March shines, April dips, and May shrugs off material shortages

For a traditionally boom or bust industry, UK construction remains almost worryingly positive and the months March to April were no exception. There was a slight dip, but overall the period delivered another upbeat set of contract awards. Builders’ Conference CEO Neil Edwards reports.

MARCH 2021 – THE SUN CONTINUES TO SHINE

The construction industry has recorded £83 billion in new contract awards since the first UK lockdown. And during March 2021 the sector reported a further £9.0 billion; driving the figures for the first quarter to more than £23 billion.

ISG topped the BCLive league table with a haul of 10 new contracts worth a combined £1.03 billion.

The most significant of these was a £750 million refurbishment and repair contract for the rewiring of Birmingham City Council’s council housing stock. Skanska claimed second place, courtesy of two new contract awards with a combined value of £589 million. Third position went to Multiplex with a single £400 million contract for the construction of a new hotel on the site of the former American Embassy in London’s Grosvenor Square, Mayfair.

Despite the resurgence of the infrastructure sector – particularly highways and roads – the housing sector continued to dominate with a third of all new contracts awarded in the month.

Regionally, London accounted for almost £1.9 billion, the Midlands appointed contracts worth a combined £1.6 billion, the North West notched £851 million, East Anglia reached £686 million, Yorkshire’s awards were worth £572 million, while Scotland secured a combined £483 million.

APRIL 2021 – NO CAUSE FOR ALARM

It is amazing just how quickly we can all shift our expectations. It was tempting to greet an April figure of “just” £5.7 billion with a sense of unease, but the industry remains upbeat and is on target to hit an unprecedented annual figure of more than £90 billion. And while the figures for April 2021 did represent a slight dip, all indications point to a continuation of high levels of contract awards.

The biggest winner this month was the Future Valleys Construction joint venture that won a £590 million roads and bridges project. In second place, BAM picked up nine new contract awards with a combined value of over £246 million. Claiming third position was Countryside Properties with a £243 million haul split across two projects.

Regionally, London was top with contract awards valued at a combined £1.48 billion. However, Wales leapt into second place with a total of £622 million. The West Midlands enjoyed yet another impressive month, delivering £522 million in new contract awards while its East Midlands neighbour picked up projects worth a combined £223 million.

Even though roads and bridges enjoyed an uptick, house builders picked up 210 new contract awards worth a combined £2.27 billion – more than a third of the monthly total. Given that housing is also a key constituent of most mixed-use developments, housing probably accounted for more than half of the monthly total.

MAY 2021 – SHRUGGING OFF SHORTAGES

When Brexit threatened to destabilise the British economy, the construction industry soldiered on as if nothing had happened. When the COVID-19 pandemic hit, the construction industry carried on regardless.

So during May, when a shortage of construction materials was considered bad enough to make the TV news, it should probably have come as no surprise to see the sector shrug its collective shoulders and deliver more than £6.2 billion in new contract awards.

Storming to the top of the BCLive league table in May was a Mace/Dragados joint venture, valued at £570 million, for the construction of the new HS2 station at Curzon Street, Birmingham. HS2 was also responsible for propelling another joint venture into second place: EKFB – a joint venture between Eiffage, Kier, Ferrovial and BAM – will build a new railway line from Twyford to Greatworth.

Despite a strong showing from the railway sector that contributed £1.11 billion to the monthly total, the house-building sector remained unassailable, delivering projects valued at £2.16 billion.

Individually, London also retained its top position with 119 new contract awards valued at almost £1.32 billion. However, with £1.13 billion and £638 million respectively, the West and East Midlands together had a good claim for the top spot.

Of course, all these new contract awards have not made the worsening materials shortages vanish. In truth, they may just exacerbate the situation. But the majority of the contracts awarded in May 2021 will be unlikely to require materials on site until after the summer. By that time, materials suppliers will have hopefully ramped up production to satisfy the continuing high levels of demand.

While that remains a concern for the future, the sector’s present – seemingly against all odds and expectations – continues to look positive.

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