Healthcare Construction Market Report - UK 2021-2025 - AMA Research

Healthcare Construction Market Report - UK 2021-2025

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The 9th edition of the “Healthcare Construction Market Report – UK 2021-2025” has been published by AMA Research. This edition of the report covers changes the market has undergone after the Covid-19 pandemic and Brexit. The report covers market influencers, main suppliers and contractors, procurement and analysis of construction pipeline.

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The 9th edition of the “Healthcare Construction Market Report – UK 2021-2025” covers changes the market has undergone after the Covid-19 pandemic and Brexit. The report covers market influencers, main suppliers and contractors, procurement and analysis of construction pipeline.

Key Issues Covered in the Report

  • The report provides a history and forecast of market size, spanning 10 years.
  • Construction pipeline in the sector is broken down by regions and healthcare facilities to provide the best angles on the future of construction in the sector.
  • Major suppliers and contractors are analyzed along with the significant projects they have been involved in.
  • An analysis of NHS structure, funding and estate.
  • AMA Research’s forecasts for future demand are supported by comprehensive sector and trend analysis.

Some of the Companies Included:

Guys and St Thomas’ NHS Foundation Trust, Great Ormond Street Hospital for Children NHS Foundation Trust, Christie Hospital NHS Trust, South West London and St Georges NHS Trust, Camden and Islington Community NHS Trust, Taunton and Somerset NHS Foundation Trust, Royal Brompton & Harefield NHS Trust, NHS Grampian, Royal Marsden Hospital NHS Trust, Salmon Harvester Properties, Betsi Cadwaladr University Health Board, Gloucestershire Hospitals NHS Foundation Trust, Noviniti Limited, Walsall Healthcare NHS Trust, Hub West Scotland, Cardiff & Vale University Health Board University Hospital, Castlewood Commercial Properties, Greater Manchester West Mental Health NHS Trust Foundation, Audley Group, Kier, Integrated Health Projects (Vinci/Sir Robert McAlpine), Bouygues UK, BAM Construction, John Sisk, Robert McAlpine, ISG Head Office, Seddon Construction Limited, Darwin Group Limited, Willmott Dixon Construction Limited, Balfour Beatty, Galliford Try Construction.

Areas of Particular Interest

  • Construction projects are grouped into contract awards, tendered projects and planning approvals which provide degrees of certainty about what to expect in the next five years.
  • Projected construction output from currently contracted, tendered or planned projects is mapped out across the next five years broken down by both regional shares and types of healthcare facility.
  • Main healthcare construction procurement programmes and future of public procurement.

KEY AREAS COVERED IN THE REPORT

Market overview

  • Market size by value 2016 to 2021, rates of change.
  • Market overview including leading contractors’ market shares.
  • Construction pipeline by healthcare facilities and regions.

Market Influencers and Drivers

  • Main influences that drive the healthcare sector including detailed PESTLE analysis.
  • Analysis including NHS and the private and acute healthcare sector.
  • NHS Long Term Plan and NHS Five Year Forward View
    Procurement changes after Brexit and cancellation PFI and PF2.
  • NHS investment
  • Impact of Covid-19 on use of modern methods of construction in the healthcare sector.
  • New framework for modular buildings by NHS Shared Business Services

Healthcare facilities

  • The report covers six types of healthcare facilities: public hospitals; private hospitals; surgeries, health and medical centres; hospices, nursing and psychiatric homes; secure hospitals; veterinary surgeries and hospitals.

Market Prospects

  • In the NHS, the shift of focus away from hospital-based provision towards a community-based model of care continues. This transforms primary care services in line with the NHS Five Year Forward View and the NHS Long Term Plan which creates opportunities for smaller value projects to provide extensions, reorganization and refurbishment of existing primary care facilities.
  • Construction output from public hospital schemes and from smaller value projects for the surgeries, health and medical centres will continue to dominate the total output in the healthcare sector.
  • Following the levels of planned government investment in the healthcare sector until 2025, the gap between the public and private sub sectors is expected to grow.

