Tag Archive for: construction

Building upwards will bring big benefits

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With the government’s recent revisions of the National Planning Policy Framework (NPPF), it is now easier for homeowners and developers to create homes above existing residential and commercial properties. Since these revisions, rooftop home developers have received funding to generate much-needed affordable homes across the UK.

Insulation Express have uncovered the benefits of building upwards, from saving the Green Belt to overcoming the current housing shortage, and why this could create a future trend in construction.

Building upwards could heighten the development growth in dense cities

The shortage of available properties has long been recognised as an issue affecting our society but building upwards could ease the demand in areas with less space and at a faster pace. In dense urban areas where there is a lack of development sites, rather than forcing people out of the city, upward extensions could allow people to live and work in city centres.

To see where there’s a demand and opportunities for development growth, Insulation Express analysed just how many people share a sqm in cities of the UK.

Surprisingly, Brighton and Hove has 10 people packed into just a sqm, even more than London (seven people per sqm). In such a densely packed city, there are limitations on where to build, but skyward extensions could be hugely beneficial in this seaside town.

There has also been a wider focus on the capital of the housing crisis, London, with seven people per sqm. Most London residents have the option of crippling rent prices or long commutes from outside London. According to the developers a whopping 180,000 rooftop homes could be created in London, even housing up to 720,000 people.

Notably, Liverpool is one of the least dense cities, with just four people sharing a sqm, yet the city has the most expensive plots.

Upward extensions could boost the productivity of the UK’s construction sector by 50%

Research has identified a critical challenge in the industry – a shortage in the workforce, and this was before the UK voted to leave the EU.

As of May 2019:

  • The total workforce is made up of 90% UK nationals, 7% EU nationals and 3% non-EU nationals.
  • Construction workers in the UK are ageing – Nearly half (47%) of UK nationals are aged 45 and over.
  • In comparison, non-UK nationals are much younger, with those aged 45 years and over making up 18% of the workforce.

Unfortunately, once we leave the EU, this shortfall could end up being worse as it becomes difficult for EU workers to live and work in the UK.

This shortage coupled with the fact that the UK’s construction industry already lags behind in productivity (15% less than Germany and 25% less than France), means the UK urgently needs to solve its issues.

But rooftop homes could be the answer. Generally, upward extensions use the modular construction process. This means building the home off-site before craning the property on top for less disruption. These techniques are massively quicker and require less workers. With new legislation making it easier to gain planning permission for building above, we could see the UK’s construction productivity grow by 50%.

How building up could stop the rapid increase (34% in two years) of homes on the green belt

The Green Belt is the neighboring countryside for more than 30 million people, covering 13% of the land in England – 1,639,560 hectares to be exact. However, the pressures on Green Belt land are mounting – there are calls for reforms to release the land in the UK to ease the housing demand.

For many, the loss of Green Belt land is also the loss of an escape from urban life, that’s why this countryside is generally protected. While building on this land is supposed to be extremely difficult to get planning permission. But since 2013, there has been a 62% increase in the loss of greenfield Green Belt (part of the Green Belt that previously, had not been built on before). Just in 2017/18 alone, there was huge 34% increase of residential units on Green Belt land.

The number of homes proposed to be built on Green Belt land has increased from 425,000 in 2017 to 459,000 in 2018, that’s an 8% rise in just one year. With the increased demand of homes needing to be built threatening our Green Belt further, one solution could be building above. London needs 66,000 homes a year, yet 22% of the land is designated Green Belt – upward extensions could allow developers to alleviate housing pressures without restrictions.

Rooftop homes can reduce construction waste by up to 90%

The majority of rooftop developers use modular homes to create these extensions. This is a major advantage in itself, especially to our environment. Why? Modular homes use marginally less materials than traditional construction, which makes them quicker to build and less damaging to the environment.

Traditional methods of construction normally use a vast array of materials (400 million tons each year), much of which has a negative impact on the environment, due to the emissions created when manufacturing these materials. But another damaging effect of this is the waste, the industry wastes 120 million tons of material per year and accounts for almost a third of the UK total of waste production.

