Tag Archive for: construction

What can we expect in 2019?

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Building.co.uk have published their thoughts on what there is to look forward to this year in construction – and they believe that there is a lot!

The construction industry could be forgiven for not looking forward to 2019 with any great relish. After all, the year begins with the economy in a moribund state, housing market confidence dropping and the very existence of some of the UK’s biggest construction firms under threat. And with Brexit looming in the next three months, there are still few signs of the “sunlit uplands” promised by Boris Johnson before the 2016 referendum.

Of course Brexit – whenever, how and even whether it happens in 2019 – will surely set the political and economic weather that the industry operates in this year. After all, both crashing out of the EU with no deal and a Corbyn-led Labour government are both still conceivable outcomes from breaking the current political impasse, which must happen by 29 March.

But predicting how the party and parliamentary wrangling and finagling over Brexit will pan out is a tall order. So, setting Brexit to one side, what can we expect from 2019?

At the top level, the forecast of the Construction Products Association, which assumes an orderly EU exit moving the UK into the “business as usual” transition period in March, is for minimal – 0.6% – growth in construction output for the year, supported by modest growth in housebuilding and infrastructure and 1.4% overall growth in UK GDP. The overall picture hides huge geographical variations, with markets outside of London likely to show more growth than the capital. So, not strong, perhaps, but stable at least.

Last year began with the dreadful shock of Carillion’s collapse, and the big concern for many in the industry will be the spectre of history repeating itself, with sickly patient Interserve very much on the operating table. Interserve is not alone in having its balance sheet put under the microscope, and many contractors will be much more focused on cash flow and debt levels than overall workload.

There are positives, or course, with many hoping 2019 will be the year when efforts will take off to reform the industry through adoption of digital and advanced manufacturing technology. For those of a less utopian bent, the first few months of the year will be significant – Brexit or otherwise – because of the planned government spending review, which will set the parameters for departmental spending for the years ahead. Simon Rawlinson, head of strategic insight at consultant Arcadis, says: “It’s a really big one. The government’s presumption in favour of offsite manufacturing means that the spending envelope set by the chancellor will be critical. These programmes will create the initial demand to drive uptake of modern methods forward.”

There’s no question about what will be the big contractor story of 2019, whichever way it pans out: Interserve. The £3.2bn-turnover firm has said it will announce its refinancing in “early 2019”. With the company valued at just £20m and analysts estimating it will need to raise anything up to £500m to put it on a sustainable footing, this means its lenders will have to be persuaded to swap loans for control of the business.

For listed construction firms, much is likely to depend on whether Interserve can pull this deal off. Cenkos analyst Kevin Cammack says its future is in the balance. He adds: “If the refinancing happens, it’ll happen in January, and it’ll take the short-term pressure off the sector. If the company falls the consequences will be worse than Carillion, I think. It will spook all lenders immensely.”

The attitude of contractors’ banks is an issue likely to concern all the big firms, with Kier’s late 2018 rights issue being prompted, it said, by the decision of a number of major lenders to reduce their exposure to contracting businesses. If lenders do pull in loans elsewhere, this could threaten other firms or reduce their ability to invest. Another much anticipated event will be the release of overdue accounts for under-pressure contractor Laing O’Rourke, which has reported more than £300m of losses in the last few years.

More positively for specialist contractors, moves to ban retention payments are progressing, with the so-called “Aldous Bill” due for a second reading in the Commons on 25 January.

Big infrastructure 

The industry will be hoping that 2019 contains much better news on big infrastructure schemes than 2018. With the first of Crossrail’s phased openings already pushed into this year, all eyes will be on whether the £15bn rail project manages to get over the finish line in 2019. The omens don’t look good, with new chief executive Mark Wild admitting in December that an autumn 2019 opening “could no longer be committed to at this stage.” Costs have already risen by £2bn on the project, and fears remain they could rise further.

