from being significantly worse."

Government claims of an adequate supply of zoned and serviced land available is difficult to reconcile with the experiences of CIF members, he said.

"If there were that many serviced sites available, we feel the price of land would be significantly lower than it is," he said, adding that the requirement on private house builders to provide for social and affordable housing still has to be addressed.

"If it is done in a way the industry finds difficult to deal with, then it will affect output. Any uncertainty and unpredictability slows down the production line and potentially that's what this is. We think the dip in new home starts in the latter part of the year was a reflection of that uncertainty," he said.

However, Mr Kelleher said he does not fear a rapid slowdown or collapse in the housing market.

"There is a strong underlying demand for housing. Any of the medium-term projections would suggest a need for 50,00055,000 housing units per annum for the next 10 years," he said.