| KN45005 |
| KEY NOTE Market Report : Building Contracting : January 2005 |
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This report covers: Building Contracting
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| New Construction Work |
| Repair, Maintenance and Improvement |
| Public Sector |
| Private Sector |
| Public Private Partnerships |
| Definitions of Construction Processes |
| General Construction and Demolition Work |
| Construction and Repair of Buildings |
| Civil Engineering |
| Installation of Fixtures and Fittings |
| Building Completion Work |
| MARKET TRENDS |
| Rising Prices |
| Federation of Master Builders — Quarterly Survey |
| Performance of Different Construction Sectors |
| Barker Review of Housing Supply |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Household Disposable Income |
| Table 3: Household Disposable Income per Capita (£), 1999-2003 |
| Inflation |
| Table 4: UK Rate of Inflation (%), 1999-2003 |
| Unemployment |
| Table 5: Actual Number of Unemployed Persons (million), 1999-2003 |
| MARKET POSITION |
| The UK |
| Table 6: Construction Output in Great Britain at Current and Constant 2000 Prices and UK Gross Domestic Product at Current Prices (£m and %), 2000-2004 |
| Table 7: Non-Manufacturing Business Investment by Industry at Current Prices (£m), 2000-2004 |
| Overseas |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 8: Output of the Construction Industry in Great Britain by Value at Current Prices (£m), 2000-2004 |
| Table 9: Output of the Construction Industry in Great Britain at Constant 2000 Prices, by Value (£m), 2000-2004 |
| by MARKET SECTORS |
| Overview of Key Construction Sectors |
| Table 10: Output of the Construction Industry in Great Britain by Main Sector by Value at Current Prices (£m), 2000-2004 |
| Table 11: Output of the Construction Industry in Great Britain by Main Sector by Value at Constant 2000 Prices, (£m), 2000-2004 |
| Table 12: Contractors Output in Great Britain by Sector by Value at Current Prices (£m), 1999-2003 |
| The Housing Sector |
| Housing Starts and Completion |
| Table 13: Number of Housing Starts in Great Britain by Tenure (thousands of dwellings), 1999/2000-2003/2004 |
| Table 14: Number of Housing Completions in Great Britain by Tenure (thousands of dwellings), 1999/2000-2003/2004 |
| The Infrastructure Sector |
| Table 15: Value of Contractors Output within the Infrastructure Sector (Public and Private) in Great Britain by Value at Current Prices (£m), 1999-2004 |
| The Industrial Sector |
| Table 16: Value of Contractors Output within the Industrial Sector (Public and Private) in Great Britain by Value at Current Prices (£m), 2000-2004 |
| Private Commercial and Public Non-Housing |
| Table 17: Contractors Output within Private Commercial/Public Non-Housing Sectors in Great Britain by Value at Current Prices (£m), 2000-2004 |
| NEW WORK ORDERS BY SECTOR |
| Table 18: New Orders Obtained by Contractors in Great Britain by Value by Type of Work at Current Prices (£m), 2000-2004 |
| Table 19: New Orders Obtained by Contractors in Great Britain by Type of Work by Value at Constant 2000 Prices (£m), 2000-2004 |
| OVERSEAS TRADE |
| Table 20: British Construction Work Overseas by Value at Current Prices (£m),1992 and 2002 |
| 3. Industry Background |
| Recent History |
| Number of companies |
| Total Number of Construction Enterprises |
| Table 21: Number of UK VAT-Based Enterprises Engaged in the Construction Industry (Number and %), 1999-2003 |
| Ownership of Construction Firms |
| Table 22: Number of UK VAT-Based Enterprises Engaged in the Construction Industry by Type (number and %), 2000 and 2003 |
| Turnover of Construction Firms |
| Table 23: Number of UK VAT-Based Enterprises Engaged in the Construction Industry by Sector by Turnover Sizeband (£000), 2003 |
| EMPLOYMENT |
| Within Construction Firms |
| Table 24: Construction Industry Employees and Total Employment in Great Britain (000), 2003 and 2004 |
| Within Private Contractor Firms |
| Table 25: Total Employment by Size of Private Contractors in Great Britain (000), 1999-2003 |
| Remuneration within the Construction Industry |
| Private Contractors |
| Table 26: Size Analysis of Private Contractors in Great Britain by Employment Sizeband (Number of Employees), 1999-2003 |
| Private Contractors by Trade |
