Construction pipeline Ellis Fox Blog

What’s in the pipeline for Construction?

There is no debate that construction plays a vital role in the economy and as a result any type of recovery plan would need to include a sizeable investment to stimulate the industry. While main contractors are seeing a trend from private clients delaying decisions on the start of new construction projects, public funding is being made available.

The UK government recently announced a £37 billion investment for the financial year, spread amongst 260 infrastructure projects as part of its post pandemic recovery plan.  There are 340 contracts up for grabs, several of which are earmarked to start before the end of 2020. It’s good news for the industry if main contractors can capitalise on the opportunities.

What are the major projects?

While HS2 has received a great amount of press, it is, in fact, not the largest project, with only £3 billion earmarked for it in the coming months. Instead it is the Smart Motorway Alliance contract, worth £7 billion, that is due to be awarded towards the end of 2020 that takes the top honours. The third biggest project is the Stonehenge Tunnel estimated at a value of £2.8 billion. The remaining £24.2 billion of funding is to be allocated to smaller road and rail development and maintenance projects throughout the UK.  With a difficult future ahead, main contractors will be glad to land any number of these projects especially as they focus on the short to medium term.

What’s needed now?

It this short to medium term focus that is most critical. Government departments aren’t exactly known for their speedy decision making or efficient implementation. So while the promise of pipeline projects may boost the confidence of the construction industry. Speed of action is what’s actually going to save it. Main contractors have been hard hit by the pandemic, whether they shut sites or not. Administrations are up, output is down and so are profit projections.

Streamlining procurement processes and getting construction work on the ground happening as soon as possible is what the industry really needs. Similarly the industry is going to have to up their game and make the most of every opportunity in every way possible. Whether it means entering joint ventures or improving operations to achieve better output, it’s not going to be business as usual. There’ll be more work involved for less reward, but in the long term it’ll be worth it.