Construction contract awards hold steady in 2019
24th January 2020
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The latest data release from the ONS indicates that in the three months to November 2019 construction output increased by 1.1% on the previous three-month period. Key to this growth was a 1.6% increase in new work with repair and maintenance reporting a smaller 0.2% increase. Comparison with the three-month period ending November 2018 shows all work is 1.4% ahead in 2019. With new work increasing by 2.7%, but with repair and maintenance works seeing 0.9% decline.
New housing remains the largest category, with total value of £3.6 billion in the November 2019 quarter. The private sector remains the largest category, but output was down by 0.4% on the June to August quarter 2019. Only marginally ahead of the comparable quarter ending November 2018. Public sector new housing saw output increase by 4.5% in the November 2019 quarter compared with the previous three-month period and was also 18.4% ahead of the November 2018 quarter.
Infrastructure was positive seeing 3.0% increase on the previous quarter and was also 4.0% ahead on the year. The private industrial sector was also relatively buoyant with output increasing by 6.3% in the November 2019 quarter. Also 8.3% ahead of the comparable quarter ending in November 2018. However, repair and maintenance output has been less positive with private sector housing down 1.9% on the previous quarter and also 3.9% down on the annual comparison. Non-housing repair and maintenance saw output growth of 1.2% on the previous quarter but it is 0.3% down on the November 2018 quarter.
The value of all construction contract awards in 2019 according to Barbour ABI data was £59.9 billion. This represents an increase of 0.2% on 2018 which in turn was 15.7% lower than 2017. Whilst contract awards values have levelled off in 2019. The value of £59.9 billion is approximately 20.3% lower than the recent peak of £75.1 billion achieved in 2015. The number of contract awards continued the downward trend exhibited in recent years with awards falling to 9,580. This is a decrease of 7.3% on 2018 and is also 23.0% lower than 2014 when the number of contract awards peaked at 12,447.
Regional analysis indicate that London had the highest share of contract awards in 2019 with 22.3%, which compares to a 19.6% share of awards in 2018. The three largest contracts for the region in 2019 were all in the commercial & retail sector with combined value of £1.1 billion. The largest of which was major off ice development at Paddington Square – Paddington Cube valued at £400 million which was awarded to Mace Limited. Other key contract awards including the Nine Elms Parkside development. This will see Telford Homes build a total of 894 residential units and the £270 million redevelopment of the London Hilton hotel by Fileturn Limited.
The North West was the region with the second highest proportion of contract awards by value in 2019 with 13.1% share, which is 2.0% higher than 2018. It was also the location for two of most notable awards this year. Including the £1.5 billion framework award for the Sellafield SRP Process Facility and also the £300 million Manchester Town Hall Redevelopment project which awarded to Lendlease Limited.
The South East was the third largest region this year accruing 12.8% of all construction contract awards, which is a marginal increase (0.4%) on 2018. The largest contract award for the region was the £800 million contract for the upgrades to Fawley Refinery in Southampton which was awarded to Fluor Limited. Another key contract award for the region was the £85 million Southsea Coastal Scheme which was awarded to Volker/Boskalis JV.
The residential sector maintains its position as leading sector in 2019 accounting for 38.4% of all construction contract awards, which is 0.3% higher than 2018. Leading residential contract awards during the year included the Nine Elms Parkside Plots B & D at Wandsworth in London, valued at £276.4 million. Will see Telford Homes provide a total of 894 build to-rent apartments within two structures, each with 23 storeys. In Scotland the Jordanhill College development in Glasgow. Valued at £150 million and will see Cala Properties provide a total of 412 houses and apartments on a 16.6 hectare site. The second largest sector in 2019 was infrastructure which had a share of 17.3% of contract awards. However, this is 2.0% lower than 2018.
The largest overall infrastructure award during 2019 was the £1.5 billion Sellafield SRP Process Facility which will include a treatment plant, process building and tank farm and delivered under a framework agreement and will include Doosan Babcock Power Systems, KBR, Morgan Sindall and Wood Group. The Highways Agency awarded a number of larger-scale contracts in 2019. With the A303 Sparkford to Ilchester Dualling being one of the largest at £250 million.
The sector accounting for the third largest share of contract awards in 2019 was commercial & retail with share of 12.7%, which is 0.5% lower than for 2018. The largest office award was the £400 million Paddington Square – Paddington Cube in London. This will see Mace Limited provide a total of 49,676 sq m of new office space in three structures. The largest retail contract was also in London and was the £300 million of the Borough Yards in Southwark which was awarded to Wates Construction.
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