Construction economists have downgraded their growth forecasts for 2016, citing political uncertainty, but the forecast for 2015 has been revised upwards and longer-term projections are unaffected.
The Construction Products Association (CPA) is forecasting construction output growth of 5.5% for 2015 and 4.0% for 2016. Two months ago the CPA was forecasting headline growth of 5.3% and 4.2%.
The revised forecast still amounts to a compound growth rate for construction output of 9.72% for this year and next, but now 2015 will be a little stronger and 2016 a little softer, CPA economists reckon, making 2016's slowdown perhaps more noticeable.
Despite this, output in 2016 will finally pass the heights of the pre-recession peak of 2007.
The CPA is projecting compound growth of 17.9% over the next four years, which is a slight rise in optimism on the 17.8% it was projecting two months ago.
Key highlights from the spring edition forecasts include:
• Construction output to grow 5.5% in 2015 and 4.0% in 2016, surpassing the pre-recession peak
• Private housing starts to rise 10.0% in 2015 and 5.0% in 2016
• Public sector construction to rise 2.4% in 2015 and 2.2% in 2016
• Infrastructure output to rise 50.8% by 2018
• Commercial construction expected to increase 6.4% in 2015, 5.2% in 2016 and 4.4% in 2017
• Infrastructure activity forecast to rise 7.6% in 2015, 9.2% in 2016 and 10.6% in 2017
CPA economics director Noble Francis said: “Construction output is forecast to increase 5.5% in 2015, which is more than double the rate of growth for the UK economy, due to growth in the three key sectors of construction; private housing, commercial and infrastructure.
“There has been a slowdown in the general housing market but house building continues to drive construction industry growth. After rising 13.3% in 2014, private house building is forecast to increase a further 10.0% to 142,000 new homes in 2015. Commercial construction, worth £22bn each year, is forecast to rise 6.4% in 2015 due to work on major towers in London and also large offices projects in Birmingham and Manchester.
“Over the following two years, however, construction output is forecast to be adversely affected by the UK’s most uncertain election in more than 40 years. The lag between construction contracts and work on the ground means that construction activity in 2015 probably won’t be impacted, since the majority of work for the year has already been planned. Instead, we expect a break in private and public investment this year for future projects, which in turn will lead to slower construction growth of 4.0% in 2016 and 3.4% in 2017.”
Dr Francis continued: “Although fewer homes are being built than we need each year, private house building growth is forecast to slow to 5.0% in 2016 and 3.0% in 2017. Again, this is primarily due to uncertainty regarding government policy such as Help to Buy, which has otherwise stimulated house building in the last two years. This means that despite five years of recovery projected to 2017, private house building at that time is still forecast to be 19.2% lower than at the pre-recession 2007 peak.
“Similarly, increases in commercial activity are likely to be constrained by a hiatus in business investment this year due to the election, with growth in the sector expected to slow to 5.2% in 2016 and 4.4% in 2017.
“One area expected to be largely unaffected by the election is infrastructure activity, which is anticipated to increase throughout the forecast period to 2018. Strong growth of 7.6% this year is expected to accelerate to 9.2% in 2016 and 10.6% in 2017 owing to the £466bn pipeline of work under the National Infrastructure Plan. This includes large projects such as the £1.5bn A14 redevelopment, the £4.2bn Thames Tideway Tunnel and, eventually, the £16bn Hinkley Point C nuclear power station.”
He concluded: “Overall, the Construction Products Association forecasts construction output surpassing the pre-recession peak next year, and expect output in 2018 to be 17.9% higher than in 2014. For this to materialise, however, industry will need to work together with the new government to address the need for greater investment in capacity and skills.”
Two construction consortia have been appointed to begin the first phase of the Central Rail Link (CRL) construction in the downtown area of Auckland.
Project director Chris Meale said that there had been wide interest from the New Zealand construction industry. Auckland Transport has appointed two joint venture contractors for the work: Connectus (McConnell Dowell and Hawkins JV) and a joint venture of Downer NZ and Soletanche Bachy. The work covers the first phase of design at a cost of about NZ$3m (£1.5m). The next phase will provide for a negotiated contract to construct the City Rail Link.
The Downer-led joint venture has been chosen to progress the CRL work through and under Britomart Station and Queen Street to the Downtown Shopping Centre site with construction likely to start in early 2016.
The Connectus Consortium will construct cut and cover tunnels under and along Albert St from Customs St to Wyndham St. The work is likely to start in October with the relocation of a major storm water line in Albert Street between Swanson and Wellesley Streets.
Auckland Transport’s Chris Meale says: “We are now definitely on the way to building a key missing link in our city’s public transport network. Once completed, the CRL will turn a one way cul-de-sac rail system at Britomart into a two way through system that will be able to carry 30,000 people an hour, providing an efficient and reliable transport choice for Aucklanders.”
The document was lodged at Leeds High Court last week.
Court officials confirmed to the Enquirer that KPMG was named as a potential administrator of PC Harrington Contractors Ltd.
