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Construction Contractors Market Report – Focus on Sector Capability and Strategy - UK 2017-2021 Analysis

Published: 13/10/2017 / Number of Pages: 107 / Price: £845.00

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Introduction and Overview

The 3rd edition of the 'Construction Contractors Market Report - Focus on Sector Capability and Strategy - UK 2017-2021 Analysis'  reviews the activities, sector capability and strategy of the leading 30 Tier 1 and 30 Tier 2 contractors in the UK, against a backdrop of increasing economic and political uncertainty.

Key issues covered in the report include:

  • Structure and size of the UK contracting industry.
  • Analysis of key market sectors within the contracting industry.
  • Analysis of key market strengths/experience of the top 30 Tier 1/top 30 Tier 2 contractors in the UK.
  • Analysis of the performance of the contracting industry including structure, size, market segmentation and market strengths.
  • Detailed review of leading contractors and their consortia in a number of market sectors including healthcare and education.
  • Market forecast for the industry over the next few years including contractor focus and sector strategy.

Areas of particular interest:

  • Key market trends and the impact of Brexit and Government spending on contractor workloads with a focus on capacity issues, tendering, market consolidation and a shortage of skilled trades.
  • Analysis of key capital building programmes and frameworks across 10 major sectors, including schools, universities, healthcare, transport, utilities, defence, commercial office, industrial & warehousing, retail and leisure & entertainment.
  • Analysis of spending across the Government's construction/infrastructure pipeline. Analysis of regional/sector spending over the next few years to 2021 and beyond.
  • Detailed assessment of new non-residential construction output across 10 major sectors together with estimated forecasts for growth over the next few years to 2021.
  • Analysis of change, diversification and consolidation within the contracting industry as firms address the legacy of Government austerity cuts on workloads and order books and address the key issues of contractor margins and the impact of Brexit on future workloads.

Some of the companies included:

Balfour Beatty, BAM Construct, Bowmer & Kirkland, Carillion, Costain, Galliford Try, Interserve, ISG, Kier, Laing O'Rourke, Lend Lease, Morgan Sindall, Sisk, Wates, Willmott Dixon.


Review of the Contracting Industry in the UK

  • Structure and size of the UK contracting industry.
  • Change and diversification in the contracting industry - change in contract size, merger & acquisition activity, skilled trades & employment levels & prospects.
  • Overview of contractor strength & capability - leading consortia in education & healthcare, specification & supply chain issues.
  • Review of regional & national contractor frameworks - SID, SCAPE Frameworks, Pagabo, NACF, ESFA.
  • Analysis of the government construction & infrastructure pipeline - regional/sector breakdown.
  • Analysis of regional concentration of contracts/contractor workloads.

Contractors' Review/Construction Output by Sector

  • End-use Sector Analysis - detailed assessment of leading contractors, workloads and principal capital & investment programmes across 10 major sectors (Schools; Universities; Healthcare; Transport; Utilities; Defence; Industrial/Warehousing; Commercial Office; Retail; Entertainment & Leisure) and an assessment of key contract wins in 2016-17.
  • Total construction output in the UK - value and forecasts to 2021/analysis by sector 2016-2021
  •  Education construction output - development programmes, key contractors, etc.
  • Universities/higher education construction output: key summary data - student trends, key areas of development and key contractors.
  • Healthcare construction output: key summary data - development programmes & key contractors.
  • Infrastructure construction output: key summary data - major projects broken down by sector.
  • Defence construction output: key summary data - development programmes, frameworks & contractors.
  • Industrial/warehousing construction output: key summary data - market trends & outlook.
  • Commercial office Construction output: key summary data - projects, trends, regions & contractors.
  • Retail construction output: key summary data - development strategies & programmes of major retailers e.g. grocery.
  • Entertainment/leisure construction output: key summary data - trends by sub-sector.
  • Construction industry issues: construction measures announced in the 2017 budget and the impact of 'Brexit' on the construction industry.