Supply and Distribution

  • Suppliers and contractors of significant projects are identified and detailed contractor profiles along with company turnovers are provided.

This report reviews the healthcare construction market, looking at the recent performance, trends, influences and forecast performance. Historical and expected future construction output is analysed by regional as well as healthcare facility breakdown.

The UK healthcare construction market declined by 37% in the past five years. The increased demand for healthcare provisions and facilities during the pandemic positively stimulated the market in 2021. While growth is forecasted in the next five years, the market size is not expected to fully recover from the decline in the past five years.

A key driver for the market is the NHS’ future vision, structure and funding for capital projects. In October 2021 Budget and Spending Review it was announced that NHS England budget will grow from £136.1bn in 2021/22 to £162.6bn in 2024/25, average real terms increase of 3.8% per year. Other political, economic, legal and environmental influences on the market are discussed in addition to NHS in England, Wales, Scotland and Northern Ireland and the private and acute healthcare sector.

As the Government has decided to axe PFI (Private Finance Initiative Schemes) and PF2 (Private Finance 2) for infrastructure projects; going forward, it is confirmed that all existing PFI contracts will be honoured, some of which will run into the 2040s. Currently the main healthcare construction procurement programmes in the UK are NHS LIFT/ExpressLIFT, the HUB Initiative Scotland, Frameworks Scotland, ProCure22 (until the end of June 2022), ProCure23 (starts in July 2022), NHS Building for Wales Frameworks.

Between 2016 and Q3 2021, in terms of the type of contracts awarded, public hospitals accounted for the largest share, followed by surgeries, health and medical centres. In 2019 before the Covid-19 pandemic, contract awards for all types of healthcare facilities declined over the previous year’s levels. In 2020, contract awards for private hospitals, surgeries, health and medical centres and veterinary surgeries and hospitals increased significantly while the value of contract awards for public hospitals remained stable. Q1-Q3 2021 activity in contract awards suggests that it will be a strong year in healthcare specifically in terms of public hospitals and hospices, nursing and psychiatric homes. Going forward, output from public hospitals and surgeries, health and medical centres will continue to dominate the total construction output in the healthcare sector.

