Public Sector (Non-Residential) Construction Market Report – UK 2017-2021
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The 5th edition of the Public Sector (Non-Residential) Construction Market Report UK 2017-2021 Analysis has been published by AMA Research. The Report specifically focuses on public sector construction activity within healthcare, education, defence, custodial, justice and other public sectors against a backdrop of continuing public sector funding cuts and uncertainties surrounding Brexit. Detailed market data and insight on the public sector construction market by AMA Research, a leading UK provider of construction market intelligence.
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The 5th edition of the ‘Public Sector (Non-Residential) Construction Market Report – UK 2017-2021‘ specifically focuses on public sector construction activity within healthcare, education, defence, custodial, justice and other public sectors against a backdrop of continuing public sector funding cuts and uncertainties surrounding Brexit.
Key areas in the report:
- Structure, size and value of the public sector construction market and a detailed assessment of the major sectors within public sector construction.
- In-depth analysis of government funding for schools, higher education, healthcare and defence. Analysis of both resource and capital spending levels to 2021.
- Detailed review of major contractors and consortia involved in public sector construction forecasts of market developments to 2021.
- Review of investment levels and progress in sector-specific procurement routes and construction programmes within the key public sectors.
- Analysis of construction output in the public sector with forecasts to 2020-21. Future opportunities for public sector work for the construction industry.
Areas of particular interest:
- Capital spending is now being prioritised following the easing of austerity measures, enabling the government to use public borrowing to fund capital developments. This will see capital spending rise from £52.3bn in 2016-17 to £74.2bn in 2021-22, a rise of around 41.8% over the 6 year period.
- Analysis of the likely impact of Brexit on public sector funding and public sector projects, EU funding and the availability of new loans from the EIB.
- Review of key public sector procurement routes and programmes including PFI and PF2; and Regional Construction Frameworks such as the London Construction Programme; the Southern Construction Framework; the North West Construction Hub; EMPA/SCAPE Contractors Frameworks; YORhub; Constructing West Midlands; and NEPO in the North East.
- A review of the new public sector market frameworks and alternative procurement routes to central government frameworks including Pagabo Major Projects Framework for EU compliant projects covering Scotland, the North, Wales and South.
- Detailed market data and insight on the public sector construction market by AMA Research, a leading UK provider of construction market intelligence.
Some of the major contractors featured include:
Amey, Balfour Beatty, BAM, Bowmer & Kirkland, Bouygues, Carillion, Farrans Construction, Galliford Try, Graham Construction, Henry Boot, Higgins Group, Interserve, ISG, Kier, Laing O’Rourke, Lend Lease, Mace, McLaren Construction, McLaughlin & Harvey, Midas, Miller, Morgan Sindall, R G Carter, Robertson, Morrison, Seddon Construction, Shaylor, Shepherd, Sir Robert McAlpine Skanska, Vinci, Volker Fitzpatrick, Wates, Willmott Dixon.
Public Sector Construction Market in the UK
- Value of construction output 2012 to 2021. Total new work and RMI output in the residential and non-residential sectors, trends by sector and forecasts to 2021.
- Public non-residential construction analysis and outlook 2012-2021 – output, forecasts and sector analysis: health, education, defence, police, custodial, justice and other public sectors.
- Current and forecast public sector spending and investment. Impact of ‘Brexit’ on public sector spending and public sector projects to 2021.
- Analysis of policy and announcements in the 2016 budget and 2016 autumn statement.
- Public sector funding: Education – DfE spending; higher education spending; education capital spending.
- Public sector funding: Healthcare – NHS spending; CCG spending; NHS in Scotland & Wales; healthcare capital spending to 2021.
Procurement Programmes in Public Sector Construction
- Overview of government investment in PFI projects. Analysis of forthcoming public sector projects under PF2.
- Construction and procurement programmes in the education sector: PFI; PSBP; academies/free schools programme; Scotland-schools for the future programme; Wales – 21st century schools programme.
- Construction and procurement programmes in the healthcare sector: PFI & PPP; PF2; ExpressLIFT; Scottish hub initiative and frameworks Scotland; Procure21+ and P22; and designed for life: building for Wales framework.
