COVID-19 Construction Update 1st May 2020

This week has seen an increase in active construction projects across the UK. The volume of restarted projects will also continue to increase over the coming weeks as housebuilders have confirmed they will return to site carry out their plans. In the planning environment, new applications and decision updates continue to strengthen. However, the number of new contract awards and tenders remain weak.

Economic conditions

In the UK this week, retailers suffered a historic slide in sales from the scale of the forced closures due to the pandemic. Alarmingly, 96% of retailers reported cash flow difficulties with a third saying they were struggling to access external finance.

A report from Resolution Foundation found that women, low-paid workers, younger employees and parents are being hit particularly hard by the Covid-19 pandemic. They calculated that women make up a majority of ‘key workers’, which means they run a greater risk of exposure to the virus as they’re not isolating.

Evidence of construction activity

There remains a very wide range of experiences reported to us, from site closures and openings, to the biggest factors affecting operation, to shortages of materials, and to productivity.

Over the course of the week many of the major housebuilders have announced a reopening of sites. We also find a wide variety of views on the shortages of construction products and materials. Some companies successfully stockpiled materials in the weeks before the lockdown but others that didn’t are experiencing significant difficulties.

We are also attempting to gauge the change in site productivity where social distancing measures have been implemented. Our findings in this area are sparse so far. We have found two distinct groups of responses – some respondents state their sites are unaffected, whereas others are stating very large productivity impacts. It is likely that it is too early to fully tell the impact.

Construction project information

This week the value of delayed projects has decreased. However, we continue to pick up additional delayed projects with smaller values, as the number of delayed projects has increased. The value of open projects has increased significantly this week.

Planning activity

As in previous weeks we continue to receive both new projects and decision updates from the planning process. Over the last fortnight activity has picked up somewhat. While new applications remain towards the lower end of average volumes, the volume of decision updates have increased significantly.

Confirmation of projects remaining open

In the last week we have separated the projects confirmed open into those returning to site (restarted projects) and those that have remained open.

The value of Infrastructure projects remains lower than expected in many regions of the UK. While the value of confirmed open projects remains lower than normal market sizes in the Industrial and Commercial sectors.

In London we have identified a larger than expected value of projects in the Commercial and Hotel and Leisure sectors, however the fewer number of projects confirmed open in other sectors results in confirmed open projects being lower than the rest of the UK.

Projects returning to site

As we mention above, this week we have commenced reporting projects returning to site. This will significantly increase over the coming weeks as housebuilders return to closed sites.

Conversely to the projects confirmed open, we have a large volume of projects returning to site in London. While the largest value in London is in the residential, by relative market size the largest restarts have been in the Hotel and Leisure, Infrastructure and Medical sectors.

For the whole of the UK, at the sector level the most projects restarting are in the residential sector, whereas relatively fewer projects are restarting in other sectors.

Delayed projects: impact by sector and region

This week we have seen a further drop in delayed projects. While we have seen a large movement by value from delayed projects into restarted projects over the course of the week, we continue to pick up newly delayed projects. These are relatively small by value but larger by number. Most likely this is due to the lag between smaller sites closing and our research team being able to confirm each project.

As with previous weeks, London and Scotland remains the most impacted. The Residential sector has the greatest volume of delays, while the Industrial sector is the least impacted.

Next steps

We will continue to provide weekly updates, including any themes we uncover as further information becomes available. For a more detailed review of the construction projects affected by COVID-19, please click here and get in touch.