by Clair Mooney | Aug 31, 2021 | Market data, Material Shortages
The latest CPA survey of the supply chain showed that the construction industry remained in expansion mode during the second quarter of 2021.
Construction product manufacturers reported the fourth consecutive quarterly rise in product sales, whilst SME building contractors and chartered surveyors saw workloads rise yet again in Q2. While growth in workloads remained broad-based across sectors, it was largely led by private housing and RM&I, where activity has been sustained by government housing policies and increased demand for larger properties with outdoor and office/study space in rural areas due to the homeworking trend. Infrastructure also remained a key driver due to works occurring on a number of large-scale projects and long-term regulatory frameworks, with civil engineering contractors reporting the third consecutive annual rise in workloads in Q2.
Forward-looking indicators point to further growth over the coming year, with the net balances for product sales and workload expectations, enquiries and orders all hitting multi-year highs in Q2. Despite this, the supply of materials and products remained the biggest issue for chartered surveyors and civil engineers and were viewed as the main risk to product manufacturers’ 12-month sales outlook due to ongoing global supply chain issues. Concerns with the recruitment of skilled labour were also echoed across the supply chain, most notably for carpenters and bricklayers relating to house building, as well as general on-site trades. Raw material costs also emerged as another potential constraint, but the proportion of civil engineers raising tender prices for both new work and R&M hit an all-time high, whilst chartered surveyors expect rising profit margins in the year ahead.
FIS members can access the full results of the Construction Trade Survey here.
by Iain McIlwee | Jul 29, 2021 | Main News Feed, Market data
Construction output is currently very buoyant and is forecast to rise by 13.7% in 2021 and 6.3% in 2022, according to the Construction Products Association’s latest Summer Forecast published today. This positive outlook comes despite the dual constraints of shortages and sharp cost rises in both imported construction products and skilled labour over the next 12 months. Infrastructure and private housebuilding are expected to be key drivers of construction growth in 2021 and 2022, while the outlook for the commercial sector remains subdued.
Major projects such as the nuclear power station Hinkley Point C, the Thames Tideway tunnel and the High Speed 2 (HS2) rail project are central to strong output in the infrastructure sector. While the CPA has revised down its infrastructure forecast for 2021 to 23.4%, it has upwardly raised its forecast for 2022 to 9.7% for 2022 owing to further delays and cost overruns on major projects. The Summer Forecasts also report an increase in client hesitancy to sign off medium-sized projects leading to a slowdown in the near-term pipeline for the sector.
As all major house builders continue to report that demand in the housing market and house price inflation continues to be robust, CPA forecasts house building starts to rise by 20.9% in 2021 and a further 9.0% in 2022. This is despite the government’s stamp duty holiday and Help to Buy schemes continuing currently in a restricted form. The outlook is particularly strong for houses outside major cities, owing to shifts in working patterns, and is likely to remain so for the next 6-9 months at least according to house builders.
Changes to the way people work as a result of the coronavirus pandemic have also positively impacted on private housing repair, maintenance and improvements (rm&i), which has been the quickest construction sector to recover since the initial national lockdown. Output in March 2021 was 19.3% higher than pre-Covid times, according to the Office for National Statistics (ONS), due to the ‘race for space’ – i.e. demand for better quality outdoor domestic leisure space and home office work environments. Most SME contractors are reporting projects lined up for at least the next six months.
In the commercial sector, the beginning of the year saw a rise in activity owing to fit-out work remodelling offices for staff to return in a socially distant manner. This was also the case in retail and leisure where refurbishing, reusing and repurposing helped prepare for reopening as social distancing restrictions eased. In addition, some larger office towers projects that had the contract signed or were started pre-Covid-19 continued in the first half of this year. Outlook for sector remains subdued, however, largely because of fewer big projects in the pipeline – particularly for new towers in London.
Commenting on the Summer Forecast, CPA Economics Director Noble Francis, said: “The key constraint to the CPA construction forecasts remains the cost and availability of imported products and skilled labour. The sharp recovery for both UK construction and also in places such as the US, has led to sharp cost increases and extended lead times for some key products such as paints and varnishes, timber, roofing materials, copper and steel. This is of concern particularly for SMEs, which account for 86% of construction employment.
