Building News is an information portal for all professional building specifiers. Here you can find all of the latest construction news from around the UK and the rest of the world.

Government needs to take note of worsening construction skills shortage now, warn industry experts

The skills shortage in the construction industry has got worse and has now spread beyond bricklayers and carpenters to other key trades, according to recent research by the Federation of Master Builders (FMB).

The FMB’s State of Trade Survey for Q4 2016 shows that:

  • Almost half of construction SMEs are reporting difficulties hiring roofers (46%)
    Shortages of electricians and plasterers are at their highest point in four years
    The SME construction sector has experienced fifteen consecutive quarters of growth.

Brian Berry, Chief Executive of the FMB, said “We’ve been experiencing a severe shortage of bricklayers and carpenters for quite some time – these latest statistics show that skills shortages are now seeping into other key trades such as roofers and plumbers. Indeed, of the 15 key trades and occupations we monitor, 40% show skills shortages at their highest point since we started to feel the effects of the skills crisis in 2013 when the industry bounced back post-downturn. This growing skills deficit is driving up costs for small firms and simultaneously adding to the pressure being felt by soaring material prices linked to the weaker pound.

“The Government needs to be taking note of the worsening construction skills shortage now that we know that the UK will be negotiating a hard Brexit. The Prime Minister must ensure that the immigration system that replaces the free movement of people serves key sectors such as construction and house building. Our sector relies heavily on skilled labour from the EU, with 12% of the British construction workforce being of non-UK origin. As the construction industry represents around 7% of UK GDP, it’s in no one’s interest to pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system.

“On a more positive note, construction SMEs reported steady growth in the final three months of 2016, capping off a generally positive year for the industry. In particular, demand for private refurbishment work was robust throughout 2016 and in terms of private and social house building, builders expect workloads to grow in the first three months of 2017. However, if the Government wants the objectives of its Housing White Paper to be realised, it will need to ensure the construction sector has the skilled workers it needs to build these new homes.”

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Expectations for construction workloads regain lost ground

Expectations across the construction sector have now regained the ground lost post the EU vote, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Market Survey, Q4 2016.

  • National workloads still positive with the private housing displaying strongest momentum
    Road and rail set to be the fastest growing infrastructure sectors over next twelve months
    Expectations for workloads, employment and profit margins improve

An overview

Following a noticeable dip around the time of the EU referendum, expectations for output growth over the year to come strengthened for the second consecutive report. Indeed, the twelve month workloads expectations series improved to post a reading of +57% (following +49% and +23% in Q3 and Q2 respectively).

Alongside this, employment expectations improved for the second straight report, with 41% more respondents anticipating a rise in construction sector employment over the year to come. As such, both employment and workload expectations have now recovered to their pre-referendum levels.
The latest results point to modest growth across the sector in the final quarter of 2016, with 18% more respondents reporting an increase in total workloads. However, while the data is broadly positive, the anecdotal comments left by chartered surveyors do continue to highlight uncertainty surrounding the departure from the EU to be dampening investment and activity.

During Q4, output increased in most sub sectors except public non-housing. Following the pattern of the last three quarters, the strongest quarterly rise in workloads was reported in the private housing sector. 27% more respondents cited an increase in private housing workloads (rather than a decrease). A rise in workloads was also reported in the private commercial and infrastructure sectors.

Meanwhile, both output and input costs rose in Q4 2016 with input prices extending a run of uninterrupted growth stretching back to Q2 2010.

Forthcoming

Over the next twelve months, respondents continue to expect the road and rail sub categories of infrastructure to post the most significant increases in construction output at the national level. Regionally, expectations for growth in railway output lead the way in London, the North West, Yorkshire & Humberside, Wales and the West Midlands. Meanwhile, expectations for growth in road construction activity come out on top in all other areas of the UK.
Skill shortages continue to be a key impediment to growth in the sector, although they have eased in five consecutive reports. Interestingly however, the one area that remains a particular concern is the shortage of quantity surveyors with 66% of respondents highlighting a gap. This is the highest figure since 2008.

Jeremy Blackburn, RICS Head of Policy said “Many firms are currently having to bring construction professionals in from outside the UK. The lack of quantity surveyors consistently apparent in our survey is also underscored by the fact that, at the moment, under the government’s Shortage Occupation List, it is easier to employ a ballet dancer than a quantity surveyor.

“Even if we were to reverse this and also ensure that through Brexit we maintain access to EU workforce, we would still have a domestic shortfall of skills. The Industrial Strategy is a golden opportunity to align education, training and employer work paths – along with modern methods of construction – to ensure we have the skilled workforce to meet our building targets.”