But Crossrail is not the only project under pressure. Construction work had been due to start in earnest on HS2 this spring, but the government admitted last year that it had put the start back until the summer. It has also delayed the legislation needed for the next phase of the HS2 project by a year. Don’t be surprised to hear of further delays as the government tries to control costs on the project. Noble Francis, economics director at the Construction Products Association, says: “We’re now anticipating that the delays may push work on HS2 into 2020.”

Arcadis’ Rawlinson says the problems with these big infrastructure projects will provide a “wake-up call” to the industry in 2019. “There’ll be a real call for genuinely aligned ways of working by clients and suppliers to get these problems addressed.”

In the utilities sector, the response expected this month by water regulator Ofwat to investment plans by the privatised water companies will set the agenda for work in that sector. Matt Cannon, incoming chief executive at the Clancy Group, says: “The regulator’s price review gives our sector an opportunity to set out a clear plan to tackle challenges around affordability, innovation, customer service and resilience across the network.”

The government is also scheduled to respond formally to last year’s first ever National Infrastructure Assessment, conducted by the National Infrastructure Commission  (NIC) – one of 2018’s few bright spots for the construction industry. David Whysall, managing director of infrastructure at Turner & Townsend, says: “The current political situation is resulting in a reduction in business confidence that is now starting to materially affect the construction industry. We therefore must see the government back the NIC and implement the investment programmes it sets out.”

The Construction Products Association now expects infrastructure output to grow by 8.7% in 2019, in contrast with its previous forecast of 13.2%.

Innovation

Last year’s construction sector deal and the creation in December of the Transforming Construction Alliance, alongside growing interest in modern construction methods, gives some cause for optimism that 2019 could see attempts to modernise the industry gain pace. The government has provided £72m to set up what it has called the “Core Innovation Hub” to drive improvements, and what form that takes will be a large part of the discussion in the year ahead. We should also see the first winners of a competition to receive a share of £12.5m from the Industrial Strategy Challenge Fund to support construction innovation, announced in the coming weeks.

Arcadis’ Rawlinson says: “This year is when we should start to see the fruits of the Transforming Construction investment. Early 2019 should tell us some really interesting things about where innovation thinking is at in the industry.”

Whatever happens with this government push, many are also predicting a ramping up of private sector efforts to digitise the construction process, such as by integrating design with offsite manufacturing.

Sarah Prichard, UK managing director at BuroHappold Engineering, says: “This will be the year when engineers really start to capitalise on recent developments in automation in design. The time has come to make building design and construction leaner and more efficient.” Steven Charlton, managing director of architect Perkins+Will, says: “I expect to see an open debate about data and how to share it. There’s now a realisation we need to tackle this.”

Housing

Brexit will undoubtedly shape housing market sentiment in 2019 one way or another, but even without the drag effect of political uncertainty, there are other reasons to be cautious on housing output. The Construction Products Association forecasts private housing output to grow 2% this year, with Help to Buy sustaining building in the face of deepening market weakness. Achieving this number may depend on further growth from institutional investors and housing associations, given the number of volume housebuilders, such as Crest Nicholson and Berkeley Group, that are forecasting stable or reduced volume this year.

The RICS forecasted before Christmas that overall house sales would weaken by 5% in 2019, with housebuilding growth “uncertain” at best. The most recent government new orders data, to the second quarter of last year, also suggests that housebuilding volume has peaked. Cenkos analyst Cammack says: “We’re likely to see a relative slowing in private sector starts and a relative quickening in the pace from institutions and housing associations, which will shift the dynamic in the sector.”

Market sentiment aside, the issue of Grenfell will continue to dominate, with the industry still digesting the government’s formal response to Dame Judith Hackitt’s review of building regulations and fire safety, which last year called for a new regulator to sign off tall buildings consents and big process changes.

Nigel Morrey, technical director at Etex Building Performance, says: “The government has now endorsed the Hackitt review’s recommendations to address what the review identified as an industry-wide lack of evidence of performance, compliance and recording of information. Yet it is still not clear exactly what format regulatory changes will take nor when they will be introduced, with no official timetable attached to the government’s response. In particular, we need to see progress on the creation of the Joint Competent Authority to assess building safety. Uncertainty is likely to remain the watchword in 2019.”

