banner ad
blog post banner

Increases in contract awards indicates on-track recovery

December 2021
  • Overall value of project-starts fell sharply during the three months to November
  • Major contract awards were 75% higher on a year ago
  • The value of planning consents rose by 16% against the preceding three months to November, but fell 7% on 2020 figures
  • Residential starts fell by 17% against the preceding three months to November, 35% lower than the same period a year ago
  • Health projects performed very poorly, declining 40% against the previous year and 20% against the preceding three months to November
  • Starts boosted in Northern Ireland, rising 10%, placing start-levels region 20% higher than in 2020.

Today, Glenigan, the construction industry’s leading insight and intelligence experts, release the December edition of its Construction Review.

The significant takeaway from December’s figures is that, whilst project starts are down by a fifth than a year ago (21%), a massive 46% increase in main contract awards indicates an uplift in activity in 2022.

This report covers all ‘underlying projects’ (with a total value of £100 million or less), with all figures seasonally adjusted. Across the UK and Northern Ireland. Where ‘major projects’ (over £100 million) are included, this is made clear.

Fundamentally, the Glenigan Review provides a detailed, comprehensive analysis of construction data, giving built environment and property professionals a unique insight into sector results, from the three months to the end of November.

Pipeline Promise

A steep decline in major projects (-75%) and a softening of underlying ones (-22%) saw the overall value of projects starting on site fall sharply during the three months to November.

This sits in line with official ONS data which registered a 1.8% volume terms fall in construction output in October 2021, the largest monthly decline since April 2020. This will have had a knock-on effect in November, and likely into December.

Overall, the value of projects starting on-site averaged £4,727 per month, a 43% drop against the preceding three months and 21% lower than a year ago.

Major contracts on the rise

However, a progressive rise in main contract awards points to sunnier uplands and a potential new strengthening in starts over the coming months, as current supply chain disruptions gradually ease.

Delving deeper into the statistics, the value of main contract awards remained strong, up by nearly a half on a year ago (46%). Major contract awards were 75% higher on a year ago, despite slipping a quarter against the previous three to November. For underlying projects, awards have been growing steadily, edging 2% higher against the preceding three months to stand 38% up on a year ago.

The value of planning consents also rose by 10% against the preceding three months, but fell 7% on a year ago. Further these were 14% higher than pre-COVID levels. Both major and underlying consents were up 19% and 13% respectively during the previous three months.

Sector Focus

Underlying residential starts fell by 17% against the preceding three months to November, 35% lower than the same period a year ago.

Whilst social housing starts slipped 7%, almost 30% lower than a year ago, private housing performed particularly poorly, declining 21%, to stand 7% lower than a year ago.

Non-residential starts painted a similar picture, registering a 10% dip against the preceding three months, but were, encouragingly, up a modest 1% on 2020.

Once again, industrial project starts buck the trend, increasing 11%, to stand 22% higher than a year ago.

At the other end of the spectrum, health projects performed very poorly, with the sharpest decline against the previous year (-40%) and a 20% fall against the preceding three months.

Office project starts fell 20% against the preceding three months, but rose 14% on a year ago. Similarly, although hotel and leisure starts fell 10%, they increased by a quarter year-on-year.

Civils, infrastructure and utilities starts continued to decline, in line with previous iterations of this Review, falling 17%, 4% and 33% respectively against the preceding three months. Particularly, infrastructure project starts were down a massive 36% on a year ago.

Regional Performance

Starts in most regions continued to decline during the three months to November, however there were some notable exceptions.

The East Midlands performed well, with starts up 7%, a 3% increase on a year ago. Starts also boosted in Northern Ireland, rising 10%, placing start-levels region 20% higher than in 2020.

London saw modest growth (2%), but was still 8% lower than start-figures a year ago. Again, starts in the North East were up 4% on 2020, but fell 19% against the preceding three months.

Scotland saw the worst decline, with the value of project starts falling 48% against the preceding three months, and by 58% on a year earlier. This pattern of year-on-year decline was echoed in Wales (-51%), East of England (-25%), North West (-22%), South East (-24%) and West Midlands (-26%).

Commenting on the findings, Glenigan’s economic director, Allan Wilen, says, “Whilst, right now, it might seem we are in perpetual decline, with average project starts continuing to decrease across the UK, I urge readers to appreciate the wider context. Supply chain issues continue to bite and the winter months usually bring delays, weather-caused or otherwise, to work on-site, the new Omicron strain has only exacerbated the situation. Looking forward, the encouraging contract awards and planning approvals figures highlight recovery is on the horizon with a stable pipeline of projects anticipated in 2022 and beyond.”

British Ceramic Tile gets obsessive in its national brand campaign

British Ceramic Tile has embarked on its national brand campaign, sharing its obsession for creating amazing spaces with consumers.  Brave,...

Continue Reading

London Build 2017 to take place 25th and 26th October

London Build 2017 will take place on 25th and 26th October at Olympia, London. London Build, now in its third...

Continue Reading

System supplies automation for American Wonder Porcelain plant

American Wonder Porcelain, the US division of the Chinese Marco Polo Group is investing in System automation for its new...

Continue Reading