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Over the last week we have seen a large increase in the number of projects that have been identified as delayed from the Coronavirus pandemic, with construction sectors other than residential starting to see more widespread shutdowns. However, we also continue to experience normal volumes of planning activity.
The flow of information slowed this week after a plethora of bad news and the announcement of government support schemes. We still lack official data and are reliant on incomplete information to understand the full impact of the Covid-19 pandemic. New information on the economy has focused on the shape of the recovery and the experiences of firms and citizens. In some positive news, the Chinese Purchasing Managers’ Indices strengthened in March, at a rate significantly more strongly than expected, leading to hopes that the Chinese economy is returning to normal.
We have continued to collect evidence from our colleagues and partners in the construction industry and we now have a wider sample of responses to draw.
A very wide range of approaches are being taken to continuing construction activity, across all types of companies. We have also been collecting anecdotal evidence about how construction and manufacturing companies are managing their businesses in this difficult time. The most frequent issue encountered is customer-led closures and managing the drop in demand.
We have identified 4,253 projects with a total value of £67.7bn that have been delayed or cancelled as a result of Covid-19. This is a significant increase from last week’s total of 1,051 projects with a value of £25.6bn. Our research team are validating each project to ensure our information is accurate and have changed their behaviours to maximise the quantity and quality of data they are collecting.
In terms of the planning pipeline we are still experiencing normal levels of activity coming through the planning pipeline, both in terms of new projects and decisions on those in the planning process. We have received some anecdotal evidence that some companies are starting to put a hold on new contract awards. We will be looking closely at this over the coming days and weeks.
Most Covid-19 project delays so far continue to be in the residential construction sector. However other sectors have started to catch up. The largest changes over the week have been in the Infrastructure and Industrial sectors. The sector that has so far seen the lowest level of cancellations is, understandably, the Medical sector.
Across the UK, the largest change has been the updating of Scottish projects. The Scottish Government has taken a harder line than the rest of the UK in its mandatory closure of construction sites.
London remains the UK region with the largest value (£20.8bn) of delayed projects, however Scotland has now seen £16.6bn of projects delayed, and the largest number of all UK regions. However other regions have also experienced large increases in the closure of sites and the delay of projects.
While most projects identified as delayed are under construction, there has been a significant increase this week in projects that have not yet started but are at the contract award stage.
The two regions with most delays identified so far at the contract award stage are those in London and Scotland.
The average value of projects impacted by Covid-19 is concentrated in the £10-50m and £100-500m categories when considering project value.
When considering the number of projects, the most delays are in the £10-50m category and the £1-10m category.
We will continue to provide weekly updates regarding the current situation. For a more detailed review of the projects affected by COVID-19, please click here.