Construction News

Sun September 20 2020

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Construction contract volumes return to normal

3 Jun New construction contract awards in May 2020 returned to more normal levels in May 2020 after a bumper harvest in March and April.

Highways England's A63 Castle Street project in Hull propelled Balfour Beatty to the top of the May 2020 BCLive contracts league
Highways England's A63 Castle Street project in Hull propelled Balfour Beatty to the top of the May 2020 BCLive contracts league

The total value of UK construction contracts logged by the Builders’ Conference monitoring service in May was £3.9bn.

May’s total was substantially down on the £7.8bn of contracts signed in March and £9.7bn in April. However, it is on a par with the monthly average (c. £4bn) that the Builders’ Conference has identified over the past few years.

What the past three months clearly show is that while construction activity may have been decimated by the Covid-19 lockdown, preparing for resumption and recovery has never faltered.

Except in Scotland, that is.

In Scotland, where Covid-19 lockdown has been more thorough and restrictive than in the rest of the country, just £128m of new construction work was awarded in May – three contracts in all – according to Builders’ Conference research.

But while the total value of UK contracts was at or about average levels, the number of contract awards has fallen. Pre-coronavirus, between May 2019 and March 2020, the number of contracts awarded each month averaged 608. This fell to 524 contracts in April 2020 and just 359 contracts in May 2020, a decrease of 52% compared to May 2019.

There was a slight increase in the number of tender opportunities available in May, compared to April. The number of projects open for tender increased by 16% from 272 in April to 312 in May. However, this is still 55% below the monthly average of 689 projects available for tender between May 2019 and March 2020 and 66% lower than May 2019. At present, there are just 156 tender opportunities available until the end of August 2020 according to Builders’ Conference.

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The Builders’ Conference monthly BCLive contracts league had Balfour Beatty at the top by the end of May 2020, attributing to it a £355m Highways England contract for the A63 Castle Street improvement project. In fact, that is the overall project budget for the client, not the value of Balfour Beatty’s contract, which has yet to be confirmed, according to Highways England, but was put at £75m when awarded on an early contractor involvement basis six years ago. With two other contracts won during the month as well, Balfour Beatty’s monthly total is listed on BCLive as £394m.

The Builders’ Conference has housing developer Berkeley Group in second place, with £277m of new work lined up, including the £120m Huntley Wharf development in Reading.

In all, 10 companies are listed as securing more than £100m  of new contract awards during the month.  House-building accounts for six of the top 10 places in the May league table, with Wainhomes, Crest Nicholson and Vistry all featuring, along with Buouygues, for a £100m+ contract with Westminster City Council for the first phase of the Ebury Bridge Estate renewal.

Dorset house-builder CG Fry & Sons, noted for its work at Poundbury, is also recorded as signing £149m of new work in May, which is a remarkable achievement given that its most recent accounts (2018) show annual turnover from contracting to be £21m, plus £62m from the sale of housing and commercial property. CG Fry is working with the Duchy of Cornwall, just as it does at Poundbury, on an £80m development in Shepton Mallet with 600 homes, a care home and a primary school,

House-building accounts for £1,851m of May’s total. Road-building was the next biggest contributor, accounting for almost £900m.

Aside from Balfour Beatty’s Hull job, Highways England also awarded Costain Jacobs JV a contract to widen the A1 Newcastle Gateshead western bypass between Scotswood and Brunton. The Builders’ Conference puts the value of the main works contract at £183m, which is the top end of Highways England’s total project budget.

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