Contractor Profiles

  • Key Contractor Profiles - activities, sector experience, strategy, recent contract awards, financial analysis: Balfour Beatty; BAM Construct; BAM Nuttall; Bowmer & Kirkland; Carillion; Costain; Galliford Try; Interserve; ISG; Kier; Laing O'Rourke; Lend Lease; Morgan Sindall; Sisk; Wates; and Willmott Dixon

Report Summary

The contracting industry has experienced good demand since 2013, with construction activity buoyant across several end-use sectors, and overall construction output increasing by 11% between 2014 and 2016. The sectors which have seen the highest levels of construction activity are the infrastructure, commercial office, education and entertainment sectors. As a result, these sectors provide some of the largest shared of contracts awarded by value.

Infrastructure continues to be the single largest sector for contractors by a significant margin, this sector remains highly volatile in terms of growth. The commercial offices sector has seen substantial output growth in both 2015 and 2016 respectively. The public sector has been affected by austerity measures in recent years but still provides opportunities for contractors. Over the past few years, there have been significant areas of growth in public sector construction contracts especially in Yorkshire, East Midlands and the South West. In particular, the 'Northern Powerhouse' and 'Midlands Engine' initiatives have seen a rise in tenders in these areas.

With competition for construction work now stronger than ever, main contractors have been considering small and medium-sized contracts in a bid to maintain workloads and boost finances. This change in strategy has intensified as large-scale construction contracts become few and far between and many contractors are now bidding for schemes around £20m and lower which are very small in comparison to previous years.

Despite the recent uplift in workload there still are many threats facing construction contractors. The increase in workload is putting pressure on main contractors who have secured work at low prices, with material and labour costs rising. Additionally, many contractors are now struggling with capacity issues to meet increased output requirements. Furthermore, margins remain under pressure influenced by rising material costs and wage inflation. The construction industry continues to face acute labour shortages in many key areas notably trades, such as bricklaying, roofing, carpentry, plastering and general labouring across the country.

Going forward, growth in the contacting industry is expected to be underpinned by opportunities in large-scale infrastructure, public sector and private residential work as new private commercial sectors suffer a slight slowdown. The contractors market is also likely to see increasing consolidation driven by the larger UK players as well as interest from overseas firms from Europe and Southeast Asia.


