In today’s news, we will look into the fact that Ferrovial Construction UK suffers a loss of thirty million pounds. Meanwhile, there are five ways that the UK can stop the construction slump. On the other hand, construction work in the UK reaches an all-time high. Moreover, the CIOB and MSPs have a conversation on improving Scotland’s draughty houses.

Ferrovial UK Loses £30m.

Original Source: Ferrovial Construction UK plunges to £30m loss

Ferrovial Construction UK lost £30m last year after hefty provisions for expected losses on the £2bn Silvertown Tunnel project in East London.

The project had £54m in provisions for the year ending 31 December 2022. £19.6m covers faults and warranties, while £31.3m covers expected losses.

Ferrovial said material and labour market inflation against a fixed price contract caused the expected losses.

Revenue climbed 8% to £493m. Ferrovial’s like-for-like net cash balance rose 9.2% to £213m despite operating losses.

Karl Goose, UK & Ireland Managing Director, said Ferrovial Construction continues its strategic objective to grow sustainably in the UK and enhance profitability.

Ferrovial’s UK business portfolio achieved £22m in underlying EBIT profit.

World events have an enormous impact on our industry in 2022.

As we face these circumstances with the rest of our business, our goal has been financial certainty and resilience.

Goose stated, “We have therefore taken the correct and prudent decision to make a provision for these factors.

Ferrovial concluded the year with a £795m (2021: £1bn) order book.

To maintain order book growth, it is targeting more and smaller projects.

Five UK Construction Slowdown Solutions

Original Source: Five ways UK can reverse construction slowdown

A new survey questioned sector executives how to enhance execution of UK infrastructure projects like HS2. While firms can improve collaboration and diversity, the UK Government must remove critical hurdles to development in the coming months, respondents said.

UK infrastructure project leaders faced their worst era ever. Three years after showing astonishing adaptability during a global pandemic lockdown, they face complicated issues on all fronts. While fighting in Ukraine disrupts supply chains and raises energy prices, political instability at home has left developers uncertain about regulatory reforms. New research from consulting firm Ankura shows that major infrastructure projects are taking longer to start construction.

The Secretary of State grants Development authorisation Orders (DCOs) for Nationally Significant Infrastructure Projects (NSIPs), combining planning authority with additional consents such listed building authorisation. DCO rulings were mostly on time or early from 2012 to 2016, resulting in a 509-day total delay at the end of 2016. Over the next five years, this increased to almost 4,000 days, with the HM Treasury admitting that “the system has slowed in recent years, with the timespan for granting DCOs increasing by 65% between 2012 and 2021.�

Five UK construction slowdown solutions:

UK project leaders and regulators want to restart significant construction projects. The Treasury asked the National Infrastructure Commission for advice. Ankura also asked construction leaders for their suggestions and came up with five crucial guidelines.

Collaboration

Ankura claims UK infrastructure is “known for world-leading innovation that solves the most complex of problems,” but the researchers discover it is often “confined within the boundaries of individual projects”. Breaking down “innovation silos” to share information and skills across industries would help solve the industry’s biggest problems, from net zero to digitalization and talent gaps.

Knowledge sharing occurs, but executives told Ankura that more innovation across projects and industries may better utilise UK infrastructure’s aggregate investing potential. After decades of dog-eat-dog competition and supply chain fragmentation, pooling resources—talent and capital—becomes logical because all clients face the same fundamental challenges. Despite this, learning to deliver projects without starting from scratch benefits everyone.

Choice making

This could help with the increasingly challenging planning exam preparation. Planning assessments are costing more due to longer timeframes. The more change that occurs, the greater the support teams and the longer they need to be involved. Collaboration can open up relevant knowhow faster and cheaper at a time when employing new people is harder due to historically high employment.

However, given the current economic climate, a speedier and cheaper planning process might provide earlier assurance. Industry leaders told Ankura that the regulatory and political environment is “not only pausing the next generation of major projectsâ€� and “seriously damaging the UK’s ability to deliver world-leading projects by driving down confidence [and] reasons to investâ€�. If regulators don’t act, this might lead to a skills deficit across the sector, with investors, employers, and trained workers considering well-funded giga-projects like NEOM, however ludicrous, a “greater allure” than “a UK redevelopment that may or may not happen”.

Diversity

UK construction already faces a skills shortage. Employers are having trouble filling positions with their preferred candidates due to increased employment and high employee turnover from the “Great Resignation” of 2021. Ankura suggests encouraging “all minds at the table” to overcome this.

