Storm Clouds Gather
Just over £5 billion in new contract awards were researched by Builders’ Conference and recorded on the BCLive league table in May 2019 possibly points to an industry basking in the sun. But the underlying signs suggest there may be a storm approaching. Builders’ Conference CEO Neil Edwards consults his trusty barometer.
Over 440 companies picked up new contract awards during the month of May 2019. Together, these were valued at a combined £5.006 billion. Admittedly, this figure represents a fall from the anomalous £6.0 and £7.0 billion recorded in recent months. But £5.0 billion in new work is not to be sniffed at. Indeed, it actually marks a slight increase on the same period last year. However, there are warning signs that a potential storm could be lurking unseen just over the horizon. The first of those signs is the huge imbalance in the distribution of work across the various market sectors. We have grown accustomed to the house building sector delivering almost half of all new contract awards each month for the past few years. But in May 2019, house building was responsible for around two-thirds of the recorded new contract awards: fantastic news if your company is active in the housing sector; deeply worrying if it is not.
An even bigger warning sign, however, is a slowing in the area of new bids recorded by the Builders’ Conference. Based on the fact that it generally takes around 22 to 26 weeks for a bid to become an actual shovel in the ground, prospects for late summer and early autumn are starting to look shaky. It is surely no coincidence that this potential slowdown coincides with the latest date set for the UK’s protracted departure from the European Union.
But while storm clouds might be gathering, a good many companies continue to make hay while the sun is shining. And climbing to the top of the BCLive league table for the month of Ma 2019 is Galliford Try which reported 12 new contract awards valued at a combined £369.3 million. The largest of these is a £125 million new build in Enfield that will include 725 new homes together with a number of commercial units as part of the Meridian Water Scheme. The client is Enfield London Borough Council.
Housing also propelled Bellway Homes to the heady heights of the number two position this month’s league table. The company started up seven new sites, the largest of which is a £100 million new build of two, three, four and five bedroom houses at Upper Warren in Hartlepool. In a month that saw the North West knock London off its perch as the most active geographic location, Redrow Homes started six new sites including a £100 million apartment and housing new build at Wrexham Road in Chester.
The North West region also provided Kier Group with the largest of its 28 new contract awards during the month. This is the First Light Pavilion at the Jodrell Bank Observatory in Macclesfield. The contract is valued at £21 million and the client is the University of Manchester.
Client Danescroft Land awarded Henry Construction Projects a £100 million new build of a residential-led mixed use development at the Clockhouse in Imperial Street in London. Comprising 462 one, two and three bedroom flats and 29 one bedroom flats on the upper floors, this pushed Henry Construction into seventh position on the league table.
Other notable contracts this month are the £52 million logistics facility in Doncaster for online retail giant Amazon that has been awarded to Bucking Group Contracting. Completing a superb month for the North West region, Chinese contractor BCEGI won an £80 million contract to build a new 281 Holiday Inn hotel and a 262-bed Ibis Budget hotel near Terminal 2 of Manchester Airport.
All things considered, May 2019 will go down as another good month for UK construction. And maybe – just maybe – tenders might bounce back. But I am reminded of former chancellor George Osborne’s speech back in 2015 in which he coined the phrase “fixing the roof while the sun shines”. Those companies that have fixed their respective roofs – particularly those allied to the house building sector – look well set to withstand the worst effects of any approaching economic storm. Those that haven’t, however, could be set for a very cold, damp and miserable fourth quarter.
Quick review of BCLive table for May 2019
- 444 no companies were detailed as winning new contracts during May 2019
- 739no new construction orders are detailed on BCLive
- Galliford Try secure overall top spot with £369.3 billion of new work
- New order winners in £1M to £5M category & the £1M and under category went to Kier Group.
- Kier Group also had the most number of new construction orders in the month with 28no.
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