CONTENTS

1. INTRODUCTION 8
1.1 CONTEXT 8
1.2 DEFINITION 8
1.3 ABBREVIATIONS AND DEFINITIONS 9
2. MARKET SUMMARY 10
2.1 MARKET SIZE 10
2.1.1 Total Construction output 10
2.1.2 Residential and non-residential construction output 10
2.1.3 Construction output in the healthcare sector 12
2.2 MARKET OVERVIEW 13
2.3 MARKET SUB SECTORS 15
3. MARKET INFLUENCERS AND DRIVERS 18
3.1 MAIN MARKET INFLUENCERS AND DRIVERS 18
3.1.1 NHS 18
3.1.2 The NHS estate 20
3.1.3 Private and acute healthcare sector 29
3.2 POLITICAL INFLUENCES AND DRIVERS 40
3.5 ECONOMIC INFLUENCES AND DRIVERS 41
3.5.1 A Shift towards Primary Care 41
3.5.2 NHS Investment 41
3.6 SOCIAL INFLUENCES AND DRIVERS 42
3.7 TECHNOLOGICAL INFLUENCES AND DRIVERS 42
3.7.1 Use of Modular Construction in the Healthcare Sector 43
3.8 LEGAL INFLUENCES AND DRIVERS 44
3.9 ENVIRONMENTAL INFLUENCES AND DRIVERS 45
4. PIPELINE 46
4.1 PIPELINE 46
4.1.1 Contract awards 46
4.1.2 Tendered and pre-tender projects 47
4.1.3 Planning approvals 47
4.2 PIPELINE BY FACILITY TYPE 48
4.2.1 Contract Awards 48
4.2.2 Tendered and pre-tender projects 51
4.2.3 Planning Approvals 52
4.2.4 Development pipeline in contract awards 53
4.2.5 Development pipeline in tendered and pre-tender projects 55
4.2.6 Development pipeline in planning approvals 56
4.3 SIGNIFICANT PROJECTS 57
5. REGIONAL ANALYSIS 59
5.1 REGIONAL CONTRACT AWARDS 59
5.2 REGIONAL DEVELOPMENT PIPELINE 65
5.2.1 Contract awards 65
5.2.2 Tendered and pre-tender projects 68
5.2.3 Planning approvals 70
5.3 REGIONAL ANALYSIS 71
5.3.1 London 71
5.3.2 South East 73
5.3.3 South West 75
5.3.4 West Midlands 77
5.3.5 East Midlands 79
5.3.6 East England 81
5.3.7 Yorkshire and the Humber 83
5.3.8 North East 85
5.3.9 North West 87
5.3.10 Scotland 89
5.3.11 Wales 91
6. SUPPLIERS: CONTRACTORS AND FUNDING 94
6.1 FUNDING STRUCTURES 94
6.1.1 NHS Long Term Plan 94
6.1.2 NHS Funding in England 96
6.1.3 NHS Funding: Scotland 98
6.1.4 NHS Funding: Wales 99
6.1.5 NHS Funding: Northern Ireland 100
6.1.6 Procurement of Healthcare Construction Work 100
6.2 KEY SUPPLIERS IN THE HEALTHCARE SECTOR 112
6.3 KEY CONTRACTORS IN THE HEALTHCARE SECTOR 115
6.3.1 Contractors’ Market Share in the Healthcare Sector – By Contract Awards 115
6.3.2 Contractor Profiles 117
7. MARKET FORECASTS 128
7.1 MARKET PROSPECTS 128
7.2 TEN-YEAR MARKET VIEW 130
APPENDICES 132
APPENDIX A: ECONOMIC ENVIRONMENT 132
A.1 OVERVIEW AND OUTLOOK 132
A.2 GDP 132
A.3 INFLATION & INTEREST RATES 134
A.4 EMPLOYMENT & WAGES 134
A.5 HOUSEHOLD CONSUMPTION 135
A.6 STERLING 136
A.7 TRADE & BUSINESS INVESTMENT 137
RESEARCH SERVICES OFFERED BY AMA RESEARCH 139

