UK construction sector delivered another upbeat set of new contract awards in August

UK construction sector delivered another upbeat set of new contract awards in August 2020 research carried out by Builders’ Conference shows. But underlying imbalances in the make-up of those figures make for more telling reading. Builders’ Conference CEO Neil Edwards reports.

August is traditionally the month in which the UK construction industry swaps hard hats and site boots for sun hats and flip-flops. But with international travel still problematic and with the sector having lost months’ of production and output during the COVID-19 lockdown, it appears that much of the industry remained at work this year. As a result, new contract awards topped the £4 billion benchmark (£4.8 billion) for the second month in succession to add a little positivity at a time when upbeat news of any kind is hard to find.

Enjoying the heady heights of the number one position on the BCLive league table for the first time is J Reddington Ltd which secured a pair of new contract awards valued at a combined £380 million. Those two contracts – one valued at £230 million; the other at £150 million – are both at Nine Elms in south west London and both were secured by group company Midgard. The larger of the two projects is a new build mixed-use development comprising 212 residential dwellings, a new primary school, a nursery and a new public realm complete with car parking. The smaller project is an enabling package of works on the same site.

With house-building continuing to fly high, Redrow Homes secured the number two position on the BCLive league table, picking up a table-topping 13 new contract awards valued at a combined £276 million. The most significant of these is a £50 million housing development in Abingdon, Oxfordshire called The Lawns.

Vinci Construction picked up a total of five new contract awards during the month worth a total of £243 million. Key among those is a £100 million resource recovery facility in Edmonton that will have the capacity to handle 135,000 tonnes of recyclable material each year. This is just part of a wider EcoPark development that will also see the construction of a £683 million energy recovery facility capable of converting 700,000 tonnes of waste into 78 megawatts of electrical power each year.

In fourth position on the BCLive league table in August 2020 is Galliford Try which collected five new contracts valued at a combined £187.5 million. This includes a £105 million housing new build at Doncaster Monk Bridge in Leeds for client Highline Investments that will comprise 665 new homes split across five tower blocks that vary in height from 12 to 22 storeys.

Also worthy of note is a £180 million new build that propelled Multiplex into sixth place on the table. That project – for client Native Land – comprises 600 new homes in blocks of up to 49 storeys on a 2.2 hectare site that straddles the Thameslink line in Blackfriars Road, south east London.

All of this makes for surprisingly positive news, a rare commodity in today’s world.   But, as ever, the devil is in the detail. Dig a little deeper into August’s figures and some increasingly worrying imbalances appear.

Firstly, despite promises of increased infrastructure spending and government initiatives to ensure that construction leads the nation’s recovery, privately-financed projects accounted for some 70 percent of all new contract awards reported on the BCLive league table during the month. Whether those government statements have yet to come to fruition or whether they were empty promises and sound-bites is hard to tell. But any increase in government spending has thus far failed to redress the balance between private and publicly financed projects.

There is also significant imbalance in the geographic spread of work. Boosted by the Galliford Try project, Yorkshire enjoyed a significant uptick this month and reported a total of £417 million split across 21 individual projects. But while London retained its geographic lead with 100 new contract awards totalling £1.46 billion, Scotland languished with just nine new projects worth a combined £104 million.

More concerning still is the industry’s increasing reliance upon the house-building sector.   For the past few years, the housing sector has contributed somewhere between a third and a half of all new contract awards recorded each month on the BCLive league table. In August 2020, stand-alone housing accounted for just over a half of all new contract awards by value. Factoring in the housing element of the numerous mixed-use developments recorded this month, housing accounted for as much as three-quarters of all UK construction activity.

Housing has been the industry’s bellwether for several years now and its performance has unquestionably helped the wider industry punch above its weight. History suggests this cannot last forever. And without the huge contribution of the housing sector, a largely positive August would have looked very different.

Quick review of BCLive table for August 2020

• 265 no companies were detailed as winning new contracts during August 2020
• 418 no new construction orders were researched by Builders’ Conference
• J Reddington Ltd secured overall top spot with £380 million of new orders
• Redrow Homes secured most number of new construction orders in the month with 13no totaling £276.3 million