Contracts continue to roll in, but can construction cope? Says Builders’ Conference


Neil Edwards, CEO of Builders’ Conference, a partner of the Scaffolding Association, looks on admiringly at the construction sector as, on the one hand, it continues to drive the UK economy but, on the other hand, looks as though it may need to find skills solutions so that it can keep pace with its own success.


Content owned and produced by Access Point, original story can be found here: https://accesspoint.org.uk/contracts-continue-to-roll-in-but-can-construction-cope-says-builders-conference/




DECEMBER 2020 – THE YEAR IN A NUTSHELL


December has always been a slow month for construction contract awards; and in 2020, the prospects were made worse by a resurgence of COVID-19 that resulted in further restrictions and by the final completion of Brexit negotiations.


What happened next confounded all good sense and left many of us in equal parts bemused and delighted. 2020 was the year in which predictions became pointless. So, in a year in which the unprecedented became the norm, the fact that UK construction recorded more than £12.2 billion in new contract awards in December really was the most 2020 way in which to see out an erratic and unpredictable year.


History will show that figure was boosted by more than £8.0 billion in work related to HS2. But even without that, December was unusually busy. Beyond the HS2 contracts, one of the most intriguing awards was to ISG, for the £300 million construction of a lithium-ion battery production facility on the former Blyth Power Station site.


The new plant will use only renewable energy, and includes the potential to use hydro-electric power generated in Norway and transported beneath the North Sea via the world’s longest inter-connector from the North Sea Link project. So, at the end of the year, the UK construction industry marched into 2021 with positivity and some much-needed and non-house building work.



JANUARY 2021 – OFF TO A FLYING START


UK construction hit the ground running at the beginning of the New Year, even though it failed to replicate the highs of December 2020. Huge tranches of HS2-related construction contracts do not come along every month.


So anyone expecting a repeat of the £12 billion plus in new contract awards recorded in December 2020 was always going to be disappointed.


But with £6.2 billion in new contract awards, the sector blasted past the established £4.0 billion monthly benchmark to get 2021 off to a flying start.


It was a month in which road projects enjoyed a welcome resurgence, with Costain landing a £250 million project near Birtley for Highways England.


Although that project provided a welcome shot in the arm for the North East, it was London (£1.87 billion) and the Midlands (£996 million) that had most to celebrate.


The North West region contributed a further £726 million while Scotland continues to play catch-up with £152 million.


As has become the norm, housing dominated in the sector countdown, with 188 new contract awards valued at a combined £2.89 billion. But a marked uptick on roads (£962 million) and education (£823 million) pointed to a loosening of the government purse strings.



FEBRUARY 2021 – AN UNSTOPPABLE FORCE


The UK construction industry flexed its muscles yet again in February, posting an astonishing £8.0 billion in new contract awards in the shortest month of the year.


There was a time when the UK construction sector was an unconfident creature, but that has given way to a seemingly unstoppable force that has met head on the triple threat of COVID-19, Brexit and wider economic jitters.


And rather than run scared, the sector charges forwards, posting an astonishing £8.0 billion in new contract awards. And this was no HS2-fuelled anomaly. In the absence of a single £1.0 billion+ project, some 340 contractors shared the spoils.


Against the background of such an unseasonably positive month, it seems almost churlish to mention the negatives. Despite the resurgence of Scotland (£458 million) and the exceptional performance of the Midlands (£774 million) and Yorkshire (£412 million), the regional imbalance still favours London as it contributed an impressive £3.36 billion to the monthly total.


A similar imbalance remains in the split of workload among industry categories. The housing sector contributed £3.52 billion of known work and will have been a large part of a further £1.52 billion of mixed use and miscellaneous work.


Warehouses and industrial units, with £637.9 million and offices, with £479 million, came a distant second and third respectively. Also worthy of note is that the split between publicly and privately funded work continues to widen.


By value, privately funded works accounted for around 80% of all new contract awards, suggesting a post-COVID tightening of the Government’s purse strings. And, like an ever-present elephant in the room, the spectre of a worsening skills shortage continues to haunt the sector.


Quite how the industry will meet the demand of £26 billion in new work in the space of just three months remains open to question.


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