65% of UK’s construction value shut down
31 Mar 2020 By Ian Weinfass
Coronavirus-related delays have hit projects across the UK with a total construction value of £104bn, according to analysts.
The total number of sites that have suspended work is 1,945, according to data provider Glenigan, amounting to 26 per cent of the UK’s total. With disproportionately larger sites being unable to continue, it estimates that the £104bn construction value total of all suspended sites accounts for 65 per cent of work currently under construction.
The data shows that the unprecedented large-scale stalling of projects and closure of sites has had some impact on construction with a value of £170.42bn as of Tuesday morning. However this figure includes projects where work has not yet started or is at an early tender stage.
High-value megaprojects including HS2, Crossrail and Tideway are among those to have had work completely or largely paused. Yesterday Laing O’Rourke confirmed that its work on the major Edinburgh mixed-use development at St James’ had been put on hold while Mace extended the shutdown of all its sites for another week.
Mace said its shutdown, which includes the Battersea Power Station redevelopment and phase one of Nine Elms Square in London, will last until at least 7 April , after concluding it could not yet reopen “without putting people at risk”.
Lendlease, Multiplex, Bouygues UK as well as most of the largest housebuilding firms have also paused their entire construction work.
Yesterday Bam Construct restarted work at many sites that had paused for review last week. This morning Costain said 70 per cent of its projects by revenue-take were still operational.
Progressive Equity analyst Alastair Stewart said: “Based on the latest statements it appears as though 30-40 per cent of revenue may have been hit. Where sites are still open there is also an impact because of slower work due to distancing measures.
“Schemes serving the public sector, especially utilities, safety and serving the NHS are likely to go on.”
Glenigan economics director Allan Wilén said the housebuilding sector, where many schemes are delivered by contractors who are also developers, has been hardest hit so far. “They are the client as well as the contractor and their sales have dropped.”
But he added: “We have seen a drop in planning applications for extensions and home improvement but large applications are pretty stable, which means the pipeline is still there and there’s opportunity for future work and for companies planning ahead.”
London is the region with most work by value delayed, followed by Yorkshire and then the South East. Some firms, including Skanska and Interserve, have closed London sites while keeping others open, over fears of overcrowding on public transport.
On the shutdown announcement, Mace chief executive Mark Reynolds said a rolling, weekly suspension of all site activity will be introduced in the UK and reviewed regularly.
"Globally, we now expect to see further restrictions on movement and activity in place across the world for several months. It is likely that these restrictions will be in place for an extended period, and so it is necessary that our sector rapidly develops new ways of working that will allow us to safely deliver our construction activities while maintaining social distancing and enhanced hygiene rules,” he added