“Whilst larger contractors and house builders have greater certainty in their pipelines of work and are better able to plan and purchase in advance, SMEs often purchase what they need on the day at builders merchants. This makes them subject to greater issues if supply is limited or costs have risen significantly, particularly for firms working on fixed price contracts. On the labour side, some contractors are finding that there is currently a shortage of key skills in some key hotspots of activity, which has been exacerbated by the fall in EU construction labour by 42% over the past four years according to the ONS.”
FIS Members can download a free copy of the latest Construction Industry Forecasts from the CPA here
by Clair Mooney | Jul 7, 2021 | Main News Feed, Market data
Forecast tool identifies over 1,150 public sector construction projects across Scotland valued at c.£8.5b.
An innovative online tool has been launched to provide the construction industry with greater clarity and understanding of future public sector construction projects to be delivered across Scotland.
The Construction Pipeline Forecast Tool has been developed by infrastructure body the Scottish Futures Trust in partnership with the public sector together with representatives from the construction industry.
The interactive tool has been created in response to actions coming from the Construction Industry Recovery Plan published in October 2020 by the Scottish Construction Leadership Forum.
With a current value of just under £8.5 billion, the Construction Pipeline Forecast Tool has details of over 1,150 future public sector infrastructure projects and covers many sectors including education, health, housing and flood prevention.
Of the 1,150 project opportunities, approximately 60% are below £2m in value, emphasising the focus on providing opportunities to small and medium-sized enterprises. This will continue to grow as additional contracting authorities join the system going forward and will be updated every six months.
By providing greater transparency on future workload, the pipeline will help businesses plan better and maintain their investment in skills and future training needs. It will also encourage collaboration between public sector organisations through a greater understanding of their respective construction pipelines.
The pipeline also seeks to provide a longer-term view on forecast investment and identifies construction projects up to 2028, with the majority of the forecast spend occurring before 2025. The types of construction projects include new build, refurbishments, maintenance works as well as road infrastructure.
The Construction Pipeline Forecast Tool allows the user to simply and easily explore data held using various criteria that includes the chosen procurement route, the procuring authority, contract value and sector.
Peter Reekie, chief executive of the Scottish Futures Trust (SFT) and chair of the Executive Group of the Scottish Construction Leadership Forum said: “Providing businesses working in the construction sector with this detailed information creates greater confidence through improved project transparency. As a result, it will allow businesses to invest correctly and recruit accordingly, as well as build stronger partnerships within supply chains.
“Through being a key partner in the Scottish Construction Leadership Forum, SFT took responsibility to deliver the Construction Pipeline Forecast Tool, one of the actions coming from the Construction Industry Recovery Plan which was published in October 2020 in response to COVID-19.
“Building the Construction Pipeline Forecast Tool was met with strong levels of engagement across the whole of the public sector, which has been greatly appreciated, and we look forward to continuing to work with the sector on this leading-edge development.”
Welcoming news of the pipeline launch, Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, said: “This is a crucial time for business, trade and investment in Scotland and we are pushing forward with an ambitious agenda of recovery and economic transformation. Construction will play a key part in that recovery, delivering critical infrastructure and supporting our important net zero commitments.
“By working together and galvanising the expertise and ingenuity of the construction industry, we can enhance Scotland’s economic potential and deliver greater, greener and fairer prosperity.
“This online tool will provide businesses with the pipeline visibility they need to plan investment in skills, labour and materials which will support jobs and business growth. It also delivers new opportunities for small and medium-sized business across the sector by providing visibility of smaller contracts. This key ask from industry has been delivered through the Construction Leadership Forum Recovery Plan – demonstrating how we can work together to deliver the changes the sector needs.
“This is just the start of an exciting process and I encourage other public bodies to share their data to broaden their market access.”
Stuart Parker, member of the Construction Scotland Industry Leadership Group and Chair of its Procurement sub-group, said: “The Construction Pipeline Forecast tool is a really exciting development for the industry, bringing together details of the upcoming opportunities in the sector in one user-friendly format.
“It will really help the industry to understand the direction of travel in social infrastructure, providing confidence to invest in the resources and skills needed to help the country rebuild better. The tool will help to provide visibility of opportunity to businesses of all sizes, but particularly SMEs throughout the supply chain.”
Speaking of the pipeline, Donald Gillies, Director of Place from South Ayrshire Council, said: “From a local authority’s perspective, the pipeline provides improved clarity of planned activity across neighbouring council areas which can help foster greater levels of collaboration and insight on future investment in infrastructure and buildings.
“Importantly, the pipeline will support the delivery of high-quality public sector buildings, created by a thriving construction industry employing local people.”