List of Report contents

Contents Listing

  1. 1. INTRODUCTION 7
  2. 2. SUMMARY AND FUTURE PROSPECTS 8
  3. 3. ECONOMIC ENVIRONMENT UPDATED 12
  4. 3.1 GDP 12
  5. 3.2 INFLATION & INTEREST RATES 13
  6. 3.3 UNEMPLOYMENT 14
  7. 3.4 HOUSEHOLD CONSUMPTION 15
  8. 3.5 HOUSING & CONSTRUCTION 15
  9. 3.6 STERLING 16
  10. 3.7 POPULATION PROFILE 17
  11. 3.8 CONCLUSIONS 17
  12. 4. REVIEW OF THE CONTRACTING INDUSTRY IN THE UK 19
  13. 4.1 THE CONSTRUCTION MARKET 19
  14. 4.1.1 Construction New Work - Value of Non-Domestic Output to 2021 19
  15. 4.1.2 Non-Residential Construction Output by Sector 2016-2021 20
  16. 4.1.3 2017 Budget - Construction Industry 21
  17. 4.1.4 Impact of 'Brexit' on the Construction Industry 22
  18. 4.2 THE CONTRACTING SECTOR 23
  19. 4.2.1 Structure 23
  20. 4.2.2 Change and Diversification within the Contracting Industry 24
  21. 4.2.3 Change in Contract Size 25
  22. 4.2.4 Merger & Acquisition Activity 26
  23. 4.2.5 Skilled Trades 29
  24. 4.3 OVERVIEW OF CONTRACTOR STRENGTH & CAPABILITY 30
  25. 4.4 CONSORTIA 36
  26. 4.5 SPECIFICATION AND SUPPLY CHAIN ISSUES 39
  27. 4.6 NATIONAL FRAMEWORKS 40
  28. 4.6.1 National Contractor Framework - Social Infrastructure Development (SID) 40
  29. 4.6.2 SCAPE 40
  30. SCAPE National Construction Framework 40
  31. SCAPE National Minor Works Framework 41
  32. SCAPE National Civil Engineering and Infrastructure Framework (NCEI) 41
  33. SCAPE National Facilities Management Framework 41
  34. SCAPE Regional Construction Framework 41
  35. 4.6.3 Pagabo Major Projects Framework 41
  36. 4.7 REGIONAL FRAMEWORKS 42
  37. 4.7.1 NACF Frameworks 42
  38. 4.8 REGIONAL CONSTRUCTION DATA 44
  39. 4.8.1 Government Construction Pipeline - Regional Projects 44
  40. 4.8.2 Regional Concentration of Contracts/Workloads 45
  41. 4.8.3 Regional Concentration of Contractors 46
  42. 5. CONTRACTORS REVIEW BY END-USE SECTOR 50
  43. 5.1 EDUCATION CONSTRUCTION 50
  44. 5.1.1 Schools Construction Output: Key Summary Data 50
  45. 5.1.2 Schools - Construction Programmes 50
  46. Priority Schools Building Programme (PSBP) 51
  47. SID Framework 51
  48. ESFA Frameworks 51
  49. Scotland - Schools for the Future Programme 51
  50. 5.1.3 Leading Contractors in the Education Sector 52
  51. Other Contractors - Schools 53
  52. 5.1.4 Universities/Higher Education Construction Output: Key Summary Data 55
  53. Other contractors - Universities 58
  54. Student Accommodation Developers/Operators 58
  55. 5.2 HEALTHCARE 58
  56. 5.2.1 Healthcare Construction Output: Key Summary Data 58
  57. 5.2.2 Leading Contractors in the Health Sector 59
  58. Other Contractors 61
  59. Healthcare Developers & Investors 61
  60. 5.3 INFRASTRUCTURE - TRANSPORT & UTILITIES 63
  61. 5.3.1 Infrastructure Construction Output: Key Summary Data 63
  62. 5.3.2 Transport 64
  63. Roads 64
  64. Rail 66
  65. Airports 68
  66. 5.3.3 Utilities 69
  67. 5.4 DEFENCE 75
  68. 5.4.1 Defence Construction Output: Key Summary Data 75
  69. 5.4.2 Defence Estate and Capital Spending Programmes 75
  70. 5.5 INDUSTRIAL & RETAIL WAREHOUSING 78
  71. 5.5.1 Construction Output: Key Summary Data 78
  72. 5.5.2 Leading Contractors in the Industrial Sector 79
  73. 5.6 COMMERCIAL OFFICE 82
  74. 5.6.1 Construction Output: Key Summary Data 82
  75. 5.6.2 Leading Contractors in the Offices Sector 83
  76. 5.7 RETAIL 85
  77. 5.7.1 Construction Output: Key Summary Data 85
  78. 5.7.2 Retail Procurement and Construction Programmes 85
  79. 5.7.3 Contractors 87
  80. 5.8 ENTERTAINMENT & LEISURE SECTOR 90
  81. 5.8.1 Construction Output: Key Summary Data 90
  82. 5.8.2 Construction Programmes and Trends 90
  83. 5.8.3 Contractors 91
  84. 6. CONTRACTOR PROFILES 94
  85. 6.1 KEY CONTRACTOR PROFILES 94
  86. 6.1.1 Balfour Beatty 94
  87. 6.1.2 BAM Construct 94
  88. 6.1.3 Bowmer & Kirkland 95
  89. 6.1.4 Carillion 96
  90. 6.1.5 Costain 96
  91. 6.1.6 Galliford Try 97
  92. 6.1.7 Interserve 98
  93. 6.1.8 ISG 98
  94. 6.1.9 Kier 99
  95. 6.1.10 Laing O'Rourke 99
  96. 6.1.11 Lend Lease 100
  97. 6.1.12 Morgan Sindall 101
  98. 6.1.13 Sisk 101
  99. 6.1.14 Wates 102
  100. 6.1.15 Willmott Dixon 102
  101. APPENDICES 104