- Construction and procurement programmes in the defence sector: next generation estate contracts (NGEC) programme with a mix of prime contracts and capital works frameworks.
- Construction and procurement programmes in the justice, police, fire & rescue and custodial sectors.
- Review of regional construction frameworks such as the London construction programme; the Southern construction framework; the North West construction Hub; EMPA/SCAPE contractors frameworks; YORhub; Constructing West Midlands; and NEPO in the North East.
Construction Supply in the Public Sector
- Detailed review of major contractors and consortia and overview of contractor capability and experience in public sector construction work.
- Key contractors in the education healthcare, education, defence and other public sectors. Capability, experience and key projects and frameworks awarded in 2016.
The largest single areas of public sector spending by the Government are in the departments of Work & Pensions (23%), NHS (Health) (19%), Education (9%), HM Revenue & Customs (6%), and Defence (5%). The Government is now distancing itself from the ‘austerity’ position and is no longer committed to balancing the books by 2020, with current chancellor, Philip Hammond stating that the public finances would return to surplus by sometime in the next Parliament. As such, capital spending is now being prioritised, continuing the gradual reversal of plans by the Coalition Government’s 2010 Spending Review for big reductions in public investment.
The austerity measures over the previous 4-5 years have meant that declines in public sector construction output have tempered overall construction recovery. However, despite short-term activity still being led by private housing, infrastructure and commercial sectors, areas of public sector construction are showing the first signs of increasing output, which is expected to continue slowly over the next few years.
Education has been a relatively strong driver of public sector construction output over the last two years, with output increases of 15% and 7% recorded respectively in 2014 and 2015. Low growth of around 1% is expected in 2017, with forecasts for modest growth of 2% to 2021. Despite 4 years of declining output between 2011 and 2014, the outlook for health construction output remains stable into the medium-term, with annual rates of growth of 2-4% currently forecast to 2021.The Ministry of Defence (MoD) is a major construction client and is expected to invest around £4bn in new construction, maintenance and property management over the next 10 years.
In total, public sector construction is forecast to grow by around 1.5% in 2017 and 2018, before rising slightly to 2% to 2021. However, whilst public sector capital investment is expected to increase to over £70bn by 2020, it is unlikely that the fiscal constraints will be removed completely. As a consequence, local authorities are expected to remain severely financially constrained and, as a result, output levels in the public sector are only expected to see moderate growth into the medium-term.