Off-site construction for upward extensions helps the industry battle this. Modular homes use less materials in general and with modular construction being built off-site, in a controlled environment, using standard sizes and even layouts, this means this method can reduce waste by up to 90%.

The challenges of building upwards

Even with all these advantages, there are certain limitations, mainly because it means you are building on top of an existing structure. This presents various design challenges and you need to ensure the existing property is structurally sound. Not least that you have to generate a solution that creates a useful space without interfering with the function of the existing development.

Developers also need to abide to planning regulations despite the new planning permissions for building upwards. Neighbouring properties have the right to object to proposed building plans if they believe it infringes on their rights, which could mean anything from lack of light to nuisance, this all falls under the Party Wall Act of 1996.

Source: buildingproducts.co.uk

Construction growth

SME contractors agree 2.75% pay deal for workers

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Employers and unions have agreed a 2.75% pay rise for construction workers under the Building and Allied Trades Joint Industrial Council (BATJIC) agreement.

The increase is below last year’s 3.1% rise and will come into effect from June.

The one-year-deal follows successful talks between the the Federation of Master Builders (FMB) and Unite the union.

BATJIC has also secured tax dispensation from HM Revenue and Customs for Lodging Allowance and Daily Fares Allowance for this year’s Working Rule Agreement after several years’ hiatus.

The deal in detail:
• BATJIC has agreed a one-year deal involving a 2.75% pay rise over the next year;
• All apprentices and trainees will also benefit from a 2.75% pay increase;
• The adult general operatives’ rate increases by 26p per hour to £9.78;
• The NVQ3 advanced craft rate increases by 34p per hour to £12.79;
• The changes will come into effect as of Monday 24th June 2019.

Brian Berry, Chief Executive of the FMB, said: “This agreement strikes the right balance as it recognises the hard work that employees are putting into their work but at the same time, it reflects the uncertainty that many construction firms are facing.

“This increase is above last year’s rate of inflation, according to all three of the leading indexes, and sends out a strong message to tradespeople that we value them and want to retain them.

“It’s no secret that economic forecasts are quite conservative for the years ahead, given the unknown impact of Brexit, but I feel this is a good compromise from the perspective of both employers and workers.”

Jerry Swain, the National Officer for Construction at Unite the union, said: “Unite welcomes this agreement which recognises inflation levels from last year and the high employment levels that we have at present.

With construction skills shortages impacting on the industry, a 2.75 per cent pay rise will help encourage tradespeople to remain in the industry at a time when the current political uncertainty and drops in construction output are affecting confidence in the industry.

“I’m pleased that BATJIC has been further strengthened this year by successfully jointly lobbying for tax dispensation on key employee expenses.

“It was important that we secured the dispensation from HMRC in respect of lodge payments, as this now formalises the position regarding taxation of lodge payments.

“The dispensation gives peace of mind to our members and ensures that they will not face any claims for retrospective payment of tax when receiving lodge payments while working away from home.”

Source: Construction Enquirer

22 million

New pre-qualification system aims to save £1bn a year

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Build UK and the Civil Engineering Contractors Association (CECA) have launched the first phase of a new pre-qualification (PQ) system that they claim will cut bureaucracy in the sector.

The trade bodies said the current PQ system is complex and estimated that it costs the industry up to £1bn a year. Currently, the multitude of schemes in operation see around 180,000 specialist contractors producing two million pieces of paper every year for 5,000 contractors, the organisations claimed.

The roll-out of the first phase of their new system, which aims to make the industry more efficient, includes:

Publication of the Common Assessment Standard used to pre-qualify companies. Based on existing PQ questionnaires, including BSI’s PAS 91, this covers 10 key areas and includes desktop and site-based assessment standards.

Confirmation of the first recognised assessment bodies to certify companies against the Common Assessment Standard. These organisations are Achilles, CHAS and Constructionline.