| Table 27: Employment of Private Contractors According to Trade of Firm by Number of Firms, 1999-2003 |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| Geographical Distribution of Private Contractors |
| Table 28: Geographical Distribution of Private-Sector Contracting Firms in Great Britain by Region of Registration (number and %), 1999-2003 |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| KEY TRADE ASSOCIATIONS |
| The Building Research Establishment |
| The Building Services Research and Information Association |
| The Chartered Institute of Building |
| Confederation of International Contractors Associations |
| Construction Confederation |
| The Construction Industry Council |
| The Construction Industry Training Board |
| Euroconstruct |
| European Construction Industry Federation |
| The Federation of Master Builders |
| The Institution of Civil Engineers |
| The National Federation of Builders |
| The Construction Products Association |
| Other Key Organisations |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Table 29: The Private Commercial Sector by Value of New Work (£m), Total Year to Date Ending August 2004 |
| Table 30: The Other Public Non-Housing Sector by Value of New Work (£m), Total Year to Date Ending August 2004 |
| Table 31: Top Ten New Work Winners by Sector by Value of Award (£m), August 2004 |
| Leading Players by Turnover |
| Table 32: Leading Players by Turnover (£000, % and £), 2003/2004 |
| Amec PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Balfour Beatty PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Mowlem PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Carillion PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Kier Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Laing O'Rourke PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Interserve PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Skanska UK PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Morgan Sindall PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Sir Robert McAlpine Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Bovis Lend Lease Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Bowmer and Kirkland Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| HBG Construction Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Barr Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Other Companies |
| MJ Gleeson Group PLC |
| Housebuilders |
| OUTSIDE SUPPLIERS |
| Table 33: Leading Material Suppliers in the Construction Industry by Turnover (£m), 2003/2004 |
| Rising Fuel Prices |
| MARKETING ACTIVITY |
| Table 34: Main Media Advertising Expenditure by Housebuilders (£000), Year Ending June 2004 |
| Exhibitions |
| UK |
| US |
| Germany |
| France |
| Spain |
| Italy |
| China |
| Asia |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| Customer PROFILE |
| The Principal of Partnering |
| NHS ProCure21 |
| The Purchasing Process |
| Constructionline |
| The Top 20 Clients by Spending Power |
| Table 35: Rolling Top 20 Clients by Value (number and £m), October 2003-September 2004 |
| 7. Current Issues |
| INDUSTRY ISSUES |
| Government-Led Reviews and Initiatives |
| The Barker Review |
| Booming Construction Market |
| Ensuring Skilled Labour |
| Quality Mark Scheme |
| Key Performance Indicators |
| Table 36: Key Performance Indicators for the Construction Industry, 2003 and 2004 |
| National Construction Week |
| Health and Safety |
| DTI Construction Innovation and Research Programme |
| The IT Construction Forum |
| Prefabrication |
| Training Levy |
| Changes to the Construction Act |
| The Sustainability Forum |
| SECTOR ACTIVITY |
| Health Sector |
| The Gaming Bill |
| Jarvis |
| Thames Gateway |
| Kings Cross Station |
| London's Crossrail Link |
| Fusion 21 |
| Decent Homes Initiatives and Social Housing Upgrades |
| Arms Length Management Organisations |
| Review of the 10-Year Transport Plan |
| Water Sector: The Asset Management Planning — Round Four (AMP4) |
| LEGISLATIVE CHANGES |
| Building Regulations |
| Environmental Legislation |
| The Landfill Regulations |
| The Waste Electrical and Electronic Equipment Directive (2002/96/EC) |
| Aggregates Levy |
| 8. The Global Market |
| Europe |
| Strong Performance Across European Construction Markets |
| Leading European Companies Increase Overall Turnover |
| Table 37: Europe's Largest Contractors by Turnover (em), 2003 |
| An Increase in the Number of European States Brings Challenges |
| Overseas Opportunities for British Contractors |
| Asia |