PC Harrington is one of the concrete industry’s biggest names and a major player in the London market.
Harrington has been raising funds since the start of this year when its HTC Plant division sold its hoist operation to Dutch specialist Reco.
And the Enquirer revealed last week that HTC is understood to be selling its tower crane business to German manufacturer Wolffkran.
PC Harrington Contractors is one of several companies operating under the PC Harrington name.
Other PC Harrington companies are believed to be unaffected by the move.
KPMG declined to comment on the filing and PC Harrington was unavailable for comment.
Latest accounts for PC Harrington Contractors for the year to May 31 2014 show the firm made a pre-tax loss of £4m on a turnover of £65m.
Construction management of a hospital in Denver is being handed over to the US Army Corps of Engineers as the project has run over budget by US$1bn (£670m).
The Department of Veteran Affairs (VA) will be investigating how the overspend arose at the new Denver veterans hospital.
The aim is that the hospital will open in 2017 following estimated spending of another US$830m to complete the work. Cost of the hospital is now put at US$1.73bn. It had been due to open next month at a cost of US$630m.
US Representative Mike Coffman has criticized VA for failing to discipline any officials over the billion-dollar cost overrun. Coffman has filed legislation that calls for a spending cap and introduces measures including prohibition of any VA bonuses until the hospital is complete. He also calls for VA to be stripped of any future major construction authority and for an independent investigation into the billion-dollar cost overruns at the hospital.
Construction is now under way at the AU$122m (£63m) Carrara sports precinct, which is being built for the 2018 Commonwealth Games in Queensland, Australia.
Premier Annastacia Palaszczuk and minister for the Commonwealth Games, Kate Jones, joined Gold Coast mayor Tom Tate to mark the start of the first stage of the project - the new $101 million Carrara Sports and Leisure Centre.
The centre is the first of four projects in the Carrara Sports Precinct that will be delivered over the next two years.
“This is a key Games venue that is generating 400 jobs during design and construction,” she said. "The Centre is a major piece of infrastructure for the Gold Coast and will accommodate a wide range of court sports including basketball, netball, indoor soccer and badminton. “These projects aren’t just about the Commonwealth Games. They’re creating jobs and they’re helping strengthen the regional economy.”
Minister Kate Jones said the Palaszczuk Government is committed to delivering the AU$320m Commonwealth Games infrastructure programme on budget and well ahead of the Games.
“The Commonwealth Games infrastructure program is an important investment in the region that will not only generate 1,000 jobs during design and construction, but also ensure the local community; local business and local industry reap long term benefits from the event.”
This week’s launch of Highways England could herald the start of a new era of safer, more pleasant to use and freer flowing motorways and strategic routes.
The new Government owned company, which takes over from the Highways Agency, has set out to reduce the number of people killed and seriously injured on its network by 40% within five years. A concerted effort will be made to make driving through roadworks less stressful, with clearer signage and better real time information for motorists.
Highways England also promises to coordinate roadworks more effectively so that lane availability does not fall below 97% in any one rolling 12 month period and pledges to resurface most of the network within five years.
Highways England will invest £11Bn over ‘Road Period 1’ until 2020. Works will include 112 major improvements and the start of 15 Smart Motorway projects to provide 450kms of extra lane capacity.
In addition 150 new cycling facilities and crossings will be built, including 40 by the end of next year. A new ‘Expressway’ standard of major A road will be introduced with better junctions and emergency refuge bays, and live trials of dynamic wireless charging for electric vehicles will begin.
Highways England chairman Colin Matthews said: “Two things I care most about are the safety of people who use our roads and to make roads better for users with smoother, more predictable journeys. We now have money to invest, a five year plan and a new company focusing on delivery.”
This Easter weekend marks the start of construction proper on one of the most eagerly awaited road improvements in southern England: dualling of the A21 between Tonbridge and Pembury.
The £70M scheme in west Kent will see Balfour Beatty upgrade a 4.1km stretch of the route which carries 35,000 vehicles a day, and has a cost: benefit ratio of around three and a half times the investment.
By the end of this year traffic heading south on the A21 should have begun to cross a new flyover, being built to take through traffic over a notoriously busy junction serving a retail park and hospital. The project is due to open fully to traffic in early 2017.
Highways England representative on the scheme Graham Link says: “When complete this project will remove a bottleneck, especially at the north end of the scheme where two lanes and a slip road currently converge into one.”
Nine hectares of ancient woodland have been lost to make way for the dual carriageway, and have been compensated for by planting 18ha of new woods.
Balfour Beatty project manager Richard Turnbull says that great efforts have been made to protect local ecology on site. He adds that a series of ancient buildings on the route of the upgrade have been carefully taken down for installation at an open air museum in West Sussex.
Britain's next Government must make a quick decision on airports expansion in South East England, according to over 50 parliamentary figures.
They have lent their signatures to a campaign organised by the pro expansion group Let Britain Fly which says that if politicians fail to act soon to expand airport capacity, Britain will lose its competitive edge.