- Contents Listing
- 1. INTRODUCTION 7
- 1.1 BACKGROUND 7
- 1.2 SOURCES OF INFORMATION 7
- 2. SUMMARY AND FUTURE PROSPECTS 9
- 2.1 SUMMARY 9
- 2.2 MARKET PROSPECTS 12
- 3. PUBLIC SECTOR CONSTRUCTION MARKET 14
- 3.1 CONSTRUCTION NEW WORK AND RMI – VALUE OF OUTPUT TO 2021 14
- 3.1.1 Non-Residential Construction Output by Sector in 2016 15
- 3.2 PUBLIC SECTOR (NON-RESIDENTIAL) CONSTRUCTION MARKET 19
- 3.2.1 Value of Output 19
- 3.3 SECTOR ANALYSIS 22
- 3.3.1 Healthcare Sector 22
- 3.3.2 Education Sector 24
- 3.3.3 Defence Sector 25
- 3.3.4 Other Public Sector Categories 26
- 4. FUNDING OF PUBLIC SECTOR WORK 28
- 4.1 PUBLIC SECTOR INVESTMENT 28
- 4.1.1 Current and Forecast Public Sector Investment 28
- 4.1.2 Public Sector Capital Spending 30
- 4.1.3 2016 Budget 33
- 4.1.4 2016 Autumn Statement 33
- 4.1.5 Impact of ‘Brexit’ on Public Sector Spending 35
- 4.2 EDUCATION SPENDING 36
- 4.2.1 DfE Spending 36
- 4.2.2 Higher Education Funding 37
- 4.2.3 Education Capital Spending 37
- 4.3 HEALTHCARE SPENDING 39
- 4.3.1 Healthcare Capital Spending 40
- 4.3.2 CCG/Primary Care Allocations 41
- 4.3.3 Scotland 41
- 4.3.4 Wales 42
- 5. PROCUREMENT PROGRAMMES IN PUBLIC SECTOR CONSTRUCTION 44
- 5.1 PFI 44
- 5.1.1 Overview 44
- 5.1.2 PF2 45
- 5.2 PROCUREMENT OF WORK IN THE EDUCATION SECTOR 46
- 5.2.1. PFI in the Education Sector 46
- 5.2.2 Construction Programmes in the Education Sector 47
- 5.3 PROCUREMENT OF WORK IN THE HEALTHCARE SECTOR 54
- 5.3.1. PFI in the Healthcare Sector 54
- 5.3.2 Construction Programmes in the Healthcare Sector 56
- 5.4 REGIONAL FRAMEWORKS 63
- 5.4.1 NACF Frameworks 63
- 5.5 PROCUREMENT OF WORKS IN THE DEFENCE SECTOR 67
- 5.6 POLICE 71
- 5.7 PRISON SERVICE 74
- 5.8 FIRE & RESCUE SERVICE 74
- 6. CONSTRUCTION SUPPLY IN THE PUBLIC SECTOR 76
- 6.1 LEADING PUBLIC SECTOR CLIENTS 76
- 6.2 LEADING CONTRACTORS IN THE PUBLIC SECTOR 78
- 6.2.1 Overview 78
- 6.2.2 Leading Contractors in the Healthcare Sector 82
- 6.2.3 Leading Contractors in the Education Sector 88
- 6.2.4 Leading Contractors in the Defence Sector 92
- 6.2.5 Leading Contractors in Other Public Sectors 9
- Tables & Charts
- TABLE 1: PUBLIC SECTOR SPENDING (RESOURCE AND CAPITAL) BY DEPARTMENT 2016-17 (£BN) 10
- CHART 2: VALUE OF TOTAL CONSTRUCTION OUTPUT BY SECTOR 2012-2021 BY VALUE (£BN AT CURRENT PRICES) 14
- CHART 3: VALUE OF NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK BY SECTOR – % BY VALUE 2016 16
- TABLE 4: CONTRACTOR’S OUTPUT IN THE PUBLIC (NON-RESIDENTIAL) SECTOR 2012-2021 (£M) 20
- CHART 5: PUBLIC SECTOR CONSTRUCTION OUTPUT – TYPE OF WORK BY VALUE % SHARE 2016 21
- TABLE 6: SUMMARY OF PUBLIC SECTOR INVESTMENT AND MAJOR CAPITAL SPENDING PROGRAMMES IN EDUCATION AND HEALTH 2016-2021 BY PROGRAMME VALUE (£BN) 22
- TABLE 7: CONTRACTOR’S OUTPUT IN THE PUBLIC HEALTHCARE SECTOR 2012-2021 (£M) 23