The system is being overseen by an interim cross-industry body consisting of experts from organisations across the sector, including public and private sector clients, contractors and trade associations.

Once the new system is fully up and running, companies will not have to be certified by more than one recognised assessment body. A data sharing arrangement is currently being developed which will allow contractors to obtain PQ information from any one of the recognised assessment bodies. Contractors will be transitioning to the new system over the coming months.

Jo Fautley, deputy chief executive of Build UK, said: “The construction industry is making great strides towards more collaborative working and this new PQ system has been developed by industry, for industry, based on standards that clients, contractors and the supply chain have all agreed on. We look forward to the industry getting on board with it over the coming months so we can realise the efficiency gains for everyone’s benefit and boost overall productivity.”

Marie-Claude Hemming, director of external affairs at CECA, said: “CECA has long advocated an industry standard approach to PQ and the new system which builds on PAS 91 will simplify the process and reduce duplication and cost. Change takes time and there will be a transition period, but this marks the start of the rollout of the new system which we anticipate will play a key role in the future delivery of world-class infrastructure.”

Ann Bentley, chair of the Construction Leadership Council business model workstream, said: “The Construction Leadership Council welcomes and supports the proposed reform of the current PQ process – it is a real and practical way of reducing bureaucracy and improving quality in the procurement process. Companies will be able to demonstrate that they meet an agreed industry standard and clients and contractors will be able to rely on the certification. The CLC will be encouraging adoption of the revised standard throughout Government construction procurement.”

Source: Construction Enquirer

gas heating

Low-carbon heating to replace gas in new UK homes after 2025

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Gas boilers will be replaced by low-carbon heating systems in all new homes built after 2025 in an attempt to tackle the escalating climate crisis, Philip Hammond has said.

In his spring statement, the chancellor said new properties would use alternative systems, such as heat pumps, to help the UK reduce its carbon emissions.

However, Hammond appeared to row back on implementing the full recommendations from the government’s advisory committee on climate change last month, which called for new homes to have no gas for cooking or heating from 2025.

The move away from gas heating in new homes was given a cautious welcome by environmental groups, although they said the chancellor had to be more ambitious, systemic and radical if the government was to get to grips with the climate emergency.

domus

New energy efficient Domus Ventilation MVHR wall units launched

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Domus Ventilation, part of the Polypipe group, has launched the HRXE range of high performance Mechanical Ventilation with Heat Recovery (MVHR) units for small to medium size residential properties.

MVHR systems combine supply and extract ventilation in one system.  They efficiently recover the heat typically lost in waste, stale air and use it to temper the fresh air drawn into the building via a heat exchanger.  The filtered, pre-warmed air is distributed to areas of the home such as living rooms and bedrooms, effectively meeting part of the heating load in energy efficient dwellings.

Building on its success in MVHR, Domus has developed the HRXE units to provide even greater efficiency through advanced heat exchange proficiency and low Specific Fan Power (SFP).  When used with a kitchen and one wet room, at typical installation, the HRXE provides a 90% heat exchange performance and boasts a very low SFP down to 0.57W/(l/s).

The new HRXE range is not only efficient, but also exceptionally quiet, with background (normal) ventilation at 24dB(A) (typically whisper quiet).  Noise reduction can be further reduced through the use of an Anti-Vibration tray, which isolates the unit from the wall to reduce any low levels of vibration induced noise which can be distracting to residents.

There are four models in the HRXE range, all with a two year warranty and all featuring 100% thermal (summer) bypass which automatically activates when the air temperature reaches a pre-set level, allowing in cooler, fresh, filtered air without warming it through the heat exchanger.The smart design of the HRXE means there is no reduction in airflow when operating in bypass mode.

Within the range, models are available with integral humidity sensors, which is much in demand.By accurately measuring air humidity, the HRXE’s extract speed automatically changes from background to boost as the level of humidity increases, thereby providing optimal ventilation performance.