Simon Rubinsohn, RICS Chief Economist, added “The latest results suggest that the construction sector has shrugged off concerns about the effect of Brexit with key workload indicators remaining firm around the country. Indeed, feedback regarding the outlook over the next twelve months is now rosier than it was back in the autumn with more building anticipated as 2017 unfolds.

“That said, there remains some unease about access to skilled labour in the emerging new world and financial constraints still remain a major challenge for many businesses. And significantly, we are being told that a shortage of quantity surveyors is impacting on the development process at the present time.”

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VIDEO: Crossrail’s quarterly update

Crossrail have released the latest video in their “Moving Ahead” series, which is issued four times a year to inform of how much progress has so far been made on what has been described as Europe’s largest construction project.

Construction work on Crossrail began in May 2009. Once completed, the Crossrail route will run over 100km from Reading and Heathrow in the west, through new tunnels under central London to Shenfield and Abbey Wood in the east.

Crossrail is considered to be among the most significant infrastructure projects ever undertaken in the UK. From improving journey times across London, to easing congestion and offering better connections, Crossrail say that their project will change the way people travel around the capital.

The total funding envelope made available to deliver Crossrail was a staggering £14.8bn, however, the new railway is expected support regeneration across the capital and add an estimated £42bn to the economy of the UK.

Watch the latest update below:

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Tougher building regulations required to protect future communities

We must stop building houses that are simply not covered or prepared for future flood events, warns Know Your Flood Risk’s Mary Dhonau OBE.

With the Environment, Food and Rural Affairs Committee’s (Efra) this week criticising Government for “missing opportunities to act on” Efra’s Future Flood Prevention report that was published in November, Mary Dhonau OBE, chief executive of the Know Your Flood Risk campaign has publicly responded to urge Government to “toughen up on building regulations” so that flood resilient measures are automatically included in all new-build properties that are deemed to be within a flood risk zone.

Following Efra’s formal response on what it calls a “disjointed flood management system”, Mary Dhonau said: “I think it is now a matter of urgency that the Government toughens up on its planning and building regulation processes to make sure that any new builds located in ‘at risk’ areas automatically include measures to make the property flood resilient.

My concern is that Flood Regulation does not cover new build properties and therefore we must stop building houses that are simply not covered or prepared for future flood events; it’s not fair on the future generations who will have to deal with the dreadful aftermath that flood waters bring.”

Landmark Information, the data partner for the Know Your Flood Risk campaign, has undertaken some cross-analysis of flood risk data from the Environment Agency (EA), Natural Resources Wales (NRW) and planning application data from Barbour ABI to determine the percentage of planning applications for new build properties (residential and commercial) that are deemed to be within an EA/NRW Flood Zone 3 (assessing sea or river flooding only), by county.

Between September 2015 and September 2016, 9 out of 10 new build applications in the City of Kingston upon Hull were deemed to be within an EA/NRW Flood Zone 3. This is followed by Thurrock in Essex at 48%, Casnewydd-Newport at 37% and North Somerset at 32%.

Adds Mary Dhonau: “Having reviewed the data analysis from Landmark, it is clear that there are hundreds of applications submitted each year that fall in to a designated flood risk zone according to the Environment Agency and Natural Resources Wales’ parameters. These stats don’t even take into account groundwater or surface water risks and so I fear the volume is greater still. I therefore agree with Efra’s call to Government to create far stronger planning rules, and penalties for those that breach them, to ensure future communities are not blighted by today’s failure to act.”

The Know Your Flood Risk Campaign’s mission is to raise awareness of the risk of flooding from all sources. It is a well-regarded online resource for helping people find out the flood risk related to their current or future home and provides access to free-to-download information guides and a smartphone app.

To download a free copy of the Homeowners’ Guide to Flood Resilience or the new supplement for businesses, visit www.knowyourfloodrisk.co.uk. For more information, follow the Know Your Flood Risk campaign on Twitter. For more information regarding Landmark Information Group, visit www.landmark.co.uk.

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Investment demand in UK commercial property continues to rebound post-EU vote

The rebound in investment demand continues post-EU referendum, according to the Q4 RICS UK Commercial Market Survey 2016.

Despite some concern surrounding potential relocation of companies based in the UK, demand from overseas buyers was up notably across all areas of the market in Q4 2016. Demand increased for a second straight quarter with the growth in enquiries gaining momentum, as 21% more respondents saw a rise in demand in Q4 up from 9% more in Q3.

Foreign investment also saw a rebound, with the weaker exchange rate likely an important factor. 20% more respondents saw a rise in demand in foreign investment enquiries up from 7% more seeing a rise in Q3 (this reading has recovered significantly from -27% in Q2 2016).

At the same time, the supply of property for investment purposes fell in both the office and industrial sectors, but was broadly unchanged in the retail segment.

