CONSTRUCTION CONSOLIDATES AFTER SHAKY START TO YEAR

Construction buyers reported a steady continuation of industry growth following a dip in output earlier this year.

 The  latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index for May registered 52.5 – exactly the same figure as April.

Crucially the figure remains above the 50 mark which represents the threshold for continuing expansion.

But optimism about future growth fell to a seven month low and purchasing costs rose sharply particularly for fuel, plastic and steel.

Sam Teague, Economist at IHS Markit and author of the report said: “The May PMI data signalled an unchanged pace of activity growth across the UK’s construction sector since April’s somewhat underwhelming rebound, yet nevertheless indicating a recovery in the second quarter after the contraction seen at the start of the year.

“However, activity in May was once again buoyed by some firms still catching up from disruptions caused by the unusually poor weather conditions in March, and a renewed drop in new work hinted that the recovery could prove short-lived.

“Inflows of new business slipped back into decline, signalling the resumption of the downward trend in demand seen during the opening quarter.

“Companies frequently noted that Brexit uncertainty and fragile business confidence led clients to delay building decisions in May.

“With new order books deteriorating and cost pressures picking back up, it’s not surprising to see construction firms taking a dimmer view of prospects and pulling-back on hiring, all of which makes for a shaky-looking outlook.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “The two millstones of uncertainty and weak economic growth gave the sector plenty to worry about this month, and whilst activity still grew, the lowest business confidence in seven months suggests the subdued pipeline of new work is having an effect. With a decline in new orders for a fourth time in five months, it was client hesitation and consumer diffidence towards spending that had construction activity stuttering.

“Higher prices for fuel, raw material shortages, higher labour costs combined with slow delivery times were further obstacles to growth as firms nervously assessed their workforce for much-needed talent and sub-contractors could name their price.

“However, it’s encouraging to see the housing sector put in a strong performance for a second month running, after stumbling at the beginning of the year, and with only small improvements in the other sectors, residential building is keeping construction’s head above water.

“It’s likely that the construction sector’s performance will be a slow and steady crawl through the second quarter, as the spectre of Brexit continues to dominate, and the double pincer movement of few orders, and higher costs, could see the sector stutter further.”

Article courtesy of ‘Construction Enquirer’ June 2018

OUTLOOK BRIGHTENS FOR CIVILS CONTRACTORS

Civil engineering contractors say that their workload was marginally down in the first quarter of 2018, overall, but orders were up.

The Civil Engineering Contractors Association’s workload trends survey for 2018 Q1 in Great Britain suggests things are looking up, therefore.

Overall, 28% of the respondents reported that workloads had fallen compared to a year ago, and 44% of the respondents reported that workloads were unchanged.

For England, only 9% of firms, on balance, reported an increase in workloads in Q1, down from 21% in Q4. In Wales, after reporting a negative balance (-33%) in Q4, workloads increased according to 47% of firms, on balance. However, in Scotland, workloads declined for a second consecutive quarter in Q1, according to 38% of firms, on balance. This was the weakest balance since 2010 Q1.

However, order books are as strong as they have been for three years, with 44% of firms reporting that orders had increased compared to a year ago and 35% of firms saying that they were unchanged.

In England, 55% of firms reported that orders had increased and 28% reported that they were unchanged. The net balance of 38% of firms reporting an increase in orders, up from 13% in the previous quarter, was the highest since 2015 Q1.

Welsh contractors reported a negative balance of -6% for orders in Q4 2017 but the start of 2018 saw a turnaround, with a balance of 46% of firms seeing orders increase.

For a second consecutive quarter, orders in Scotland decreased, on balance, according to 3% of firms. Overall, 34% of firms reported that orders had declined.

CECA chief executive Alasdair Reisner said: “2018 has seen challenging market conditions in the UK’s infrastructure sector, where the aftershocks of the Carillion liquidation continue to be felt. We believe there is more the government can do to support the sector, by committing to projects outlined in the National Infrastructure Delivery Plan and continuing to develop this pipeline to secure economic growth.

“At the same time, our members are reporting that they are expecting orders to turn into activity, as schemes come forward to market in the coming year.

“While the first quarter of 2018 has proved a challenging period for many of our members, we believe that there is light at the end of the tunnel, and that industry will act as a platform for secure growth in the coming years.”