Commercial

The outlook for commercial building is subdued in 2019. The Construction Products Association forecasts a 5.4% decline in commercial buildings output in the year, a consequence of the political uncertainty we’ve already seen holding back investment. Its forecast says the sharp fall in new orders for large office buildings seen in 2018 followed on from “concerns from investors over long-term economic prospects and returns on investment” in the wake of the 2016 referendum on leaving the EU.

The retail sector is also likely to be hard hit, with poor sales over the Christmas period deepening concerns over the long-term sustainability of high streets and shopping centres. This calls into question major retail schemes, such as the £1.4bn Brent Cross scheme – already on hold – as well as the similar sized Croydon Partnership development. Perkins+Will’s Charlton says this will mean businesses involved in retail will have to adapt quickly in 2019. “Retail’s going to take an absolute hammering. This will present a huge opportunity to repurpose existing retail developments, and potentially resolve the housing crisis at the same time. There’ll need to be a radical rethink of plans.”

august figures

Construction output grew 2.1% in 3rd quarter

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Construction output is continuing to recover following a relatively weak start to the year, increasing by 1.7% in September 2018 and by 2.1% for the third quarter.

The 2.1% growth in GB construction output in Quarter 3 (July to September) 2018 followed a fall of 1.6% in the first quarter and an increase of 0.8% in Quarter 2 (April to June) 2018.

Growth in the third quarter of 2018 was driven by all new work which increased by 2.8%, and repair & maintenance which increased by 1.0%, according to Office National Statistics data for Great Britain.

Between August and September 2018, construction output increased by 1.7%, driven by a 2.8% increase in all new work and partly offset by a fall of 0.3% in repair & maintenance.

The level of the all work series for September 2018 reached £13,995 million – a record high since the monthly records began in January 2010.

Construction output increased by £872m in Q3 2018 compared with Q2 2018. The most notable contribution to growth came from private housing new work, which increased by £507m between Q2 and Q3.

Non-housing repair & maintenance and infrastructure also grew strongly, by £230m and £191m respectively.

In contrast, downward pressure on construction output in Q 3 2018 came from private commercial new work, private housing repair & maintenance and private industrial new work, which had falls in the three-month on three-month series. These decreased on Q2 by £162m, £124m and £60m respectively.

construction output 2

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, commented: “The construction industry is enjoying an Indian Summer. True, the surge in output in the third quarter is flattered by comparison with the grim decline of the first quarter and the plodding indifference of the second. But this is real, and welcome, progress.

“House-building retains its crown as both poster child and ‘get out of jail’ card for the industry as a whole. House-builders delivered a half billion boost to the industry in the third quarter, but elsewhere the growth was patchy at best. Infrastructure work remains in positive territory but output is down, with contractors focusing on finishing existing projects rather than starting new ones.

“Among developers there is a widening confidence gap between the overheated southeast and other areas where demand is stronger and margins better. Despite a marked improvement in the Brexit mood music this week, months of deadlocked negotiations have choked investor appetite. Unless and until the political limbo is ended, the industry will continue its holding pattern of two steps forward and one step back.”

Source: UK Construction Week

uk construction

Construction growth rising

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UK construction growth has risen through October, thanks in part to an upturn in civil engineering activity.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose in October to 53.2. This was up on the 52.1 reported in September and against the no-change reading of 50. For the uninitiated, a figure below 50 indicates contraction.

Having dropped off somewhat through August and September, civil engineering activity grew at its quickest pace since July 2017. Housing and commercial construction also expanded, albeit at a slower rate. New business volumes rose more slowly however, with construction firms citing intense competition and delayed decisions from clients as the root causes. Worryingly, business optimism fell to a near six-year low.

Understandably, input purchasing increased more cautiously – at its slowest rate in seven months. And yet, delivery times for construction products and materials continued to stretch, with firms reporting stock shortages at builders’ merchants.