The group aims to build cross party political support for the need to build new runways and is calling for a decision on runway expansion to be made soon after the Airports Commission publishes its final report this summer.
Signatories to the list include Labour's Louise Ellman who until Parliament's dissolution on Monday was chair of the Transport Select Committee.
Other names include the previous MP for Crawley, close to Gatwick (Henry Smith of the Conservatives) and the previous MP for Feltham and Heston (Seema Malhotra of Labour) near Heathrow.
Let Britain Fly director Gavin Hayes said: “There are growing numbers from across the political spectrum – and all corners of the country – who understand the urgent need to expand London and South East airports in order to support future jobs and economic growth.
“After over half a century of inaction the political procrastination has to stop. Once the election is out of the way we urge our political leaders to be bold and decisive on this issue.”
London is pushing ahead on two fronts with plans to increase rail capacity in the capital. London Underground confirmed this week it will deliver the Croxley Rail Link to extend the Metropolitan Line, and a consultation on a proposed Bakerloo line extension has received "overwhelming" public support.
Meanwhile one of two remaining tunnel drives on Crossrail has begun between Liverpool Street and Farringdon.
Work is set to begin later this year on the Croxley Rail Link beyond Watford Junction. London Underground is now to deliver the project rather than Hertfordshire County Council.
The tube operator’s director of major programme sponsorship David Hughes explained: “Late last year, faced with significant project slippage and cost escalation, Government asked us to consider stepping in. We made it clear that a suitable funding package needed to be in place before we would be prepared to take this on.
"Those discussions have concluded and the Mayor has confirmed that London Underground should take on overall delivery responsibility.”
London Underground has agreed to contribute £16M towards the £280M scheme, with the county council providing £230M and Department for Transport contributing £34M. The first trains are expected to run on the extended line by 2019.
Extension of the Bakerloo line to the south by the early 2030s meanwhile received 96% support from a public consultation.
The £3Bn project is aimed at helping to meet expected population growth in the area. Mayor of London Boris Johnson said: “This extension has huge potential to breathe a new lease of life into south London’s opportunity areas, as well as delivering urgently needed rapid transit capacity.”
Also this week the Mayor visited Cross rail’s TBM Victoria (pictured) to see it off on its final 750m tunneling drive from Liverpool Street to Farringdon.
Cross rail chairman Terry Morgan said: “For nearly three years, our machines have been inching their way forward beneath the streets of London. Once the tunneling is complete, we will turn our attention to fitting out the tunnels with the tracks, cabling and all the systems needed to deliver a fully operating railway.”
Highways England, the government-owned company which will deliver the largest investment in England’s major roads in a generation, officially launched today.
The company, which replaces the Highways Agency from today, will invest £11 billion in delivering a raft of improvements on England’s motorways and major A roads making roads even safer, improving traffic flow and reducing congestion.
Graham Dalton, Chief Executive of Highways England said:
The launch of Highways England is an incredibly significant moment for those who rely on England’s motorways and major A roads.
As well as delivering the biggest investment in major roads since the 1970s, there will be fundamental changes to the way motorways and major A roads are maintained and operated. We will be focusing on customers, providing better travel information before and during journeys, improving safety and reducing the impact of roadworks.
Highways England is the organisation that will meet this challenge. We are committed to a strategic road network in England that is far safer, more free-flowing and more integrated and supports economic growth across the country.
The 1.4m sq ft scheme will see demolition to two major buildings next to Blackfriars Bridge to clear the way for nine buildings ranging from 5 to 48 storeys in height.
These will be split between 492 luxury apartments and 450,000 sq ft of offices and 25,000 sq ft of retail space, which were granted outline planning last year.
Singaporean sovereign wealth fund Temasek, Hotel Properties, run by Singaporean tycoon Ong Ben Seng and Amcorp Properties, run by one of Malaysia’s richest men, have scooped up the site in a deal worth over £300m.
The bidders using Native Land as an investment vehicle have been in talks for several months and now plan to build the Bankside Quarter.
Alasdair Nicholls, Chief Executive of Native Land, said on behalf of the consortium: “The development of the Bankside Quarter will set the seal on London’s finest emerging location.
“By unblocking routes through this strategically important site as well as significantly enhancing the public realm the area will become even more popular for residents, businesses and visitors from across the globe.
“The project will also deliver much needed private and affordable housing in the borough, where there is a shortage of supply.
“The consortium which has been assembled to deliver the project represents the best in international development and funding expertise. We are confident that we can deliver a major new destination for London, adding to the strong foundations already laid in the Bankside area.”
Native Land intends to deliver the project in a series of phases, with the first phase including a 49-storey tower comprising 211 apartments fronting the River Thames.
The subsequent phase will deliver a Grade A office building, with later phases including the redevelopment of Sampson House, which is currently leased to IBM until 2025 but with a mutual break option in June 2018.
The tallest tower will stand opposite developer St George’s beveled One Black friars tower, now under construction, to form a high-rise gateway on the south side of Black friars Bridge.