Strategic Forum fights for 'shovel-ready' projects amid 2012 concerns
The construction industry will present a series of options to government for accelerating ‘shovel-ready’ projects amid concerns over imminent work.
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The Strategic Forum for Construction announced it would lead a ‘charge for instant growth’, less than a week after the Chancellor’s autumn statement, following concerns over the lack of work due in the next year.
The forum will seek evidence from its member organisations for ways to bring forward schemes in the next year as it seeks to respond to concerns over 2012 workloads.
New forum chairman Lord O’Neill told CN last month that priority projects were the biggest issue facing the industry. He said that by the summer he wanted the forum to be re-established as the credible and coherent voice of the industry.
Despite the investment unveiled in the autumn statement and corresponding National Infrastructure Plan 2, mid-tier and regional contractors are concerned that the majority of projects are medium-to-long term or have contractors already attached.
The Chancellor announced £5 billion would be injected into projects from savings in current spending over the next three years, but only 20 per cent of that will be allocated next year. The remaining £4bn is due to be spread over 2013 and 2014.
A number of the major announcements in the statement, including the potential Northern Line extension to Battersea and High Speed Rail, will not start construction until at least the next spending review period after 2015.
CN has also revealed that just £290m of the £1.2bn new spending in education announced by the Chancellor will be spent before spring 2013.
The government is considering introducing a £500m, 1.5-mile tunnel under the Chiltern Hills, to reduce the visual impact of the scheme.
A final decision is now expected in January on the final route for the £32bn rail link, after the government has considered the environmental impact of proposed changes.
Meanwhile the Scottish government has announced it wants to allocate up to £9bn to ensure the proposed HS2 link runs as far as Scotland.
As part of plans to spend up to £60bn on Scottish infrastructure before 2030, the government has set out plans to include 54 major infrastructure projects and 33 programmes across sectors including schools, hospitals and Housing.
The total estimated capital investment to 2015 will be £12.8bn and includes road upgrades, health facilities in Glasgow and Edinburgh and a long-term commitment to schemes including the £400m Aberdeen Western Peripheral Route and Edinburgh Tram.
The Federation of Master Builders director of external affairs Brian Berry said its members wanted a greater focus on Housing and that ensuring the success of credit easing was crucial to short-term growth.
CN revealed last month that half of specialist contractors cannot plan for work beyond the next three months, according to the State of Trade survey by the National Specialist Contractors’ Council.
Thomas Vale chief executive Tony Hyde said regional contractors would be struggling and he had concerns that a short-term solution of increasing housing was being overlooked in favour of long-term, major civils projects.
“With the PFI and Building Schools for the Future reviews, it has slowed down the bigger schemes, but the industry is also not seeing the £3 million to £5m projects coming to the market unless you are inside strategic partnerships,” he said.
Civil Engineering Contractors Association North-east director Douglas Kell has written to the region’s MPs and the Transport Select Committee pleading for funding due to the lack of work in the North-east.
Mr Hyde said regional contractors would need to consider forming consortia to bid for all the bigger schemes in NIP2.
“I can’t see anything stopping more job losses in the short term though. Thomas Vale has had two fantastic years, but 2012 will be tough for everyone,” he said.
“It’s competitive out there and companies are in dire need of bank funding. Short term, they will all still be controlling their costs in 2012.”
The focus on road and rail projects announced last week has also led to major contractors looking to consolidate their position as new contracts come to market.
Tier one contractors are already tied to a number of the 40 infrastructure projects designated a priority by the government. These include Crossrail and airport capital investment programmes. They are looking to capitalise on new work.
Wates group investment director Steve Beechey said the visibility of work in the road and rail pipelines would lead to the company taking a strategic review of the sectors.
“From our perspective, there has been a spending shift towards rail and roads, so we will need to do a strategic review following [the autumn statement] to see what we need to do to shift out into those areas,” he said.
Morgan Sindall has opened a new office in Cumbria to target nuclear work including the £1.1bn Sellafield Infrastructure Strategic Alliance for which it is one of eight bidders alongside firms including Balfour Beatty, Amec and Jacobs.
The company is also targeting growth in regeneration, London commercial office construction and utilities where its joint venture with Vinci Energies, MSVE Transmission was named preferred bidder for a £500m National Grid overhead line contract last month.
The contractor’s construction and infrastructure managing director Graham Shennan said: “We were aware of most of the projects [announced in the government’s work pipelines] as we had been discussing them already.
“We won’t abandon any sectors but it’s nice to be in some of the good ones for work at the moment and we can still win some big schemes and maintain our percentages in existing sectors like Education even if spending is down.”