Trevor Balchin, Economics Director at IHS Markit, said: “Although total UK construction activity rose at a stronger pace in October, the underlying survey data paint a less rosy picture for the sector towards the end of the year.”

According to Balchin: “Construction firms continued to raise headcounts at a strong pace, suggesting they are not expecting an imminent contraction in demand. That said, if the new orders and expectations indices remain at current levels or fall further, the employment index could also drift back towards the 50.0 no-change mark.”

Duncan Brock, Group Director at CIPS, added: “These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes.”

Source: UK Construction Week / UK Construction Media

commercial

Commercial building was the best performing area of construction output in August

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Commercial building was the best performing area of construction output in August 2018, followed closely by residential work.

However, the latest expansion of housing activity was the weakest since March, and civil engineering workload decreased for the first time in five months. A number of survey respondents cited a lack of new work on infrastructure projects.

Overall, August data pointed to a renewed slowdown in output growth across the UK construction sector but positive signs included an increase in new business and employment growth maintaining the recent peak level seen in July.

At 52.9 in August, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) eased from July’s 14-month high of 55.8, but remained above the crucial 50.0 no-change mark. The latest reading signalled a moderate overall rise in construction output, with the rate of expansion the weakest since May.

Anecdotal evidence cited resilient client demand and supportive economic conditions, but there were also reports that Brexit-related uncertainty continued to hold back investment spending. Higher overall workloads encouraged additional staff recruitment across the construction sector in August. Survey respondents noted tight labour market conditions and shortages of suitably skilled candidates to fill vacancies.

Purchasing activity increased for the eleventh consecutive month in August, although the latest upturn was the weakest since March. Low stock and labour shortages among suppliers continued to impact on delivery times for construction products and materials. The latest deterioration in supplier performance was the greatest seen for almost three-and-a-half years. Despite stretched supply chains and rising energy-related costs, latest data indicated that input price inflation edged down to its lowest since July 2016.

UK construction companies are optimistic that business activity will expand over the coming 12 months, but the degree of confidence eased to its weakest since May. Survey respondents cited confidence about achieving organic growth through new project wins and geographical diversification, while Brexit uncertainty remained the main factor cited as holding back sentiment.

Tim Moore, associate director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, said: “The construction sector slipped back into a slower growth phase in August, with this summer’s catch-up effect starting to unwind after projects were delayed by adverse weather at the start of 2018.

“Civil engineering was the worst performing area of the construction sector, with output in this category falling for the first time since March amid reports citing a lack of new work on infrastructure projects. House building saw a particularly sharp slowdown since July, meaning that commercial construction was the fastest growing sub-sector in August.

“There are some encouraging takeaways from the latest survey, especially the resilient degree of new business growth in August and a strong upturn in staff recruitment. Survey respondents noted that they are confident about achieving organic growth at their businesses in the coming 12 months. The degree of optimism reported in August remained constrained by external factors, including domestic political uncertainty, stretched supply chains and shortages of suitably skilled labour.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Cracks in the construction sector’s masonry were beginning to show again this month, and the house building sub-sector was hit the hardest as it reported the poorest performance since March this year.

“Civil engineering saw a drop off in larger infrastructure projects and found itself in contraction territory. Levels of new work held moderately steady overall, but with any significant growth held back by Brexit uncertainty. It was also the logjams in supply routes that hampered work in hand where material and skills shortages meant vendor performance deteriorated to its worst level since March 2015.

“If there is anything positive to note from this month, it would be that the rate of hiring remained strong. However, persistent pressures from skills shortages and slow rates of new orders will continue to hit business optimism still trailing below the survey’s average.

“The sector is hovering too close for comfort to the no change mark, which makes it a contender for more disappointment next month. Though the path to Brexit is paved with good intentions, without significant progress the sector will soon be building castles in the air rather than on solid ground.”

Source: The Construction Index

 

 

Summer

Summer high for construction

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UK Construction is riding high through summer, with the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) indicating the fastest rise in construction output since May 2017.

