Suspended sites are still the most visible manifestation of how the
Coronavirus is impacting UK construction and our researchers have identified
and verified a rising number of sites where work is now suspended.
At almost 3,500, the number of suspended sites account for 39% of all
projects currently on site and a similar proportion of work by value, but these
suspensions are not evenly spread across the industry. More extensive shut
downs are in place in Scotland and Northern Ireland at the request of the devolved
authorities: 79% of sites in Northern Ireland and 80% in Scotland are currently
suspended.
Encouragingly though, our researchers have also found that work has now
resumed on 10% of sites that were initially suspended at the outset of the
lockdown.
Private Housing
While private housing is the worst affected sector with 60% of sites
currently suspended, there are signs that activity is likely to pick-up over
the coming weeks. Both Vistry and Taylor Wimpey have announced that they will
resume work on some sites from next month.
In addition, the major mortgage lenders are improving their borrowing terms
– which should help to support new house sales and potentially lift sector
activity over the coming months.
We will continue to closely monitor site activity over the weeks ahead to be
able to provide insight of when and where sites are reactivating; what we’re
trying to do is to help firms to prepare to judge when the time is right to
begin investment in plant and materials, look at un-furloughing staff and gear
up to meet a revival in construction activity.
We’re keenly monitoring the leading indicators that will be first early
warning of revival, because of course, activity on current construction sites
only tells half the story,
Development Pipeline
We are also closely monitoring the development pipeline to identify where
new opportunities will emerge over the coming months and the good news is that
the early development pipeline still remains firm.
Our researchers have seen only a small decline in the overall number of
planning applications and decisions being published by planning authorities
each day. Overall, average number of applications submitted has dropped by 10%
since the lockdown began compared to the earlier part of this year and the
number of decisions is just 7% lower. These declines are relatively modest and
may in part be due to reduced staffing at authorities delaying the publication
of applications and decisions.
Individual local authorities are adopting differing approaches for dealing with
planning applications during the lockdown. Cardiff City Council has simply
suspended its planning committee, although the rest of Wales seems to be
carrying on. But more positively, a number of local authorities have moved the
work of their committees online. For example, Ashford Borough Council has
recently approved plans via virtual planning committee meeting for a new £250
million film studios complex.
However, the more immediate pipeline has weakened since the lockdown came
into force, as you’d expect.
Contract Awards
The number of main contract awards since mid-March is down by third on the
same period a year ago, but interestingly the value of contracts awarded has
only declined by 21% over the same period, indicating that a greater proportion
of the work being awarded is higher value projects.
The slowdown in contract awards may in-part reflect greater caution among
smaller clients to commit to projects in the present economic environment.
However, the lockdown and the increase in remote working is also likely to have
lengthened the decision-making process, perhaps contributing to the fall of in
contract awards as these decisions are delayed.
Accordingly, we’re expecting there to be a marked rebound in invitations to
tender and contract awards as lock down restrictions are eased which could
create a wealth of new business opportunities for firms who are prepared to
capitalise on them.
It feels as though we’re approaching an important turning point in this
crisis and so we’re monitoring all the leading indicators and keeping close in
touch with the major developers to understand when the optimal moment is for
firms to mobilise their resources to get ahead of their competitors, rebuild
their workload and steal market share.
If you would like to know more about these opportunities as they arise, or
if you’d like to talk to us about the detail behind the numbers then please do get in touch - we’re here to
help and support the industry.
