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Fri October 19 2018

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February sees return of sanity over vanity

21 Mar As the nation shivers in the grip of Siberian blizzards, the UK construction industry has a warm glow about it thanks to another positive month of contract awards. Neil Edwards reports

February is the shortest month of the year. It’s also usually the coldest month (and few would argue with that, this year). And so while new construction starts are often held over for a January start, February often brings with it an industry-wide lull.

But despite February’s cold blast (the coldest for a decade, we are told) the construction industry delivered an unexpectedly healthy crop of new contract awards, taking our Contracts League table over the £4bn monthly total yet again.

Top of the pile for the second successive month is Kier Group which collected 11 new contract awards with a combined value of £304.3m. The largest of these is a £180m refurbishment and repair contract on the M6.

BAM Construction could (and possibly still might) have actually topped the tree this month. It claimed second spot as part of a £300m joint venture with Morgan Sindall for the ‘smart motorway’ refurbishment and repair contract on Junctions 4 to 11 on the M27 in Hampshire. It is not yet clear how that £300m will be divided between the two joint venture partners. 

BAM also claimed third spot independently, picking up three new contract awards worth a combined total of £265m. The most notable of these is a £100m new-build mixed-use development at Atlantic Square in Glasgow for client Taylor Clark Properties.

BCLive, which compiles the Contracts League table, recorded more than 300 companies winning new work last month.  As has become the norm, Greater London was yet again the busiest region, generating just over £1bn-worth of new contract awards.

Equally predictably, housing was the busiest sector. But it is important to note that infrastructure workloads are increasing. Last month a combination of new work in the road, rail and airport sectors generated more than £625m in new contract awards.

The top 11 companies on the Contracts League table each bagged more than £100m-worth of new work last month, a number of them with multiple contract awards. 

Galliford Try claimed seven new contracts to take the number four spot while Willmott Dixon took fifth place with nine awards and ISG secured 10 new contracts to take the number seven spot. Even Morgan Sindall, which narrowly missed out on a top 10 finish, collected 10 new contract awards worth a combined £95.5m, putting it 12th on the table.

When work is hard to come by, multiple contract awards often suggest a degree of desperation; a focus on turnover to keep the company wheels turning. That does not seem to be the case this month. In the aftermath of Carillion’s demise we are receiving reports of companies actively walking away from contracts that do not fit their remit or their profitability profile.

Quite how long such a strategy will last remains to be seen. But a switch from the vanity of turnover to the sanity of profit is surely to be welcomed and applauded.

• Neil Edwards is chief executive of The Builders’ Conference

This article was first published in the March 2018 issue of The Construction Index magazine, which you can read for free at http://epublishing.theconstructionindex.co.uk/magazine/march2018/

UK readers can have their own copy of the magazine, in real paper, posted through their letterbox each month by taking out an annual subscription for just £50 a year. See www.theconstructionindex.co.uk/magazine for details.

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