With robust and accelerating rises in construction activity during July, the industry is riding a successful summer. House building has expanded at its sharpest pace since December 2015, underpinning the sector.

The latest survey also indicated that new business growth gained momentum, which contributed to the largest rise in employment numbers since December 2015.

The latest survey results put the Index at 55.8, a sharp rise on 53.1 in June. Purchase Mangers responding to the survey noted improved demand and a higher volumes of new starts, together with some degree of catch-up work from the terrible spring weather.

Continuing the trend seen this year, house building and residential work remains the best performing sector. Activity in July shows the strongest upturn since December 2015. Commercial work, which has been lagging since 2015 also showed a strong pick-up in pace.

July 2018 has given the construction sector its strongest increase in total new orders for over a year, with survey respondents noting a general improvement in client demand had led to successful contract negotiations on larger scale projects.

However, construction companies are cautious about the year ahead business outlook, with the degree of positive sentiment about future workloads unchanged since June and remaining weaker than the long-term survey average. Anecdotal evidence suggests that Brexit-related uncertainty continued to hold back business optimism in July.

Supply chain pressures continued in July, which contributed to another sharp lengthening of delivery times for construction products and materials. However, input cost inflation moderated from the nine-month high seen in June.

Civil engineering activity increased only moderately, with companies noting a lack of work to replace completed projects (particularly railway infrastructure work).

Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI®, commented: “July data reveal an impressive turnaround in the performance of the UK construction sector, with output growth the strongest for just over one year. While the recent rebound in construction work has been flattered by its recovery from a low base earlier in 2018, there are also signs that underlying demand conditions have picked up this summer. New business volumes expanded at the strongest rate since May 2017, while workforce numbers increased to the greatest extent for just over two and-a-half years.

“House building was the bright spot for construction growth in July, alongside a stronger upturn in commercial development projects. Residential activity and commercial work both increased at the sharpest pace since December 2015, which contrasted with another subdued month for civil engineering.

“UK construction companies experienced substantial cost pressures in July, driven by rising fuel bills and higher prices for steel-intensive items. Meanwhile, supply chains struggled to keep up with greater demand for construction products and materials, which resulted in the greatest lengthening of delivery times since July 2017.”

Source: UK Construction Media

Construction growth

Construction growth to rebound to 2.3% next year

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UK construction output is expected to bounce back to 2.3% growth in 2019 after dipping by 0.6% this year.

The growth hiatus this year ends the five-year run enjoyed by the industry, fed mainly by private sector home building and strong commercial and industrial activity.

While forecast 2019 and 2020 growth will boost civils contractors and trade contractors working for house builders, commercial building contractors are expected to continue to feel the squeeze in both commercial and retail work opportunities.

The latest forecast from economists at the Construction Products Association, revises 2018 output down from stagnation to contraction, due mainly to bad weather and the fall-out from Carillion.

Forecasters predict growth will bounce back in 2019 and then expand by 1.9% in 2020.

Strong house building activity outside London will drive up activity in this sector by 5% in 2018 and 2% in 2019.

Infrastructure will also become a primary driver of growth for the whole industry, with output forecast to hit a historic high of £23.6bn by 2020, driven by large projects such as HS2 and Hinkley Point C.

Without the forecast growth in infrastructure and private housing activity, total construction output would fall by 3% in 2018 and remain flat in 2019.

The demise of Carillion resulted in a poor performance for the industry at the start of the year, which combined with the bad weather, lost UK construction £1bn of work.

It is estimated 60% of this work may be recovered, but Carillion’s collapse will cause further delays at two major hospitals as work on the £335m Royal Liverpool University and Birmingham’s £350m Midland Metropolitan hospitals is on hold until at least 2019.

Brexit uncertainty continues to drive the sharpest decline for construction in the commercial sector, particularly felt in the offices sub-sector which is expected to fall 20% in 2018 and a further 10% in 2019.

Meanwhile, the shift to online shopping is causing woes for the high street, with new retail construction expected to fall by 10% this year.