Tables & Charts

  1. CHART 1: VALUE OF CONTRACTS AWARDED BY SECTOR 2016 (£BN) 8
  2. TABLE 2: GDP DATA - 2015-2017 - KEY CONSTITUENT ELEMENTS 12
  3. CHART 3: INTEREST RATES AND INFLATION (CPI) FROM 2000-2021 14
  4. CHART 4: PDI & SAVINGS RATIO AT CURRENT PRICES 2000-2021 15
  5. TABLE 5: EXCHANGE RATE FLUCTUATIONS 2013-2019 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 17
  6. CHART 6: VALUE OF TOTAL CONSTRUCTION OUTPUT 2012-2021 BY VALUE (£BN AT CURRENT PRICES) 19
  7. CHART 7: NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK ANALYSIS BY SECTOR 2016 AND 2021 - % BY VALUE GB 21
  8. TABLE 8: MAIN PRIVATE CONTRACTORS - BY NUMBER OF EMPLOYEES 2015 23
  9. TABLE 9: EMPLOYMENT IN THE CONSTRUCTION INDUSTRY: 2007 - 2017 24
  10. CHART 10: TOTAL VALUE AND NUMBER OF ANNUAL CONTRACTS WON 2012-2016 (£'000) 26
  11. CHART 11: CONSTRUCTION INDUSTRY: COMPANY INSOLVENCIES 2010 - 2016 27
  12. TABLE 12: CONSTRUCTION SECTOR ADMINISTRATIONS/MERGER & ACQUISITION ACTIVITY 2016-17 28
  13. TABLE 13: EMPLOYMENT IN THE CONSTRUCTION INDUSTRY BY TRADE (ANNUAL RECRUITMENT REQUIREMENT) 2017-2021 30
  14. TABLE 14: TOP 30 UK TIER 1 CONTRACTORS BY REVENUE (£M), CONTRACTS AWARDED AND SECTOR STRENGTHS 32
  15. TABLE 15: TOP 30 UK TIER 2 CONTRACTORS BY REVENUE (£M), CONTRACTS AWARDED AND SECTOR STRENGTHS 34
  16. TABLE 16: HEALTH AND EDUCATION SECTOR ANALYSIS - MAJOR CONSORTIA AND FRAMEWORK PARTNERS 37
  17. TABLE 17: NIEP CONSTRUCTION FRAMEWORKS - REGIONS, LEAD AUTHORITY, PROJECT DETAILS 43
  18. TABLE 18: NATIONAL INFRASTRUCTURE & CONSTRUCTION PIPELINE 2016-2021: ALLOCATED SPEND BY REGION, PIPELINE CONTRACT VALUES, KEY PROJECTS (£BN) 45
  19. CHART 19: VALUE OF CONTRACTS AWARDED BY REGION 2016 (£BN) 46
  20. TABLE 20: LEADING CONTRACTORS BY REGION: VALUE OF CONTRACTS WON 2016-17 (£M) 48
  21. TABLE 21: EDUCATION CONSTRUCTION - KEY SUMMARY DATA (CONSTRUCTION OUTPUT AND KEY CAPITAL PROGRAMMES £BN) 2016-2021 50
  22. TABLE 22: TOP 10 CONTRACTORS IN THE EDUCATION SECTOR (BY NUMBER & VALUE OF CONTRACTS AWARDED) 2016-17 52
  23. TABLE 23: EDUCATION SECTOR ANALYSIS - TOP CONTRACTORS IN THE SCHOOLS SECTOR: KEY PROJECTS IN 2016-17 54
  24. TABLE 24: UNIVERSITIES CONSTRUCTION - KEY SUMMARY DATA (CONSTRUCTION OUTPUT AND KEY CAPITAL PROGRAMMES) 2016-2021 55
  25. TABLE 25: EDUCATION SECTOR ANALYSIS - TOP CONTRACTORS IN THE HIGHER EDUCATION/UNIVERSITIES SECTOR: KEY PROJECTS IN 2016-17 57