TABLES & CHARTS

CHART 1: CONSTRUCTION OUTPUT 2016-2021(EST) 10
CHART 2: RESIDENTIAL AND NON-RESIDENTIAL CONSTRUCTION OUTPUT 2016-2021(EST) 11
TABLE 3: NON-RESIDENTIAL CONSTRUCTION OUTPUT BY SUB SECTOR 2016-2021(EST) 12
CHART 4: HEALTHCARE SECTOR CONSTRUCTION OUTPUT 2016-2021(EST) 13
TABLE 5: SUMMARY OF MAJOR HEALTHCARE CAPITAL SPENDING PROGRAMMES 2018-2024 BY PROGRAMME VALUE (£BN) 14
CHART 6: SHARE OF THE PUBLIC AND PRIVATE SUB SECTORS IN HEALTHCARE CONSTRUCTION OUTPUT IN VALUE TERMS 2016-2020 16
CHART 7: HEALTHCARE SECTOR CONSTRUCTION OUTPUT IN THE PUBLIC AND PRIVATE SUB SECTORS 2016-2020 16
CHART 8: HEALTHCARE SECTOR QUARTERLY CONSTRUCTION OUTPUT IN THE PUBLIC AND PRIVATE SUB SECTORS 2019-2021(Q3) 17
TABLE 9: NHS ENGLAND ESTATE BACKLOG MAINTENANCE 21
TABLE 10: SIZE AND COST OF THE NHS ENGLAND ESTATE (SQ. M.) 2015-2020 (£M) 22
TABLE 11: SIZE AND CONDITION OF THE NHS SCOTLAND ESTATE 2015-19 23
CHART 12: NHS SCOTLAND – 5+ YEAR ASSET INVESTMENT PROGRAMME % SHARES: 2018-2023 24
CHART 13: NHS INVESTMENT IN GP PRACTICES (£M) 26
TABLE 14: LEADING UK PRIVATE HOSPITAL PROVIDERS 2021 33
TABLE 15: TOP PRIMARY HEALTHCARE PROVIDERS BY NUMBER OF SURGERIES OWNED 2019-20 37
TABLE 16: LEADING UK PRIVATE DENTAL COMPANIES BY NUMBER OF PRACTICES IN 2019 AND 2021 39
TABLE 17: NHS EMISSIONS FROM 1990 TO 2020 45
CHART 18: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY VALUE AND NUMBER OF PROJECTS 46
CHART 19: TENDERED AND PRE-TENDER HEALTHCARE CONSTRUCTION PROJECTS BY VALUE AND START YEAR 47
CHART 20: DETAIL PLANNING APPROVED HEALTHCARE CONSTRUCTION PROJECTS BY VALUE AND START YEAR 48
CHART 21: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY VALUE AND TYPE OF FACILITY 49
TABLE 22: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) YEAR-ON-YEAR CHANGE IN VALUE TERMS BY FACILITY TYPE 50
CHART 23: CONSTRUCTION STATUS OF CONTRACT AWARDS 2016-2021(Q3) BY FACILITY SHARE 51
CHART 24: TENDERED AND PRE-TENDER PROJECTS WITH DETAILED PLANNING APPROVAL BY TYPE OF FACILITY AND PROJECT START YEAR 52
CHART 25: DETAIL PLANNING APPROVED PROJECTS BY START YEAR AND TYPE OF FACILITY 53
CHART 26: HEALTHCARE CONTRACT AWARDS YEARLY OUTPUT 2016-2025 BY VALUE (£M) 54
TABLE 27: HEALTHCARE CONTRACT AWARDS YEARLY OUTPUT 2016-2025 BY VALUE (£M) 54
CHART 28: HEALTHCARE TENDERED AND PRE-TENDER PROJECTS YEARLY OUTPUT 2021-2025 BY VALUE (£M) 55
TABLE 29: HEALTHCARE TENDERED AND PRE-TENDER PROJECTS YEARLY OUTPUT 2021-2025 BY VALUE (£M) 56
CHART 30: HEALTHCARE PLANNING APPROVALS YEARLY OUTPUT 2021-2025 BY VALUE (£M) 57
TABLE 31: HEALTHCARE PLANNING APPROVALS YEARLY OUTPUT 2021-2025 BY VALUE (£M) 57
CHART 32: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY CONTRACT AWARD YEAR AND REGION 59
TABLE 33: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY CONTRACT AWARD YEAR AND REGION (£M) 60
TABLE 34: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY CONTRACT AWARD YEAR AND YEARLY REGIONAL SHARE IN VALUE TERMS 60
CHART 35: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY REGION AND TYPE OF FACILITY 61
TABLE 36: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) BY REGION AND TYPE OF FACILITY (£M) 62
CHART 37: HEALTHCARE CONTRACT AWARDS IN 2020 BY REGION AND TYPE OF FACILITY 63
TABLE 38: HEALTHCARE CONTRACT AWARDS 2020 BY REGION AND TYPE OF FACILITY (£M) 64
TABLE 39: HEALTHCARE CONTRACT AWARDS 2016-2021(Q3) YEAR-ON-YEAR CHANGE IN VALUE TERMS BY REGION 65
CHART 40: HEALTHCARE CONTRACT AWARDS YEARLY OUTPUT 2016-2025 BY VALUE AND REGION (£M) 66
TABLE 41: HEALTHCARE CONTRACT AWARDS YEARLY OUTPUT 2016-2025 BY VALUE AND REGION (£M) 68
CHART 42: HEALTHCARE TENDERED AND PRE-TENDER PROJECTS YEARLY OUTPUT 2021-2025 BY VALUE AND REGION (£M) 69