Noble Francis, Economics Director at the Construction Products Association said: “Overall, it’s mixed fortunes for contractors at the moment.

“On the positive side, house builders are keen on accelerating building rates outside of London and that is expected to be enough to offset sharp falls in house building in the capital.

“Firms working on major infrastructure projects also have a lot of work in the pipeline. Infrastructure output is forecast to rise by 3% in 2018 and 13% in 2019.

“This growth is highly dependent on large projects such as HS2 and Hinkley Point C. As ever, there remain concerns about government’s ability to deliver infrastructure projects without the cost overruns and delays that we have seen on Crossrail and HS2 recently.

“On the negative side, the elephant in the room is clearly Brexit uncertainty, which has had a big effect on international investment, especially where it is high up-front investment for a long-term rate of return, which is now highly uncertain.

“It badly affects demand in sectors such as prime residential in London, commercial offices towers and industrial factories, which is dependent on manufacturing.”

CPA summer 2018 forecast

  • Construction output to fall by 0.6% in 2018 before growth of 2.3% in 2019 and 1.9% in 2020
  • Private housing starts to rise by 2.0% in 2018 and 2019
  • Commercial offices output to fall by 20.0% in 2018 and by 10.0% in 2019
  • Commercial retail output to fall by 10.0% in 2018 and remain flat in 2019
  • Infrastructure construction to grow by only 3.2% in 2018 and 13.0% in 2019

Source: Construction Enquirer

construction output

Construction buyers have reported strong rise in construction activity

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Construction buyers have reported the strongest rise in construction activity since November 2017.

The latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index for June registered 53.1 in June – up from 52.5 in April.

The rise represents the sharpest increase in overall construction output since last November.

New orders also rose at their fastest pace since May 2017.

Residential and commercial work were the main drives as civil engineering continued to plod along.

Tim Moore, Associate Directorat IHSMarkit and author of the IHSMarkit/CIPS Construction PMI said: “The latest increase in UK construction output marks three months of sustained recovery from the snow-related disruption seen back in March.

“A solid contribution from house building helped to drive up overall construction activity in June, while a lack of new work to replace completed civil engineering projects continued to hold back growth.

“Of the three main categories of construction work, commercial building was sandwiched in the middle of the performance table during June.

“Survey respondents suggested that improved opportunities for industrial and distribution work were the main bright spots, which helpedto offset some of the slowdown in retail and office development.

“Stretched supply chains and stronger input buying resulted in longer delivery times for construction materials during June.

“At the same time, higher transportation costs and rising prices for steel-related inputs led to the fastest increase in cost burdens across the construction sector since September 2017.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “With the fastest rise in new orders since May 2017, it appears the brakes are off for the construction sector.

“Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects and hesitancy was swept away.”

Source: Construction Enquirer

22 million

£22 million cash injection to address skills shortage

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The government has attempted to address the construction industry skills shortage with a £22m cash injection which will bring training to construction sites and therefore allowing learners to apply their knowledge in a real-world environment.

The multi-million-pound Construction Skills Fund has been announced by skills minister Anne Milton with 158,000 new construction jobs expected to be created in the UK over the next five years after first being unveiled by the chancellor Philip Hammond in his Spring Statement.

Money will go towards 20 on-site hubs to train more people to help deliver 300,000 new homes a year by the mid-2020s. The 18-month scheme is funded by the Department for Education (DfE) and will be administered by the Construct.on Industry Training Board.

Commenting on the announcement, Milton said: “For our economy to thrive we need everyone, regardless of their age or background, to be able to get the training and the skills they need to make the most of the opportunities that lie ahead. The government has committed to building 300,000 new homes a year by the mid-2020s and we want to make sure that we are investing in the UK skills base to deliver this. A career in construction offers the chance for many people to establish and grow their own business. On-site training will be hugely beneficial for employers and trainees, as it will help bridge the gap between training and working in the industry, meaning trainees are site-ready sooner.”