London investment trends

Investment trends in the capital remain mixed. Industrial assets attracted a solid rise in investor interest during Q4 but overall enquiries were flat in the office sector and declined modestly in the retail segment. That said, foreign investment demand did in fact grow strongly across each sector of the capital, with the sharp decline in sterling since June particularly prominent in enticing overseas demand. Nevertheless, having stabilised during Q3, all-sector capital value expectations slipped back into negative territory in London.

Rises predicted in capital values

Back at the national level, near term capital value expectations remained mildly positive across all sectors in Q4, with 14% more respondents projecting values to rise (rather than fall) over the coming quarter. Over the next twelve months, respondents anticipate capital values will increase across the majority of sectors, led by the prime industrial market. In terms of the headline picture, 28% more respondents expect to see a rise rather than fall in capital value over the next 12 months.

Occupier demand

Occupier demand is less buoyant than that from investors, with demand increasing only modestly at the all-sector level. However, this was driven entirely by industrial property with demand flat in both office and retail sectors. The lack of demand prompted landlords to increase the value of incentive packages on offer to prospective tenants in both these sectors. In the office sector, inducements have now risen in each of the last two quarters at the headline level (the first time this has happened since 2013) with 14% more respondents seeing a rise in Q4 2016.

Lack of availability

On the supply side, a lack of availability continues to be a key feature of the industrial occupier market with a net balance of 32% of respondents reporting a further decline in leasable space during Q4. Industrial supply, in net balance terms, has now fallen in eighteen successive quarters. As a consequence, near-term rent expectations in the industrial sector have been pushed higher and are now pointing to strong growth, with 30% more respondents envisaging a rise in industrial rents in the coming three months. In comparison, only very marginal gains are expected across office space and modest declines are now anticipated for retail sector rents.

Simon Rubinsohn, RICS Chief Economist said “The results for the Q4 survey suggest that the commercial property market is continuing to attract investor interest despite ongoing concerns about pricing in the capital and the prospects for the economy more generally. Indeed, the feedback we have received is consistent with a renewed appetite from overseas buyers for UK assets.

“Meanwhile the results for the occupier market highlight the resilience of the economy in the wake of the vote to leave the EU, but also clearly demonstrate the demand for large warehouses to support the development of the distribution industry as consumers increasing go online to make their purchases.”

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Trump expected to give the order to begin constructing wall today

The new President of the United States Donald Trump is expected to give the order to begin works on building his controversial wall between the US and Mexico today. Buildingspecifier investigates:

Mr Trump is visiting the Department of Homeland Security today, purportedly to order federal funds to be allocated towards the building of the giant wall in question. Yesterday he tweeted:

How big will it be?

Reports of how big the wall will actually be vary, but the length of the border itself is around 1,900 miles in total. Trump himself has said that the wall will cover roughly 1,000 miles, with natural obstacles protecting the remainder of the distance.

In comparison, the Berlin Wall was 96 miles long and the Great Wall of China is 13,000 miles long.

How much will it cost?

There is already some fencing in place between the borders, which cost approximately $2.4 billion to build. Reoports estimate that to building the rest of it would cost between $15-$25bn. THEN there’s maintenance, which is expected to run up to a whopping $700m per annum, according to deputy director of the US Immigration Policy Program at the nonpartisan Migration Policy Institute, Marc Rosenblum.

After offending their neighboring country with racial slurs such as “When Mexico sends its people, they’re not sending their best… They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people”, Donald Trump added further salt to the wound by insisting that Mexico would foot the bill for the construction of his ludicrous wall.

Mexico have repeatedly insisted that they will do no such thing, forcing the President to find alternative methods of payment. Earlier this month, he announced that the wall would instead be paid for initially with a congressionally approved spending bill, which would eventually be reimbursed by Mexico. He has yet to explain how he intends to make that happen.

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PM unveils controversial plans to back nuclear power

Prime Minister Theresa May will use her first regional Cabinet meeting this morning (23 January) to launch proposals for a modern Industrial Strategy to build on Britain’s strengths and tackle its underlying weaknesses to secure a future as a competitive, global nation.

As part of this strategy, May intends to invest time and money on improving UK competitiveness and skills in the nuclear power industry.

Prime Minister Theresa May said: “The modern Industrial Strategy will back Britain for the long-term: creating the conditions where successful businesses can emerge and grow, and backing them to invest in the long-term future of our country.”

“It will be underpinned by a new approach to government, not just stepping back but stepping up to a new, active role that backs business and ensures more people in all corners of the country share in the benefits of its success.”

What, no renewables?

This news will undoubtedly come as a disappointment to the many Brits opposed to nuclear power within the UK today. A string of costly issues regarding the delivery of Hinkley Point C and overwhelming national support for renewables bring the very need for nuclear power in Britain into repute.