When it comes to installation, Domus Ventilation has designed the HRXE units to be even smaller than their predecessors making them ideal for wall-mounted cupboard installation, with opposite handed models available to meet different on-site requirements. Spigots on the top of the HRXE are 125mm, but with Domus Ventilation’s extensive duct portfolio, adaptors are available to enable direct connection to the most common ducting size – 204x600mm flat channel duct –for quicker and more cost-effective installation.  Furthermore, integrated controls are accessed via a front panel for easy commissioning.

The HRXE range has been designed to work most efficiently when used with Domus duct systems, including its Flow Control Plenum and High Efficiency Green Line Bends, which reduce duct bend resistance by up to 60%.  Domus duct systems offer improved system performance through the exacting tolerances and engineered fit of the system, whereby pressure drops are minimised and air leakage virtually eliminated.

Domus Ventilation has a well-deserved reputation for quality, supported by excellent technical support, from a market leading manufacturer and designer.  It is well placed to offer immediate, practical solutions to Building Regulations Parts F & L.

Source: UK construction week

uk construction

168,500 new jobs to be created

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CITB experts are predicting an extra 168,500 new construction jobs will be created over the next five years despite the uncertainty of Brexit.

The training body’s annual Construction Skills Network (CSN) report anticipates average annual industry growth of 1.3% until 2023.

That is down a third of a percent on last year’s forecast and is based on the scenario that the UK agrees an exit deal with the EU, rather than a ‘No Deal’ Brexit.

Despite the wider economic uncertainty approximately 168,500 construction jobs are to be created in Great Britain over the next five years – 10,000 more than in last year’s forecast.

Construction employment is expected to reach 2.79m in 2023 – just 2% lower than its peak in 2008.

Steve Radley, Policy Director at CITB, said: “Assuming that a deal is agreed, we expect low but positive growth for construction.

“Even as infrastructure slows, sectors like public housing and R&M are strengthening.

“This will see the number of construction jobs increase over the next five years, creating growing opportunities for careers in construction and increasing the importance of tackling the skills pressures we face.”

The CITB and industry trade bodies have published a plan to help brace the sector for tighter migration controls after Brexit.

Building After Brexit: An Action Plan for Industry identifies the need for construction to adopt a twin-track strategy: growing investment in the domestic workforce and driving up productivity, while working with Government to agree how to maintain access to migrant workers to give it the breathing space to adapt.

Recommendations include:

  • Attract talent by raising apprenticeship starts and completions, creating pathways into construction for under-represented groups and providing better work experience opportunities.
  • Retain the workforce by supporting older workers to stay in the industry, upskilling the existing workforce and offering improved mental health support.
  • Be productive by developing a Future Skills Strategy to identify the skills required to modernise the industry, drive digitalisation forward and boost investment in modern methods of construction.

Steve Radley, Policy Director at CITB, sayid: ‘Construction needs a twin-track strategy, increasing investment in the domestic workforce and working with Government to agree how we can maintain access to migrant workers to give it the breathing space to adapt to changing rules.

‘The latest forecast has revealed over 168,000 new jobs will be created over the next five years and with a likely post-Brexit reduction to the availability of foreign workers, the industry must act now to avoid widening the skills gaps.

‘We must do more to attract new talent to the sector and get better at retaining and upskilling the current workforce. Finally, the sector must fully embrace digital skills in order to become more productive and mitigate the widening skills gap.’

Alasdair Reisner, Chief Executive at CECA, said: “The date for leaving the European Union is rapidly approaching and employers are finding it harder and harder to recruit the right people for their business.

“Recruitment is already very difficult for some key roles and this will be exacerbated once migration from the EU is reduced post-Brexit.

“We must work together, as an industry and with Government to target these gaps; boosting UK-based recruitment and training while looking to sensible migration from the rest of the world to meet demand.”

Brian Berry, Chief Executive of the Federation of Master Builders, said: “The single biggest issue keeping construction employers awake at night is the skills shortage.

“If we’re going to address this skills gap post-Brexit, the whole industry needs to step up and expand their training initiatives. Even Sole Traders can offer short term work experience placements and large companies should be aiming to ensure at least 5 per cent of their workforce are trainees or apprentices.