The fund forms a vital part of the Government’s modern Industrial Strategy – a long-term plan to build a Britain fit for the future by helping businesses create jobs in every part of the UK.

It underlines the Government’s commitment to improving education standards for everyone, so they can gain the skills they need to succeed and can secure good jobs.

The fund aims to support:

  • 20 on-site training hubs
  • Work experience and placements for people working to join the industry
  • Entry pathways for those currently unemployed
  • Pathways for career switchers.

CITB is now calling on employers, housing associations and other interested bodies such as LEPs and local authorities to submit expressions of interest. These can be from both existing and prospective on-site learning hubs.

The funding will only support on-site training provision, and access to live construction projects is essential to qualify.

Steve Radley, Policy Director at CITB, said: The Construction Skills Fund is a milestone scheme for the sector and provides a significant investment in skills and training. It will help attract new talent and bridge the gap between training and working in the industry. Having training on or near to major projects will reveal what an exciting sector this can be, while also putting new talent in the shop window. We want all interested organisations to submit Expressions of Interest that are innovative, collaborative and with training at their heart. We will support applicants through the process and provide expert guidance to apply to the fund. We are pleased to help deliver this major new project and we are confident that, with industry support, it can help meet construction’s skills needs now and in the future.

Managing director Graham Ratcliffe said: “It is great seeing funds being made available to support on-site training through hubs similar to the Construction Skills Villages in Scarborough and Barnsley. We hope to secure funds to expand our unique and successful model in turn helping support the construction industry overcome a skills gap.”

Funds provided by the DfE will also be provided for work experience placements for people working to join the industry, entry pathways for those currently unemployed and pathways for career switchers.

The CITB is now calling on employers, housing associations and other interested bodies such as LEPs and local authorities to submit expressions of interest. These can be from both existing and prospective on-site learning hubs.

Radley continued: “Having training on or near to major projects will reveal what an exciting sector this can be, while also putting new talent in the shop window. We want all interested organisations to submit Expressions of Interest that are innovative, collaborative and with training at their heart. We will support applicants through the process and provide expert guidance to apply to the fund.”

The Construction Industry Training Board (CITB) has released new research investigating how to tackle the skills crisis.

With Brexit on the horizon, the research points to the need for greater skills transferability, with a key goal to attracting talent from other sectors and trades.

The new report, ‘Construction and Built Environment: Skills Transferability in the UK’, surveying 500 employers across the UK, found that with a smaller construction talent pool post-Brexit, the sector needs to look at encouraging people from different industries to look at construction as a good career progression.

The industry is not noted for its diversity of talent, with researchers finding that 62% of employers took no action to encourage employees to transfer between trades. This is despite approximately one in five (19%) of construction sector workers having previously worked in another sector.

The report highlighted manual occupations, such as steel erectors and bricklayers, as the roles with the best potential to transfer skills.

The survey pointed to a number of challenges in increasing skills transferability, including:

  • Improving the image of the industry
  • Changing the way training is delivered to it promotes multi-skilling
  • Concerns from employees and unions around multi-skilling

Radley continued: “Our research shows that transferability of skills is a growing issue, particularly with Brexit looming.

“While many employers are not yet looking at it, it could become a significant way to meet our skills needs in the coming years.

“CITB clearly has a role to play in this. Our forecasts can help prioritise support for upskilling and ensure training providers are well placed to respond. In addition, we will collaborate with industry to develop top-up courses to enable transition for people with relevant transferable skills.”

 

Source: Infrastructure Intelligence / UK Construction Media

construction output

Construction output increased 8% in 2017

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Recently revised data from AMA Research indicates that total construction output increased by 8% in 2017 compared with 2016, to reach a total value of £163.5bn. In terms of value, new work accounts for the largest share, with output growth having been particularly strong in the residential new work segment, which saw growth of 14% in the year. RMI output has also been stronger in the residential than in the non-residential sector. Overall RMI output increased by 7% in 2017.