The CECA survey does not include Northern Ireland.

Article courtesy of  ‘The Construction Index’ 

Gender pay gap among 30 top contractors revealed

Laing O’Rourke has recorded the lowest inequality in pay between men and women among Britain’s top 30 main contractors.

The firm’s record on equal pay was revealed as thousands of employers with over 250 staff were forced to published their gender pay gap figures for the first time.

The Government hopes this will help to shine a light on the barriers preventing women from reaching the top.

Construction ranks as one of the worst industry’s for pay inequality with women paid 36% less than men on average.

The first returns by leading main contractors reveals Laing O’Rourke is way ahead on pay equality with women on average paid just under 9% less than men.

Companies had to file data based on a “snapshot” of their payroll taken on 5 April 2017.

The discrepancy among major players is widened because fewer women are among the top earners in the industry.

This appears to have impacted BAM Construct which recorded the highest pay gap and women accounting for 68% of the lowest quartile of earners in its workforce.

The listing of the top 30 main contractors compiled by the Enquirer is ranked by the median, which gives a good sense of where a company is overall, the mean figures will include the outliers with large salaries.

Main contractor pay gap reports
Hourly rate % lower than men % of women in pay quartile
Mean Median Highest paid Lowest Paid
Laing O’Rourke Services 6.6 8.8 9.8 13.4
Ferrovial Agroman UK 20.6 20.7 18 54
Kier Ltd 27 26 12.0 39.0
Skanska UK plc 27.2 26.7 10.9 36.8
Costain Eng & Con 26.6 27 9.9 43.6
BAM Nuttall 26.2 27.7 7.0 33.0
Keepmoat Ltd 19.6 28.5 28 48
Interserve Construction 30.3 29.7 4 27.6
Sir Robert McAlpine 29.4 30 7.4 27.5
VolkerWessels UK 38.2 30.5 9.1 32
Balfour Beatty Group Emp. 27 33 7.0 31.0
Wates Group Services 29.5 33 10.0 39.8
Lendlease Construction Europe 30.4 33 6 33
Morgan Sindall Group 31 33 8.0 31.0
Galliford Try Emp. 30.7 33.2 9.3 36.7
Geoffrey Osborne 36 34.2 8 48
Ardmore Construction 31 35 12 40
John Graham Construction 37.4 36.8 7 36.6
Buckingham Group 30.4 38.4 2.7 33.6
Mace 34.5 39.9 7 48
ISG Construction 34.7 40.5 4.8 41.9
Bouygues UK 31.6 40.9 11.6 54.5
Willmott Dixon Construction 35.5 43.5 4.7 42.5
John Sisk 37.3 44.5 5 46
Bowmer & Kirkland 37.3 44.6 5 35
Multiplex Europe 43 47.2 5 43.6
Vinci Construction UK 43.6 48.5 7.0 55.1
McLaren 48 51 2.8 43.4
Midas Group 49.2 51.5 1.0 48.6
BAM Construct UK 46.9 59.6 7.4 68.0

The mean hourly rate is the average hourly wage across the entire organisation so the mean gender pay gap is a measure of the difference between women’s mean hourly wages and men’s mean hourly wages.

The median hourly rate is calculated by ranking all employees from the highest paid to the lowest paid, and taking the hourly wage of the person in the middle; so the median gender pay gap is the difference between women’s median hourly wage (the middle paid woman) and men’s median hourly wage (the middle paid man).
Article courtesy of Construction Enquirer 2018.

Highways England commences hunt for principle contractor for its Area 10 highways and motorways upkeep contract.

The 15-year term maintenance contract is expected to be worth up to £326m.

Balfour Beatty’s joint venture with Mott MacDonald has held the region covering Merseyside, Cheshire, Lancashire and Greater Manchester since 2012.

At the end of last year the team secured a £115m Asset Support Contract extension to March 2019 when Highways England will start its new-style contracts.

This will see Highways England take a lead role managing both routine maintenance and the delivery of capital renewal and improvement schemes, while appointing a principal maintenance and response contractor.

Several specialist subcontractor improvement packages, let under a construction works framework worth up to £220m, will also be up grabs in a separate tender race.
Article courtesy of Construction Enquirer 2018.