“But realistically speaking, the UK construction sector can’t satisfy its thirst for skilled labour via domestic workers alone.

“With record low levels of unemployment, we’ll always need a significant number of migrant workers too – particularly in London and the south east.

“The Government needs to work with construction to amend its Immigration White Paper and rethink the current definition of low-skilled workers.

“Level 2 tradespeople play a vital role in the sector and would currently be excluded, which is wrong. We urge Ministers to engage with the construction industry to help improve these proposals.”

Source: Construction Enquirer.com

uk construction

Brexit will have no impact on the construction industry

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A detailed analysis of the UK’s withdrawal from the European Union, with or without a deal, has shown that it will have little or no impact on UK construction, according to Laing O’Rourke group finance director Stewart McIntyre.

He has lead an analysis of Brexit implications and  explained his findings in the company’s 2018 financial review.

He said that: “Laing O’Rourke has analysed its current order book and pipeline and this review supports an assessment that, to date, a ‘no-deal Brexit’ would present minimal, if any, risk to current projects and liquidity forecasts. The business has also considered implications for the sector and, to date, has not identified any negative impact on the UK construction market either in the traditional built environment or infrastructure sectors. We are concluding that, based on evidence to date and assuming the sector’s clients continue with their projects, there are minimal risks to liquidity forecasts arising from any deterioration in revenue.”

He continues: “The business has conducted a detailed review of its staff and workforce with a full analysis across primary job families. Based on the most recent data, 16.1% of the total UK headcount are EU citizens and 23% of that total are Irish citizens who have the full ongoing right to work in the UK. This risk assessment has highlighted a dependency on EU nationals in certain job families and the business is monitoring developments in these areas, however, it is clear that earnings and rewards are such that it does not present a significant risk to staff retention, staff recruitment or the ability to comply with the minimum earnings threshold for securing visas.”

Mr McIntyre also finds little to fear should the UK have to revert to trading under World Trade Organization (WTO) rules. “The UK business buys assets such as tower cranes as part of its core business and has conducted a detailed analysis on potential tariffs based on the past 12-month record of direct imports from the EU and possible registration procedures available to mitigate import supply difficulties,” he writes. “No tariffs apply under WTO rules to the import of tower cranes and it is assumed that additional customs procedures will create delays of no more than seven days. Apart from construction capital assets, the level of direct EU imports is low and the estimated additional costs arising from a ‘no deal Brexit’ are deemed to be immaterial.”

He concludes with a caveat that continued vigilance is required. “In summary, there has been no change to the group’s workwinning methodologies, or material negative impact on current live projects or staff recruitment and attrition. However, with the political environment continuing to develop, few companies can declare themselves immune to the risks of withdrawal from the EU. The board will continue to monitor developments in the UK business and political environment, and remains vigilant to the need to respond to changes in market conditions such as freedom of movement, finance and tariff implications, disruption to supply of plant and equipment and key construction components, logistics, exchange rates and primary commodity prices as we approach 29th March 2019, and for the period immediately after any other withdrawal date.”

Laing O’Rourke’s phlegmatism in the face of political uncertainty is in contrast to concerns that the Construction Leadership Council (CLC) has aired to government. CLC co-chair Andy Mitchell has written to construction minister Richard Harrington, copying in the chief executive of the civil service, warning that “it will not be possible to mitigate all of the potential impacts of ‘no deal’”.  These include employment issues, trade in construction products, the future regulatory regime for construction products and potential impact delaying projects and adding costs.

Source: The Construction Index

Housing

House-building boosts construction activity

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Surging mortar sales reached a record high in 2018, indicating that house-building in Great Britain remained buoyant in 2018. However,  faltering concrete sales suggest an industry in limbo, waiting for planned infrastructure projects to get going.

Latest data from the Mineral Products Association (MPA) show volumes of mortar sales at their highest level since records began in 2004.