In H1 2018, the construction sector remains uncertain to moderately optimistic. Indications are that new orders remained positive into Q4 2017 and this should lead to some growth in terms of output into 2018 and beyond for certain key sub-sectors, and as a result, the outlook for the UK construction market remains mildly positive into the medium-term, although with lower rates of overall growth than previously forecast.

The outlook for the housing sector remains positive, if modest, with 17% overall growth in residential output currently forecast between 2017 and 2022. The imbalance between demand and supply for new housing will remain one of the key drivers for continued output growth for the residential sector, and the number of new programmes designed to address shortage in housing stocks should motivate output into the medium-term.

However, predicted growth in the newbuild sector is set against lower growth levels for completions, and also takes into account an element of materials inflation – in particular for the finishing of new housing, such as sanitaryware, tiles and electrical wiring products. RMI in the residential sector is currently forecast to remain relatively steady, with low annual growth rates reflecting consumer confidence levels.

The non-residential sector is facing more subdued growth into the medium-term with output currently forecast to reduce to 1-2% 2018-19, followed by annual growth of around 3% to 2022. The issue of business confidence and investment levels and the “wait and see” approach regarding the commitment to future funding and capital commitments are all likely to act as a brake on output levels into the medium-term.

Infrastructure will remain the largest sub-sector with growth underpinned by HS2 which has the potential to deliver £3-4bn pa of output to 2022. However, the HS2 works also bring into question the issue of capacities both in terms of materials but also workforce which could result in skills shortages for other sub-sectors into the medium-term.

The entertainment & leisure sector output is forecast to see good overall growth to 2022, when output is forecast to be around £10.9bn. Following growth of around 33% in 2017, annual growth rates are currently forecast to fall back to around 3-5% from 2018 to 2022.

The retail sector is currently forecast to perform less well, due to a combination of structural changes within the sector and also potential reduction in consumer confidence and spending levels, and the public sector is likely to see less investment in capital projects into the medium-term, particularly given the focus on the collapse of Carillion and their extensive involvement in PFI contracts.Pa

“Overall growth in construction output is forecast to reduce to around 2% for 2017-18, but improving to 3% for 2019-22” said Jane Tarver of AMA Research. “This more modest forecast takes into account the continuing uncertainty surrounding the Brexit process affecting the timing of business investment decisions.”

AMA Research publish the Construction and Housing Forecast Bulletin – GB 4 times a year – the bulletin provides analysis of the overall construction market in current prices, in terms of new work and RMI activity, also public and private sectors and detailed reviews of the two main sectors with sub-sector analysis for quarterly output and new orders, housing starts and completions, as well as forecasts to 2022.

The recent issue of the bulletin includes revised data for 2016 as well as preliminary data for the full year 2017 for output and new orders for total GB construction, as well as the residential and non-residential sectors, though this may be subject to revision in the medium term.

Source: UK Construction Week / AMA Research

 

construction robots

Demand for construction robots will more than double by 2023

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The use of robots in the construction industry is forecast to grow considerably over the next five years, according to new research.

Valued at $76.6mn in 2018, the construction robot market will more than double in size to $166mn by 2023, growing at around 17% a year.

The report, by MarketsandMarkets, says that the growth will be mainly driven by factors such as demand for enhanced productivity, quality, and safety due to growing urbanisation worldwide.

The semi-autonomous segment is the largest currently, accounting for 67% of the overall construction robot industry. Common tasks for these revolve around infrastructure monitoring and predictive and corrective maintenance.

Labour shortages are predicted to lead to the rise of exoskeletal robots over the next five years, with this particular market segment expected to grow the most between now and 2023.

Regionally, the report highlights Europe as a major territory for construction robots.

This is attributed to the large facilities of various companies for the development and production of construction and demolition robots, increasing number of government regulations, and growing need for the residential and non-residential construction projects.

In terms of companies, a healthy mix of large and small players are competing for business, including Husqvarna (Sweden), Ekso Bionics (US), Komatsu (Japan), Fujita (Japan), Construction Robotics (US) and Fastbrick Robotics (Australia).