The latest market review from Barbour ABI, which manages project pipeline data on behalf of the government, has pointed to a dearth of contracts in the infrastructure sector in 2015, contrasting with healthier prospects in the commercial and residential sectors.
The Economic and Construction Market Review looks back at contract awards in 2014, but also looks ahead to 2015, based on tracking projects through the planning process.
In terms of the overall value of contracts awarded, the 2014 figure of £64.2bn was an increase of 2.8% on 2013, compared to a 25.2% rise in 2013, showing that the pace of growth has slowed.
But the infrastructure sector underperformed the all-sector picture, experiencing far lower levels of activity in 2014. The total value of contracts awarded in 2014 was £12.9bn, a 29.7% decrease from the value awarded in 2013.
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And this trend is predicted to continue into contract awards for 2015, as schemes reaching the detailed planning application stage in 2014 declined by 30.2% to a total of £13.3bn.
According to the report, “this indicates that contract award activity is likely to remain lower in 2015. Given the major role that the infrastructure sector has in the construction industry the lack of growth presents a challenge to the sustainability of growth.”
Michael Dall, lead economist for Barbour ABI, told Construction Manager: “We track the projects from earliest planning to contracts awarded, and if you look at planning activity, it’s down year on year. There are major schemes coming to contract award point this year, such as the Thames Tideway Tunnel and the Northern Line Extension, which will obviously make a difference, but the number of contracts is still down year on year.”
However, Dall also predicted a strong year for the commercial sector, which is traditionally the largest sector for the industry. Although the £10.8bn value of projects reaching detailed planning application stage in 2014 was 5% lower than in 2013, the report says this is still “consistent with the likelihood of continued modest growth in the sector in 2015”.
He added that the residential sector would also continue to do well and be a dominant sector for the industry, although with a levelling off of the rapid growth seen in 2013/14.
The report shows that projects reaching an advanced planning stage in 2014 amounted to £41.9bn, an increase of 21.8% from the value in 2013, indicating that the sector is likely to continue to grow in 2015.