| Strong Growth in the Chinese Construction Market |
| Rising Prices in World Steel Market |
| Leading Asian Companies Active in International Markets |
| The us |
| Leading US Companies |
| 9. Forecasts |
| INTRODUCTION |
| The Economy |
| FORECASTS 2005 to 2009 |
| Table 38: Forecast New Work Output in the Construction Industry in Great Britain by Volume at Constant 2000 Prices (£m), 2005-2009 |
| Table 39: Forecast Repair, Maintenance and Improvement Output of the Construction Industry in Great Britain by Value at Constant 2000 Prices (£m), 2005-2009 |
| FUTURE TRENDS |
| Technological Developments |
| Further Consolidation |
| Overseas Work |
| People Issues |
| Environmental Issues |
| 10. Company Profiles |
| Amec PLC |
| Balfour Beatty PLC |
| Bovis Lend Lease Ltd |
| Bowmer And Kirkland Ltd |
| Carillion PLC |
| Hbg Construction Ltd |
| Interserve PLC |
| Kier Group PLC |
| laing o'rourke PLC |
| Morgan Sindall PLC |
| Mowlem PLC |
| Sir Robert Mcalpine LTD |
| Skanska Uk PLC |
| 11. Further Sources |
| Associations |
| Publications |
| General Sources |
| Government Publications |
| Bonnier Information Sources |
| Building contracting is defined in this report as construction processes that include the erection of new, or improvement and repair of existing, residential and non-residential buildings. It can incorporate a variety of activities, such as design and planning, project management, site preparation, procurement of materials and erection of structures through to the final fitting out of the building. Some of the larger contractors now classify themselves as operating in the services sector, since they also take responsibility for the long-term management of the building, often raising the finance. |
| Building contracting operates within the context of the construction market as a whole. Output of the construction industry in Great Britain is estimated by Key Note to have reached £101.98bn in 2004 at current prices (£80.38bn at constant prices, according to forecasts from the Construction Products Association [CPA], reflecting very buoyant conditions and strong growth. This market is broken down into new work, and repair, maintenance and improvement (RMI). Further segmentation of the construction market shows that within new work, private commercial and private housing are the largest areas. In the RMI sector, however, private housing is by far the most substantial single area. |
| Analysis of the size of private building contractors shows that smaller contractors are in the majority. There have been drives to improve the image of the industry in the general builder sector and, at the top end, a focus on benchmarking through key performance indicators (KPIs). A number of government-led reviews has spurred on a desire to improve quality and efficiency and to stimulate a client focus, while engendering a spirit of partnering and collaboration. One ongoing problem within the industry, however, remains the shortage of skilled labour, which if not resolved satisfactorily will hinder future growth. |
| The British contracting market is subject to global economic conditions. For example, strong demand within the Chinese construction market has created an alternative outlet for material suppliers, such as the steel industry, which can impact on the cost of steel and therefore buildings in the UK. In a European context, UK contractors are dwarfed by French, Swedish and German contractors, although Amec was identified as the seventh-largest contractor in Europe in 2003 in terms of turnover. Many of these contractors have UK divisions and compete internationally, as do US contractors such as Bechtel and Fluor. Similarly, there are opportunities for British contractors to tender for overseas contracts, including European infrastructure projects and, in the case of Amec, gaining reconstruction work in Iraq. |
| Using the CPA forecasts to 2007, Key Note predicts that output of the UK construction market will grow by 2009 at constant prices. The key drivers of growth will be public sector/private finance initiative (PFI) education and health projects, as well as social housing. Throughout this period, environmental legislation will impact on material usage and waste reduction issues within the industry, with a view to achieving more sustainable construction. |
Text © 2005Key Note
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Last updated by Amanda Porteous 2005
