December is always 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 from research carried out by Builders’ Conference confounded all good sense and leaves Builders’ Conference CEO Neil Edwards in equal parts bemused and delighted.
2020 was the year in which forecasts became futile; when predictions became pointless; when the runes were rendered redundant. So, in a year in which the unprecedented became the norm, the fact that the UK construction industry recorded more than £12.2 billion in new contract awards 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, the final month of 2020 would have been unusually busy for a December. As it is, the UK construction industry strides into the New Year with well over 12 billion reasons for renewed positivity and some much-needed and non-house building work to which to look forward.
The largest of the month’s mega contracts was awarded to a Balfour Beatty/Vinci joint venture. Valued at approximately £6.0 billion, the contract requires the construction of the West Midlands section of HS2’s Phase One route between Long Itchington in Warwickshire, to the centre of Birmingham then on to Handsacre in Staffordshire. The 80 kilometre long contract includes more than 11 kilometres of viaducts (42 in total), 66 overbridges, and 30 kilometres of cuttings. That single contract propelled the Balfour Beatty/Vinci joint venture to the top of the UK’s only live league table of contract awards BCLive for the rolling year.
Although conservationists and environmentalists might have a different perspective, HS2 is the gift that keeps on giving for the UK construction sector. And it delivered another £2.5 billion worth of new work for EKFB, a joint venture comprising Eiffage, Genie Civil, Kier, BAM Nuttall and Ferrovial. This joint venture organisation will tackle the North Portal Chiltern Tunnels to Brackley and Brackley to South Portal of Long Itchington Wood Green Tunnel.
Costain stormed into the number three position on the BCLive league table in December, courtesy of a single £482 million refurbishment and repair contract with Highways England as part of the Regional Delivery Partnership North project in and around Newcastle upon Tyne.
ISG picked up three new contract awards valued at a combined £403 million to claim the number four spot. The largest and most intriguing of these is the £300 million construction of a lithium-ion battery production facility on a 95 hectare site that was formerly Blyth Power Station. Underlining its green credentials, the new plant will exclusively use 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. Battery production is expected to commence in 2023.
Six new contract awards valued at a combined £249 million saw Bowmer & Kirkland claim the number five position. This includes a £100 million dwelling refurbishment and repair framework agreement with Leeds City Council. With 10 new contract awards worth a total of £193.5 million, Vistry Group took the number six slot.
Kier Group, meanwhile, maintained its astonishing run of winning roughly one contract per working day in 202, collecting 25 worth a combined total of £191.5 million.
Those two HS2 projects ensured that the rail sector trumped the housing sector to claim top spot on the monthly breakdown by project category. With 109 new contract awards, housing still accounted for a respectable £2.139 billion.
The larger of the two HS2 contract awards saw the West Midlands claim the number one position on the monthly regional countdown; while the smaller of the two projects pushed Buckinghamshire into second place. London fell slightly short of the £1.0 billion that has become the norm (£829 million) but still took third position ahead of the North with £827 million. Amidst a second wave of Coronavirus infections and stricter lockdown rules, Scotland slipped back to just £77 million with Wales accounting for £76 million.
Although it would take a lunatic to make predictions at this point, it seems unlikely that the UK construction sector will repeat such an incredible haul of new contract awards in January 2021. However, thanks to an astonishing end of year rally, the sector enters the New Year with huge confidence and the promise of a veritable glut or work to be undertaken. Against the background of Brexit, new variant COVID and the accompanying government restrictions, which is more than any of us could have hoped for.