An Absence Of Good News - May 2017 Review & Commentary of Construction New Orders from Builders' Conference

01 Jun 2017

With the industry seemingly holding its breath for the outcome of the General Election and its likely impact upon Brexit negotiations, the BCLive league table tells a sorry tale of across-the-board downturns. The Builders’ Conference CEO Neil Edwards analyses the figures.

Builders’ Conference monthly round-up of new contract awards compiled on the BCLive league table not only provides an accurate analysis of the ebbs and flows of construction demand and outputs; it also allows us to identify industry norms. In recent months – ever since the economic recession was officially declared dead – those norms have included an average of £4 billion in new contract awards each calendar month; London contributing more than £1 billion to that monthly total; the top seven or eight contractors each winning £100 million or more of new orders; and the housing sector leading the way.

In May, following months of increasingly worrying warning signs, the industry achieved just one of those established norms with housing accounting for more than a third of all new contract awards recorded. Only five companies at the top of the BCLive league table managed to break the £100 million barrier and one of them had to win work in the Republic of Ireland to do so; the entire table barely scraped £3 billion leaving it 25 percent short of expected levels; and London – the bellwether of UK construction demand – was some 60 percent down, contributing circa £400 million.

This situation – caused, no doubt, by pre-Election uncertainty, rising materials prices, and ongoing fears over Brexit – was exacerbated by a total absence of signature projects. While the BCLive league table is generally topped by a company winning new contracts worth hundreds of millions each, Kier Group took the May 2017 crown with a monthly total of circa £200 million made up of 17 individual contracts. The largest of these was a £40 million order from Countryside Properties for the construction of a new research and development building at the Cambridge Biomedical Campus.

BAM Construction claimed second place with nine new contract awards during the month. The largest of these is a £35 million refurbishment and repair contract for Bourne Leisure Ltd at the Studley Castle Hotel in Stratford upon Avon. Morgan Sindall took third place with a massive haul of 23 new contract awards for a combined total of £118 million. Wates claimed the fourth slot with nine new contract awards worth a combined £105.5 million including a £31 million deal for the construction of a new residential block for the Regal Property Group in Broad Street in Birmingham.

It is indicative of the sharp downturn in UK construction awards that fifth spot on the BCLive league table went to PJ Hegarty & Sons thanks to a single £100 million new office build contract award in the Republic of Ireland. Similarly, Walls Construction – a newcomer on the upper echelons of the BCLive league table – took a top 20 place on the monthly countdown thanks to a £60 million contract win for the construction of 261 apartments in the Irish capital.

In total, the BCLive league table identified circa 600 new contract awards during the month of May. That is actually not far off the established norm and proves that there is still construction demand out there. But while clients are still willing to invest, it seems that investment has become significantly more cautious. To use a motoring analogy, they remain willing to buy a Ford Mondeo, but they are not minded to purchase a Ferrari.

It is no coincidence that a weakening in construction demand has been intensified by Theresa May’s decision to call a snap General Election. The concern is that if the industry is holding its breath for that election and its impact upon Britain’s future outside the EU, it might well succumb to asphyxia before any clarity is realised.

Quick review of BCLive table for May 2017

337no companies were detailed as winning new construction orders during May 2017

Circa 608no new construction orders are detailed on BCLive

Kier Group secure overall top spot with £177.4M of new work

New orders in £1M to £5M category, Morgan Sindall Group came out on top & in the £1M and under category Armfield Construction from Chertsey in Surrey were the winners

Morgan Sindall Group plc secured the most number of new construction orders in the month with 23no