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This week has seen a further increase in open projects and a comparable decrease in delayed projects. Most of the increase has been in the residential sector. Further increases in open and restarted sites are expected over the coming weeks.
In the planning environment, new applications and decisions continue to hold firm at levels nearing normality. However, the number of new contract awards and tenders remain very weak.
Our research continues to find a majority focused on on-site productivity; however, sentiment may be starting to shift away from immediate concerns to the weakness of the planning pipeline, contractual disputes and financial resilience.
We made an error in weekly briefings 6 and 7 in the reporting of confirmed open and restarted projects. We had been adding the two together whereas in fact the restarted projects are a subset of the confirmed open projects. Apologies for any issues caused.
On Wednesday the ONS published March’s GDP, giving the first indication of the magnitude of the Covid-19 economic slump. The result was the worst contraction since the 2008 financial crisis. After a stagnation of growth in January and February as well as the March GDP suffering a record monthly fall, this resulted in a Q1 GDP contraction.
In production, 9 out of 13 sub-sectors fell. The largest of these was transport equipment. Meanwhile the manufacture of pharmaceuticals exhibited solid growth. The construction sector also contracted in March.
Over the course of the week there were further reports of site openings. Several major housing associations have announced returns to site, as have several major housebuilders. However, site productivity remains a major issue. We are getting many reports that social distancing is difficult if not impossible and we continue to collect several responses stating that sites are not safe.
Many respondents’ concerns are turning to the future. We are seeing an increase in concerns about contractual disputes as projects run late or over budget. There is also a serious risk that projects on-site will be finished but until conditions improve, there may not be a supply of new projects.
This week the value of projects confirmed open or restarting has increased with most of the increase in the residential sector. The value of delayed projects has again reduced significantly over the week.
Earlier stages of planning activity remain relatively healthy with decision updates and new applications holding steady at slightly below pre-Covid levels. In May so far contract awards are down, and tenders have fallen compared to pre-crisis levels, though this may be due to the bank holiday.
The projects we have confirmed as remaining open have increased further over the week. The majority of projects confirmed open are in the Medical and Residential sectors, with the next largest increase in the Infrastructure sector. The Industrial sector continues to have the smallest open projects. Across the UK, London has the highest number of open projects whereas the lowest levels of open projects are in the East Midlands and Yorkshire.
This week we have seen a sharp increase in projects returning to site. Overall, the residential sector has by far the most projects returning to site, followed by the Infrastructure sector. The Industrial sector has the least restarted projects relative to its size. Across UK regions the most projects returning to site are in London, the South East, North West and the East of England.
Over the last week we have seen a further large decrease in the number of delayed projects. This week much of the decrease is in the residential sector. The other sectors with non-material reductions are the Infrastructure sector and the Commercial sector.
The picture of delays across the UK is more mixed. London has the highest fall but other regions also have enjoyed significant falls in delays. Since the falls in delays are mainly concentrated in the Residential sector, it is consistent with UK-wide housebuilders restarting activity nationally.
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.