Sector - Transport & Infrastructure
Construction & infrastructure review 2020
Construction & Infrastructure review: The key to recovery
2020 was a tumultuous year, no one could have foreseen the rapid changes the country underwent in March and April and the impact the COVID-19 would have.
Inevitably, construction performance dipped as the country went into lockdown, with figures taking a huge knock. Figures published by the Office for National Statistics for the period to August 2020 indicated that infrastructure was the only element of the wider construction and infrastructure sector to have returned to pre-pandemic levels of output, with infrastructure output in August 0.6% higher than in February. This was achieved thanks to a 10.9% increase in output in the three months to August 2020 compared with the previous three months.
While the sector has, inevitably, been affected by the ongoing economic uncertainty, the outlook remains positive, with housing being a major factor in recovery. According to the latest figures released in December, IHS/CIPS* PMI marketing activity showed sustained recovery across the construction sector, with the latest index recording 54.7, up from 53.1 in October and registering above the 50.0 no change value for the sixth consecutive month.
For infrastructure, the outlook overall is good, with Civil Engineering returning to growth in November, registering at 52.3.
Figures published by the Office for National Statistics in December for UK construction output**, show that, whilst the pandemic is still having a biting effect across much of industry, construction is steadily recovering. The latest figures record that construction output grew by 1.0% in the month-on-month all work series in October 2020. Increases were seen in both new work (0.3%) and repair and maintenance (2.3%); which helped the figures rise to £13,066M. This is the sixth consecutive month of growth for construction output, but the smallest monthly increase in that time.
The long-term effects of the pandemic and current lockdowns and tiered areas can still be seen, however, with the figures still well below pre-lockdown figures – by some 6.4%.
All sectors of the industry saw growth in October, apart from private new housing and private commercial new work. The only sector to recover completely is infrastructure, which is now recording output levels above the April decline.
The figures show that both infrastructure and public other new work were both more resilient to the lockdown effect, showing smaller drops in work at the beginning of the crisis and consistent growth ever since, albeit relatively small.
The construction industry as a whole has shown its resilience to the changes, bouncing back to growth under extraordinary circumstances where other industries have struggled.
Infrastructure has underlined its importance to the economy and construction sector. Before the COVID-19 pandemic broke out, the UK was set for major investment into infrastructure projects designed to connect the country to unleash growth outside the south east.
As we head into 2021, it is clear, given the National Infrastructure Pipeline 2020/21 and recent ‘Getting Building’ fund announcement, that the outlook for Infrastructure is good with many opportunities across the public sector as a whole.
And momentum is building, with the long-awaited and highly anticipated National Infrastructure Strategy finally published alongside Rishi Sunak’s Spending Review, the country can plan its national infrastructure priorities and delivery of the projects.
The Strategy sets out a bold ambition of improving the country’s infrastructure and making it fit for the future. Much of the document follows on from the Prime Minister’s promise to ‘level up’ the country and his plan of ‘Building back better, building back greener’.
The government wants to use infrastructure to unite and level up the UK, delivering a stronger Union, thriving regions, cities living up to their full potential and revitalised towns and communities. To deliver this, the Strategy records investment across the country, prioritising those areas that have received less support in the past.
The publication of the ‘Construction Playbook’* is another important step for the industry – a guide to procuring, design, developing and constructing all government projects – all indicate that the UK is serious about investing in infrastructure, providing a wealth of opportunities for suppliers.
The Construction Playbook is focused on getting projects and programmes right from the start; whether the delivery of a school, hospital or major infrastructure project, the Playbook will transform how public works are assessed, procured and managed.
The Construction Playbook sets out how the government and industry can deliver a world-class sector – improving productivity in construction safely, delivering skilled jobs across the country to level-up the economy and achieving net zero greenhouse gas emissions by 2050.
The publication is the result of extensive collaboration from across the public and private sectors to bring together expertise and best practices. It builds on the National Infrastructure Strategy and the National Infrastructure Commission’s advice, to transform infrastructure networks over the next decade and beyond, building back better, faster and greener
The government’s ambition is to deliver excellent public works and see improvement in that delivery; from environmental credentials, to future-proofing of these projects, innovation, effective contracting, a better supply chain and the inclusion of SMEs, to resolution planning and financial monitoring.
Central government will bring up to £37Bn of contracts across economic and social infrastructure to market over the next year. To meet this ambition, the delivery of projects needs to change. From building schools, hospitals and prisons, to major infrastructure and the wide range of construction, engineering and other works projects and programmes undertaken by the public sector, the government has set out a commitment to delivering better, faster and greener solutions that support recovery from the COVID-19 pandemic and build the economy of the future; all while improving building and workplace safety.
The construction sector is key to the UK economy, contributing £117Bn to the UK economy in 2018 and supporting over two million jobs and it is clear that the opportunities available in 2021 will be vast.
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