  26. TABLE 26: HEALTHCARE CONSTRUCTION - KEY SUMMARY DATA (CONSTRUCTION OUTPUT AND KEY CAPITAL PROGRAMMES) 2016-2021 58
  27. TABLE 27: TOP 10 CONTRACTORS IN THE HEALTHCARE SECTOR (BY NUMBER & VALUE OF CONTRACTS AWARDED) 2016-17 60
  28. TABLE 28: HEALTH SECTOR ANALYSIS - TOP CONTRACTORS IN THE HEALTHCARE SECTOR: KEY PROJECTS IN 2016-17 62
  29. TABLE 29: INFRASTRUCTURE CONSTRUCTION - KEY SUMMARY DATA (CONSTRUCTION OUTPUT AND KEY CAPITAL PROGRAMMES) 2016-2021 63
  30. TABLE 30: ROADS INVESTMENT STRATEGY - COLLABORATIVE DELIVERY FRAMEWORK AWARDS (AS AT FEBRUARY 2017) BY CONTRACTOR AND VALUE (£M) OF CDF CONTRACT 65
  31. TABLE 31: AMP6 WATER FRAMEWORKS 2015-2020: BY UTILITY COMPANY AND FRAMEWORK CONTRACTORS 70
  32. TABLE 32: TOP 10 CONTRACTORS IN THE INFRASTRUCTURE SECTOR (BY NUMBER & VALUE OF CONTRACTS AWARDED) 2016-17 70
  33. TABLE 33: INFRASTRUCTURE SECTOR ANALYSIS - TOP CONTRACTORS IN THE TRANSPORT SECTOR: KEY PROJECTS IN 2016-17 72
  34. TABLE 34: INFRASTRUCTURE SECTOR ANALYSIS - TOP CONTRACTORS IN THE UTILITIES SECTOR: KEY PROJECTS IN 2016-17 AND PREVIOUS EXPERIENCE 73
  35. TABLE 35: DEFENCE CONSTRUCTION - KEY SUMMARY DATA (CONSTRUCTION OUTPUT AND KEY CAPITAL PROGRAMMES) 2016-2021 75
  36. TABLE 36: DIO NGEC CONTRACTS CONSTRUCTION FRAMEWORKS - REGIONS, LEAD AUTHORITY, PROJECT DETAILS 77
  37. TABLE 37: TOP CONTRACTORS IN THE INDUSTRIAL SECTOR (BY NUMBER & VALUE OF CONTRACTS AWARDED) 2016-17 80
  38. TABLE 38: INDUSTRIAL SECTOR ANALYSIS - TOP CONTRACTORS IN THE INDUSTRIAL/WAREHOUSING SECTOR: KEY PROJECTS IN 2016-17 81
  39. TABLE 39: TOP CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR: KEY PROJECTS IN 2016/17 AND PREVIOUS EXPERIENCE 84
  40. TABLE 40: TOP CONTRACTORS IN THE RETAIL SECTOR: KEY PROJECTS IN 2016/17 89
  41. TABLE 41: TOP 10 CONTRACTORS IN THE HOTEL & LEISURE SECTOR (BY NUMBER & VALUE OF CONTRACTS AWARDED) 2016-17 92
  42. TABLE 42: TOP CONTRACTORS IN THE HOTEL/LEISURE SECTOR: KEY PROJECTS IN 2016/17 93
  43. APPENDIX 1: NON-RESIDENTIAL CONSTRUCTION OUTPUT SECTOR ANALYSIS 2012 TO 2021 - BY VALUE (£ BILLION AT CURRENT PRICES) 105
  44. APPENDIX 2: NATIONAL INFRASTRUCTURE & CONSTRUCTION PIPELINE 2016-2021: INVESTMENT BY SECTOR (£BN) 106
  45. APPENDIX 3: GOVERNMENT FORWARD CONSTRUCTION/INFRASTRUCTURE PIPELINE 2016-2021 AND BEYOND: PUBLICLY-FUNDED PROJECTS BY SECTOR, NO. OF SCHEMES, AND VALUE (£M) 107

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