The majority of mortar sales take place within six months of house-building projects starting, so increased volumes indicate that new starts also grew during 2018.

Year-on-year mortar volumes increased by 14.3%, despite dropping by 1% in the fourth quarter. This trend suggests more cause for optimism than other market indicators such as Office for National Statistics data on brick deliveries, which show just a 1.6% increase in the 12 months to Q3 2018.

Beyond house-building, the wider picture of construction demand for construction mineral products is more muted, reflecting an industry still waiting for major projects to get going.

Ready mixed concrete sales volumes fell 1.6% nationally in 2018, weighed down by reduced demand in London, where sales declined by 4.8%.

The MPA’s analysis shows that the southern regions of England and Wales led asphalt sales in 2018, indicative of roadbuilding and maintenance activity, contributing to a 0.7% growth nationally and offsetting declines in most other regions.  Many Highways England projects appear to have been pushed to the back end of the current spending periods.

Aurelie Delannoy, director of economic affairs at the MPA, said: “Like many sectors, construction is awaiting the outcome of Brexit negotiations, but our data shows that Great Britain is still building despite the uncertainty. In particular, strong mortar sales indicate continuing new house-building projects in 2018.  Our analysis, based on actual sales and on-the-ground activity rather than sentiment, suggests this has been higher than forecasted by other metrics.

“Elsewhere, the picture for the industry is more muted as we wait for several major infrastructure schemes to make the leap from the planning phase to the construction site.  Policymakers and clients need to be mindful that the critical mineral resources that underpin our built environment don’t flow from a tap, and preparations to ensure a ready supply need to begin early in a project’s lifecycle.”

The MPA represents more than 520 companies across the £20bn sector.  Its sales data is seasonally adjusted and drawn from the MPA membership which covers 100% of GB cement production, 90% of aggregates, 95% of asphalt and more than 70% of ready mixed and precast concrete production.

Source: The Construction Index

Amsterdam garage

Underwater garage in Amsterdam wins prize

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Albert Cuyp parking garage scooped the European Standard Parking Award (ESPA) Gold Award for its design, which accommodates hundreds of cars.

Designed by ZJA Zwarts & Jansma Architects, the garage is unique in being the first parking garage built under an Amsterdam canal. The designers took this approach to maximise use of limited space in the neighbourhood.

The award is a recognition for parking garages that excel in design, quality and customer service and is awarded by Vexpan, the platform for parking in the Netherlands. The Albert Cuyp parking garage is the 13th parking garage in the Netherlands to win an ESPA Gold Award.

ZJA designed the underground parking garage for 600 cars and 60 bicycles under the water of the Boerenwetering canal. Max Bögl Netherlands is responsible for the construction of the Albert Cuyp parking garage, commissioned by the Municipality of Amsterdam.

With a large number of parking places disappearing at street level, more space becomes available for pedestrians, cyclists and planting. The idea behind the design is to blend the garage into the existing urban landscape. All elements are installed out of sight while ramps are integrated into the existing quays without any conspicuous elevations.

The motto is: ‘simple and safe, visually unobtrusive’ to keep the quality of the public space for pedestrians and cyclists optimal. Entrances and elevators are therefore modest in size. Walls are made of glass, allowing daylight into the garage and allowing visitors to easily orient themselves.

Because the parking system remembers which license plate is parked in which slot, it qualifies as a smart garage. However, the real intelligence is that not a square foot of city has been sacrificed to house 600 cars so residents and visitors can enjoy more spacious, greener and quieter streets.

The new Albert Cuyp parking garage could be an example for other cities that have a limited space above ground, according its designers. Furthermore, underwater construction in cities can be used for multiple applications.

In the past ZJA, together with Strukton, designed a plan for a possible urban expansion under the canals of Amsterdam; AMFORA. In addition to underground parking spaces, the concept also offers spaces for sports facilities, shops, cinemas and other recreational areas. In this way, the urban space under the city of Amsterdam is better utilized.

Source: worldarchitecturenews.com

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.”