Mixed Messages - May 2022 Commentary Of Contracts By Builders Conference

Office building and road construction is up but contract awards in London are down.   The number of new contract awards is up, but their value is down.   May 2022 was a month of mixed messages for the UK construction sector.   Builders’ Conference CEO Neil Edwards attempts to make sense of it all.

The combined value of all the 432 new contract awards recorded on the BCLive league table during the month of May 2022 was £4.75 billion.   Although that is slightly down on the previous month, it did mean that the £4.0 billion baseline that has held firm each month for more than three years did so once again.   House-building contributed £1.24 billion to that total, retaining its position – yet again – as the construction industry’s most prolific and stable sector.

So far, so predictable.   But beyond those two bell-weathers, the BCLive league table for May 2022 pointed to an industry in the midst of uncertain times.   And the mixed messages beyond the statistics are a double-edged sword of positive and negative.

London was not the top regional source of UK construction activity as it has been for the past four years or more, it failed to hit the now familiar £1.0 billion mark, delivering a regional total of £804.5 billion.   This meant that the nation’s capital was narrowly pipped by the combined and resurgent East and West Midlands which reported £399.96 and £413.63 million respectively for a £813.59 million total.   Also enjoying a significant uptick were Surrey (£535.70 million), the North West (518.15 million), and Hertfordshire (410.50 million).   Does that mean an unexpected slump in demand in London?   Or do those monthly figures point towards the regional “levelling up” that politicians have been calling for?   It is too early to tell.   And the mixed messages do not end there.

House-builders secured 131 new contract award during May 2022 worth a combined £1.24 billion, while the entertainment sector delivered a further £544.29 million.   Offices accounted for a further £497.85 million while roads contributed £413.78 million.   Yet, in the middle of ongoing political scandals, traditional vote-winning sectors such as education and health could muster only £552.09 million between them.

As if all that were not sufficient to leave industry-watchers scratching their collective heads, only eight companies reported contract awards valued at more than £100 million during the month.   Morgan Sindall reported an astonishing 53 new contract awards worth a combined £328 million to claim the crown for the highest number of individual projects.   Yet Kier Group (which typically secures roughly a contract award for each working day) managed just 14 valued at a combined £70.5 million to limp home in a comparatively lowly 16th position on the BCLive league table.

Despite the mixed messages and unexpected region and sector twists and turns, several companies hone bright this past month.

Laing O’Rourke soared to the number one position on the BCLive league table, courtesy of a single £400 million project.   That project is for the extension of the Shepperton Studios in Surrey for client Pinewood Group.   This project will add a further 450,000 square feet of space to the complex and is part of a wider programme that will ultimately add a remarkable 1.2 million square feet of studio space.

With its haul of 53 new contract awards, Morgan Sindall stole into second place on the BCLive league table with a cumulative £328 million total.   The largest of these is an eighty million project of a community hub at Western Way in Bury St Edmunds that will include council offices, private let offices, a medical centre and a leisure centre together with car parking and associated landscaping.

Claiming third position on the BCLive league table while simultaneously bolstering the roads sector was Balfour Beatty which secured two projects worth a combined £312 million during the month.   The largest of these is for improvements to the M25 motorway at Junction 10 (A3) to junction 16 (M40 interchange) to provide four lanes running through junctions on the M25 between junction 10 and junction 16. 

Skanska took the number four position, securing a single £250 million contract for the construction of a new vehicle storage facility for the British Army at Tewkesbury.   The BCLive league table top five was completed by Bowmer & Kirkland which secured eight new contract awards worth a combined £217 million.

Looking at the positives, the house-building sector continues to be the crutch upon which the entire industry leans; there are signs that regions outside London might be enjoying some long overdue positivity; and the uptick in office construction points to an ongoing confidence among the UK business community.

Beyond that, however, the over-arching feeling in May 2022 is one that would be familiar only to the Grand Old Duke of York’s 10,000 men when they were halfway up a hill: Neither up nor down.

Quick review of BCLive table for May 2022

277 no companies were detailed as winning new contracts during April 2022

342 no new construction orders were researched by Builders’ Conference all detailed on the UK’s only Live league table of construction contract awards BCLive

Laing O’Rourke secured overall top spot with a single contract worth £400 million

Morgan Sindall Group was the company with the most number of new construction orders in the month with 53no totaling £328 million

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