- TABLE 8: CONTRACTOR’S OUTPUT IN THE PUBLIC EDUCATION SECTOR 2012-2021 (£M) 24
- TABLE 9: PUBLIC SECTOR GROSS SPENDING 2011-2021 (£BN) 29
- CHART 10: PUBLIC SECTOR GOVERNMENT SPENDING BY FUNCTION 2016-17 (TOTAL MANAGED EXPENDITURE BY VALUE AND %) 29
- CHART 11: PUBLIC SECTOR CAPITAL INVESTMENT BY VALUE (£BN) (CAPITAL DEL) 2016-2022 30
- TABLE 12: SUMMARY OF PUBLIC SECTOR CAPITAL SPENDING BY MAJOR DEPARTMENT: 2016 – 2022 (£BN) – EDUCATION, HEALTH, TRANSPORT, DEFENCE, HOME OFFICE, FCO, DECC, GLC COMMUNITIES ETC 32
- TABLE 13: DFE SPENDING 2015-2020: RESOURCE AND CAPITAL SPENDING (£BN) 36
- TABLE 14: HEFCE GRANT FOR FINANCIAL YEARS 2015 TO 2018 (£M) 37
- CHART 15: DFE CAPITAL EXPENDITURE 2012-2020 BY VALUE (£BN) 38
- TABLE 16: DFE: CAPITAL DEL SUMMARY 2015-17 BY BUDGET (£M) 38
- CHART 17: VALUE OF UK NHS EXPENDITURE 2014-2021 (£BN) 40
- TABLE 18: NHS CAPITAL SPENDING 2015-2021 (£BN) 40
- TABLE 19: HEFCE GRANT FOR FINANCIAL YEARS 2015-16 TO 2020-21 (£M) 41
- TABLE 20: TOTAL HEALTHCARE SPENDING SCOTLAND 2015-2017 (£M) 42
- TABLE 21: TOTAL HEALTHCARE SPENDING WALES 2015-2021 (£M) 43
- TABLE 22: CURRENT PFI INVESTMENTS BY GOVERNMENT DEPARTMENT (BY NUMBER AND CAPITAL COST £M) 44
- TABLE 23: PFI/PF2 EDUCATION SCHEMES – BY SCHEME STATUS AND VALUE (£M) (AS AT APRIL 2016) 46
- TABLE 24: PRIORITY SCHOOLS BUILDING PROGRAMME: PROJECT STATUS (AS AT DECEMBER 2016) BY VALUE (£M) 49
- TABLE 25: SCOTTISH GOVERNMENT – KEY CAPITAL AND REVENUE FUNDED EDUCATION PROJECTS: FORWARD PIPELINE 2015-2020 BY VALUE (£M) 53
- TABLE 26: PFI/PF2 HEALTHCARE SCHEMES – BY SCHEME STATUS AND VALUE (£M) (AS AT APRIL 2016) 55
- TABLE 27: PROCURE21/P21+ FORWARD CONSTRUCTION PIPELINE 2016-2020 BY SCHEME STATUS AND VALUE (£M) 59
- TABLE 28: FRAMEWORKS SCOTLAND – KEY HEALTH PROJECTS IN DEVELOPMENT: 2016-2020 BY VALUE (£M) 62
- TABLE 29: NIEP CONSTRUCTION FRAMEWORKS – REGIONS, LEAD AUTHORITY, PROJECT DETAILS 64
- TABLE 30: DIO NGEC CONTRACTS CONSTRUCTION FRAMEWORKS – REGIONS, LEAD AUTHORITY, PROJECT DETAILS 69
- TABLE 31: GOVERNMENT CONSTRUCTION PIPELINE – KEY POLICE PROJECTS IN DEVELOPMENT: 2016-2020 BY VALUE (£M) 73
- TABLE 32: TOP PUBLIC SECTOR CLIENTS – KEY CONSTRUCTION PROJECTS BY VALUE 2015-2021 (£M) 77
- TABLE 33: LARGER CONTRACTORS IN PUBLIC SECTOR CONSTRUCTION BY VALUE OF PROJECTS 2016 (£M) 79
- TABLE 34: SMALLER CONTRACTORS IN PUBLIC SECTOR CONSTRUCTION BY VALUE OF PROJECTS 2016 (£M) 81
- TABLE 35: TOP CONTRACTORS IN THE HEALTHCARE SECTOR: KEY PROJECTS IN 2016 AND PREVIOUS HEALTHCARE EXPERIENCE 83
- TABLE 36: HEALTH SECTOR ANALYSIS – MAJOR CONSORTIA AND FRAMEWORK PARTNERS 86
- TABLE 37: TOP CONTRACTORS IN THE EDUCATION SECTOR: KEY PROJECTS IN 2016 AND PREVIOUS EDUCATION EXPERIENCE 89
- TABLE 38: TOP CONTRACTORS IN THE DEFENCE SECTOR: KEY PROJECTS IN 2016 AND PREVIOUS DEFENCE EXPERIENCE 94
- TABLE 39: TOP CONTRACTORS IN THE CUSTODIAL, JUSTICE AND COMMUNITY SECTORS: KEY PROJECTS IN 2016 AND PREVIOUS EXPERIENCE 97
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