COVID-19 Construction Update 29th May 2020
29th May 2020
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This week has seen a further small increase in open projects and a fall in delayed projects. Once again most the increase has occurred in the residential sector. Restarted projects have also increased along with a decrease in delayed projects.
Over the last few weeks new tenders have recovered somewhat to approximately 30% lower than pre-crisis levels. Contract awards remain the same as previous weeks and new applications remain stable, but decision updates are weakening slightly.
This week our research findings have focused around concerns over delays in projects under construction, with on-site productivity and breach of contracts major issues. We have some evidence to support the slight pickup in tenders we have observed as staff return from furlough.
There was little new economic news this week, with the media focused on political developments. The European Union unveiled a proposed €750bn recovery fund with the aim of supporting member states as they come out of lockdown. The Treasury published its comparison of forecasts for the UK economy which compares independent economic forecasters’ estimates of major economic parameters.
This week, much of our research has captured information over the delays in project completion. This is due to the lockdown and productivity reductions under social distancing rules. Several respondents said they were concerned about the difficulties maintaining productivity and achieving contract milestones. We also picked up several projects with new later completion dates.
We also picked up information of the on-site activities being undertaken to support social distancing. This includes more spacious rest welfare areas, the introduction of one-way systems for site movement, and the adoption of thermal cameras to monitor workers’ temperatures. While many companies have now returned to site, we continue to find a number of firms where all sites and offices remain closed.
This week the value of projects confirmed open or restarting has increased by a small amount. Once again most the increase has occurred in the residential sector. The value of delayed projects has reduced.
New planning applications remain fairly robust compared to pre-Covid levels. However, decision updates have deteriorated somewhat over the last fortnight.
Contract awards and new tenders remain very subdued. The volume of tenders received seems to be recovering very slightly. This is backed up by our anecdotal research findings this week. Contract awards however continue to stagnate below normal levels.
The projects we have confirmed remaining open have increased by a further small amount over the week. The majority of the total change has occurred in the Residential sector, with the commercial and retail sectors also seeing an increase.
The most confirmed open projects continues to be in the Medical sector, followed by the Residential sector. The Industrial sector continues to have the smallest open projects, followed by the Hotel and Leisure sector. Across the UK, London has by a margin the highest number of open projects whereas the lowest levels of open projects are in the East Midlands and Yorkshire.
We have seen an increase in restarted projects this week. Almost all projects returning to site are in the Residential sector.
The Residential sector has by far the most projects returning to site, followed by the Infrastructure sector. The Industrial sector remains the sector with least restarted projects relative to its size, though it does have the lowest amount of delays. London has the highest level of restarted projects, followed by Scotland and the North East of England, with the rest of the UK at lower levels. Yorkshire and the East Midlands have the lowest amount of restarted projects relative to their size.
The number of projects delayed have decreased, as we continue to pick up small numbers of low value projects.
The Residential sector has seen the largest fall in delays. The Infrastructure sector also saw a large fall, though this was dominated by a single project – the TFL Silvertown Tunnel project in London. Other sectors have seen minimal changes.
Scotland remains the outlier in terms of remaining delays. Even with the large number of residential sector projects returning to site, the sector remains the most impacted, closely followed by the Commercial and Retail sector. The Medical and Industrial sectors remain the least impacted by the delays.
We will continue to provide weekly updates, including 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.