Figures released last year confirmed that 25% of the UK’s electricity was generated from renewables in 2015 – an increase of 29% on 2014. Nearly half of this (48%) came from wind power alone. 1 in 8 units of electricity generated in the UK came from wind.

In comparison, coal generated 22% of the country’s electricity – down from 30% in 2014.

In a survey by Harris Interactive of more than 2000 UK respondents found that only ‘one in four people (24%) considered nuclear power to offer the greatest potential.’ This was further proved when a recent report from the International Energy Agency (IEA) and Nuclear Energy Agency (NEA) http://www.iea.org/newsroom/news/2015/august/joint-iea-nea-report-details-plunge-in-costs-of-producing-electricity-from-renew.html discovered that new nuclear power in the UK would be more expensive than in any other country in the world.

Interestingly, the Government’s own poll on the public’s views on energy, the ‘Public Attitudes Tracking Survey,’ showed that 76% of people support renewable energy and that 70% of people also said renewable projects provide economic benefits to the UK. Doesn’t it seems strange then to announce further backing of a controversial industry when public opinion and solid statistics are in fact tilted more in favour of renewables?

Investing in nuclear power is a costly and long term action. All eyes will be on Theresa May and her cabinet as she makes that decision – let’s hope she’s thought it through!

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VIDEO: Construction giants – amazing bridge building machine in action

This amazing video shows a giant machine called the SLJ900/32 building a bridge in China. The SLJ900/32 is built by the Beijing Wowjoint Machinery Company and is an impressive 91m long, 7m wide, 9m tall, and weights a staggering 580 tons. You can sense its size in the video below, when you see workers scale down it to begin work.

It’s lays new bridges one section at a time, progressing gradually across support girders. The behemoth of a machine is a perfect example of how China’s economy and construction industry is booming and requires giant feats of engineering to keep up with the growth.

https://www.youtube.com/watch?v=k0X9cECLsAM&t=78s

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Retail construction sees a decline in value but contract numbers hold steady

Even though the internet continues to eat into the share of retail spending (15% market share in October 2016), this has not detracted the industry from building in 2016, albeit showing a widespread trend towards smaller project contracts.

According to the ‘Does retail offer real opportunity?’ report from construction industry analysts Barbour ABI, the key change in work coming from the sector is that construction projects are smaller, fitting in with the emphasis that is being placed, especially by larger retailers, towards an nincrease in smaller, more local retail units.

Retail construction accounts for £4.7 billion pounds a year, down from the £8 billion pre-recession peak. The report also describes how physical stores are still pivotal to the strategies of most retailers, as major opportunities look to be available over the next few years, particularly for architects who can rethink retail space and develop nexus between the physical and digital shopping experience.

Across 2016, the twenty largest retail projects accounted for a value of more than £570 million, with £421 million coming from the South of England which is 74 per cent of the total. However, interestingly it was the North West of England that led all regions with the highest overall number of contracts in the retail sector over the 12 months to September (see fig 1.1).

The two largest projects by value in retail construction last year were the Charter Place shopping Arcade in Watford valued at £178 million and the £75 million O2 retail village outlet in London.

Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said “Ultimately today’s retailer is looking to improve the experience of their customers. That has been reflected in how they design and use the buildings they occupy, which has ultimately resulted in smaller, more frequent projects, making up for the declining overall value of retail work over the past five years for the construction sector.”

“The value of work may have shrunk, but the number of projects being let by retail clients is holding steady, providing similar numbers of opportunities to impress clients.”

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70% of builders report material price hikes, report FMB

70% of UK builders have seen an increase in material prices due to the depreciation of the pound, new research from the Federation of Master Builders (FMB) has revealed.

Sarah McMonagle, Director of External Affairs at the FMB, said “thousands of smaller building firms are grappling with the rising cost of materials caused by the depreciation of sterling since the EU referendum. More than 70% of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10 to 15% expected as the new year unfolds. Anecdotally, construction SMEs are already reporting an increase of 22% in Spanish slate and 20% increase in timber. A quarter of all materials used by the UK construction industry are imported – this is significant and underlines the vulnerability of the industry to sudden fluctuations in the strength of our currency. The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders.”

“What this means is that home owners could start to see the cost of their building projects increase. It also means that consumer choice may be reduced as some home owners face having to compromise on aspects of their project due to the fact that certain materials have become too expensive. There is also an added headache for the builder, as material price rises can come at short notice and if they are mid-project, the original costing is no longer accurate. This makes pricing jobs problematic and leads to construction SMEs having to cover themselves against sudden price swings. Some builders are attempting to mitigate this by introducing larger contingency funds when pricing for a job, or by stipulating in the contract that the overall contract price will change in the case of material price hikes, making client budgeting more tricky.”

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