Member Article

Sharp increase in infrastructure contract values

According to the latest Economic & Construction Market Review from Cheshire-based Barbour ABI July was a busy month in the infrastructure sector with the value of contracts awarded reaching £2 billion, based on a three month rolling average.

That’s almost 90 per cent higher than July 2014 and the largest total for more than 18 months.

The two largest infrastructure contracts awarded in July were; a £250 million extension to the Burbo Bank offshore wind farm and a Beddington based ‘energy from waste’ facility worth £200 million. Not surprisingly both contracts are renewable energy projects, which have been performing strongly in recent months.

Overall for construction in July, infrastructure had the highest proportion of contracts awarded by value with 27 per cent of the total. Even the residential sector, a linchpin of construction over the last few years, was second to infrastructure with 26 per cent of total contract value.

The North West that dominated infrastructure for the month with 32 per cent of all contract values and an increase of almost 25 per cent in activity compared with July 2014. This was helped significantly by the Burbo Bank project and the £130 million M6 motorway junction 16-19 development.

Michael Dall, lead economist at Barbour ABI, said: “Over the last five months, continued spending on road projects and the growing amount of renewable energy contracts has propelled infrastructure to become the top performing sector in construction for July.

“It is evidence that the projects proposed by the Government are starting to have an impact on the construction industry, though it is important that these move from contractor appointed to spades in the ground for the full effect to be realised.”

“However, construction is still lagging behind its pre-recession peak by 3.2 per cent, which compared to service sector growth of 9.2 per cent, exemplifies the scale and challenge of rebalancing the economy. The commissioning of the large scale infrastructure projects that we have seen in July is encouraging but this momentum must continue to ensure growth is sustained.”

This was posted in Bdaily's Members' News section by Simon Malia .