TABLE 43: HEALTHCARE TENDERED AND PRE-TENDER PROJECTS YEARLY OUTPUT 2021-2025 BY VALUE AND REGION (£M) 69
CHART 44: HEALTHCARE PLANNING APPROVALS YEARLY OUTPUT 2021-2025 BY VALUE AND REGION (£M) 70
TABLE 45: HEALTHCARE PLANNING APPROVALS YEARLY OUTPUT 2021-2025 BY VALUE AND REGION (£M) 71
CHART 46: LONDON HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 72
TABLE 47: LONDON HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 73
CHART 48: SOUTH EAST HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 74
TABLE 49: SOUTH EAST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 75
CHART 50: SOUTH WEST HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 76
TABLE 51: SOUTH WEST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 77
CHART 52: WEST MIDLANDS HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 78
TABLE 53: WEST MIDLANDS HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 79
CHART 54: EAST MIDLANDS HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 80
TABLE 55: EAST MIDLANDS HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 81
CHART 56: EAST ENGLAND HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 82
TABLE 57: EAST ENGLAND HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 83
CHART 58: YORKSHIRE AND THE HUMBER HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 84
TABLE 59: YORKSHIRE AND HUMBER HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 85
CHART 60: NORTH EAST HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 86
TABLE 61: NORTH EAST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 87
CHART 62: NORTH WEST HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 88
TABLE 63: NORTH WEST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 89
CHART 64: SCOTLAND HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 90
TABLE 65: SCOTLAND HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 91
CHART 66: WALES HEALTHCARE CONTRACT AWARDS ESTIMATED YEARLY OUTPUT BETWEEN 2016-2025 BY VALUE AND FACILITY TYPE 92
TABLE 67: WALES HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 93
TABLE 68: NHS ENGLAND SPENDING REVIEW SETTLEMENT 2018-2024 & CCG FINANCIAL ALLOCATIONS 2018-19 TO 2023-24 (£BN) 96
TABLE 69: DHSC CAPITAL SPENDING 2015-2022 (£BN) 98
TABLE 70: TOTAL HEALTHCARE SPENDING SCOTLAND 2014-2021 (£M) 99
TABLE 71: WALES – HEALTHCARE CAPITAL SPENDING 2015-2020 (£M) 100
TABLE 72: NORTHERN IRELAND – HEALTHCARE CAPITAL SPENDING 2014-2021 (£M) 100
TABLE 73: HUB INITIATIVE SCOTLAND – HUBCO’S IN SEPTEMBER 2021 105
TABLE 74: HUB INITIATIVE SCOTLAND – KEY HEALTH PROJECTS IN DEVELOPMENT: 2019 – 2021 BY VALUE (£M) 106
TABLE 75: INVESTMENT IN P21+/P22 UNDER THE NATIONAL INFRASTRUCTURE & CONSTRUCTION PIPELINE (NICP) (£M) 108
TABLE 76: P22 – KEY SCHEMES IN DEVELOPMENT 2021-2026 (£M) 109
TABLE 77: TOP SUPPLIERS IN THE HEALTHCARE SECTOR – BY NO. & VALUE OF PROJECTS IN 2020 (£M) 114
TABLE 78: PRIMARY HEALTHCARE DEVELOPERS & INVESTORS BY NUMBER OF PRIMARY CARE PREMISES IN THE PIPELINE 2020 115
CHART 79: HEALTHCARE CONTRACT AWARDS 2020 – APPROXIMATE SHARE BY CONTRACTOR 116
CHART 80: HEALTHCARE SECTOR CONSTRUCTION OUTPUT 2016-2020 AND 2021-2025 FORECASTS 130
CHART 81: HEALTHCARE SECTOR CONSTRUCTION OUTPUT 2016-2020 AND 2021-2025 FORECASTS BY PUBLIC AND PRIVATE DIVIDE 131
CHART A1: GROSS VALUE ADDED BY SECTOR 133
CHART A2: CPI INFLATION AND BANK OF ENGLAND BASE RATE 134
CHART A3: AVERAGE WEEKLY EARNINGS BY SECTOR 135
CHART A4: DISPOSABLE INCOME PER CAPITA & SAVINGS RATIO 136
CHART A5: STERLING EXCHANGE RATES TO THE DOLLAR AND THE EURO 137
CHART A6: TRADE & BUSINESS INVESTMENT, 2018-2020 138

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