Almost there - November 2018 Review & Commentary of Construction New Orders from Builders' Conference

04 Dec 2018

For the 11th consecutive month, the value of new contract awards recorded on the BCLive league table has topped the £4.0 billion mark.   And Builders’ Conference CEO is quietly optimistic at the industry’s ability to notch up a full year.

Ask anyone and they will tell you that construction is a business of highs and lows; categorised by peaks in demand and troughs in workload; up one week and down the next.   Traditionally, they would have been right, at least until the beginning of 2018.

In January 2018, new contract awards for the UK construction sector were valued at a combined £4.529 billion.   Although we didn’t know it at the time, that month set a benchmark that would be maintained and unbroken for an astonishing 11 months and counting.   And this is not a “bumping along the bottom” level that the industry endured throughout the recession when a monthly total of more than £1.0 billion was seen as a blessed relief.   Rather, this is an industry that has hit a high and decided to stay there.

Perhaps more telling is the rolling year total on the BCLive league table which hit an all-time high of £57 billion in August 2017 when around £7.0 billion of HS2-related works were awarded.   Even though that £7.0 billion was removed at the end of August 2018, that rolling year total has stood fast at £57 billion, despite a lack of any further landmark projects to replace HS2.

So the industry enters December – a month usually curtailed by Christmas holidays, office parties and clients sitting on work till the New Year – with the very real possibility that the industry might notch up a full year in which new contract awards do not dip below the £4.0 billion mark.   The sector certainly has the momentum.   And Kier Group is the very embodiment of that impetus.

The company, which has already claimed the top spot on the BCLive league table three times during 2018, topped to pile again this month with a 19 new contract haul worth a combined total of £328.7 million.   The largest of these is a £100 million new build contract for the construction of a new prison at HMP Wellingborough in Northamptonshire.

A pair of new contact awards valued at a combined £258 million pushed Sir Robert McAlpine into second place for November 2018.   The most notable of these is a £250 million office new build above Farringdon Station in London for client Land Securities Properties.

A haul of seven contracts valued at a combined £216 million saw ISG claim third place on the BCLive league table.   Those contracts include a £70 million refurbishment and repair contract for client Blackstone Group at 25 North Colonnade in East London.

In a month in which the top thirteen companies on the BCLive league table each secured more than £100 in new contracts, Mace and Laing O’Rourke took the number four and number five spot respectively with a single award.   Mace won a £215 million new build for the University College London East at Marshgate, E15 to take fourth spot while Laing O’Rourke picked up the £200 million new build at Royal Liverpool Hospital.

In typical fashion, Morgan Sindall claimed an impressive 19 new contracts worth a combined total of £192.7 million – including a £35 million new build for Accor Hotels at Paddington Village.   Together with Laing O’Rourke’s contract at the Royal Liverpool Hospital, this award helped push the North West region to an impressive £672 million to take second place behind perennial regional supremo London which delivered more than £1.5 billion new contract awards.

Housing retained its position at the industry bellwether with £1.36 billion in new contract awards.   But the office sector (£703 million), the education sector (£690 million) and the entertainment and leisure sector (£443 million) all performed well to maintain the industry’s impetus towards the year end.

Will the industry manage a full year without dipping below the £4.0 billion mark?   Some clients will already be sitting on their hands and waiting for the arrival of the New Year before letting work.   And the month will be shortened by the Christmas holidays.   But I certainly wouldn’t bet against it.

Quick review of BCLive table for November 2018

297no companies were detailed as winning new contracts during November 2018

491no new construction orders are detailed on BCLive

Kier Group secure overall top spot with £328.7 million of new work

New order winners in £1M to £5M category was Kier Group with offices throughout the UK & the £1M and under category went to Engie

Kier Group & Morgan Sindall Group share the most number of new construction orders in the month with 19no.

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