Tender prices within the UK construction sector are projected to surge by 20 per cent over the next five years, as reported by the Building Cost Information Service. Chief economist David Crosthwaite highlighted that while contractors are currently exhibiting cautious behaviours and being selective in their bidding processes, a more optimistic outlook is beginning to surface in relation to the project pipeline. However, he also pointed out that ongoing insolvencies within the supply chain continue to raise concerns about both capacity and cash flow for the industry.
The construction industry is notably under scrutiny, as it remains one of the sectors most frequently investigated for potential breaches of competition law, according to the Competition and Markets Authority (CMA). The heightened attention on legal compliance could impact operational practices within the industry.
An analysis by Barbour ABI and the Construction Products Association indicates a disparity in contract awards across the UK. From 2022 to 2023, Scotland experienced a significant increase in contract awards, while Wales faced a substantial drop in new contracts during the same period. This trend reflects varying regional dynamics and market conditions within the construction landscape.
Cost challenges continue to plague the sector, with nearly half of UK construction firms listing high material costs as a primary hurdle in a recent survey conducted by insurance broker Gallagher. This resonates with industry concerns about the sustainability of current pricing structures and supply chains.
In terms of infrastructure development, the Colne Valley viaduct, measuring 3.4 kilometres, is noted as the UK's longest and newest rail bridge, with the successful installation of the final deck segment achieved by the Align joint venture in September. Moreover, September also saw the announcement of 131 UK green infrastructure projects that received state subsidy contracts, which includes notable initiatives like Europe's largest windfarm, Hornsea 3.
According to the Housing Forum, a significant effort is required, with an estimated 450,000 homes needed by the 2028/29 deadline to meet the government's ambitious target of delivering 1.5 million homes.
Despite the numerous challenges, a survey conducted by consultancy Ayming revealed that 55 per cent of UK construction firms perceive that artificial intelligence (AI) is fostering positive innovation within the industry. This adoption of technology points towards a forward-thinking approach to operations and developments in construction.
On a less optimistic note, analysis of Companies House records by AB Drylining indicates that more than half of the firms involved in railway construction have ceased operations between 2019 and 2023, highlighting a concerning trend regarding business sustainability in the sector.
Source: Noah Wire Services