Construction is well behind other industries in gender balance, despite sluggish progress. ONS statistics shows that 15% of the UK’s construction workforce is female, and GBM, the construction union, estimates that it will take approximately 200 years to achieve gender equality at this rate. However, accelerating those reforms and better utilising marginalised labour could help address the sector’s skills gap. Making the industry more appealing for progression appears necessary. Construction managers and directors are only 2.1% female.

Public risk affinity

Innovation is best before planning consent, but ventures lack money. One of Ankura’s 2021 participants said, “There are no rewards for getting it right, but plenty of criticism for getting it wrong”. Two years later, respondents told Ankura that public investment for technologies that could assist the building sector address crucial issues like climate change is scarce. The UK Government’s infrastructure pipeline is non-binding, making it hard to attract private sector investors.

To change this, leaders urged Ankura that the UK Government must take measured risks to advance. This requires state-level institutional transformation to provide a more assured framework to reassure private sector investors.

Tech gap

Finally, despite widespread discussion of the need to digitalize the sector, progress is modest. Ankura believes that a change in transparency attitudes “could unlock significant improvements in performance,� allowing the UK construction sector to take use of new technology.

Participants told Ankura that the sector generally has an anti-transparency information orientation, citing the history of business competition. They noted supply chain data sharing reluctance due to concerns about intellectual property rights and other problems. Data openness across infrastructure projects could reveal the merits and downsides of present operational performance and allow responsive improvement and optimization as projects are delivered.

UK Construction Peaks

Original Source: UK construction work hits record high

UK construction work grew 0.2% in March, reaching its highest level in over a decade.

The ONS reports that the UK construction industry established a record in that month. New build work rose 0.7% in March, offsetting 0.6% declines in maintenance and repair activity.

Construction output rose 2.6% in February, followed by a smaller rise in March. These two factors helped the sector break its record. The ONS says it’s the sector’s sharpest rise since data collection began 13 years ago.

Beard Construction’s Fraser Johns told Mortgage Strategy that sector confidence was low in January, with maintenance and repairs outpacing new builds.

He added:

“However, the March data shows the tide beginning to turn with an increase in new work offsetting a fall in repair and maintenance, and another monthly construction output increase.�

He judged that industry prospects were improving.

This will encourage CeMAP mortgage advisors who recognize more homes are needed to meet demand.

MSPs and CIOB Debate Fixing Scotland’s Draughty Homes

Original Source: CIOB and MSPs discuss retrofitting Scotland’s draughty homes

Last week at Holyrood, construction professionals and MSPs discussed the urgent need for coordinated retrofitting measures for Scotland’s draughty homes.

A CIOB retrofit roundtable in Holyrood brought together 30 people, including Grand Designs TV presenter and architect Natasha Huq, to enhance energy efficiency in homes and buildings nationwide.

According to built environment organisation BRE, two in five occupied Scottish homes fail quality criteria, with energy efficiency failing the most.

The 2019 Scottish Housing Condition Survey found that 52% of dwellings are not weathertight, rising to 71% for pre-1919 properties.

MSPs and industry agreed weathertight buildings are the first step to energy efficiency. Critical element degradation requires a coordinated approach.

“It was encouraging to have cross-party support from MSPs along with representatives from the construction sector at our roundtable to discuss the important role retrofitting will play in cutting energy bills and improving the quality and sustainability of the built environment,” said CIOB Scotland policy and public affairs officer Jocelyne Fleming.

“Scotland’s housing stock needs urgent repair and energy efficiency improvements. Government and business must work together to meet Scotland’s ambitious housing and decarbonisation goals.

Skills gap reduction

Retrofitting skills programs with schools promoted construction careers to students during the CIOB roundtable.

Scottish construction employs 231,000 people. Expected demand, including retrofitting, requires 3,910 more per year.

Natasha Huq, associate at Groves Raines Architects Studios, said: “A coordinated plan on retrofitting, which includes how to recruit, train, and retain skilled workers and incentivize works to existing buildings, is vital to make Scotland’s housing stock more energy efficient.

“As an architect, I want to stress to the government the importance of detail in any proposals, including education on how retrofitting should be applied to different types and ages of property, as a one-size-fits-all approach won’t be suitable, especially in older buildings.�

Summary of today’s construction news

Overall, after making large provisions for potential losses on the £2 billion Silvertown Tunnel project in East London, Ferrovial Construction UK posted a loss of £30 million last year.

Against a fixed price contract, Ferrovial blames losses on material and labour market inflation. Meanwhile, construction resumption is a priority for UK project managers and authorities. In order to get some guidance, the Treasury contacted the National Infrastructure Commission. Additionally, Ankura sought advice from industry professionals and formulated five fundamental principles. Furthermore, in February, construction output grew by 2.6%, and in March, it grew by a more modest 0.8%. As a result of these two reasons, the industry set a new benchmark. It’s the sector’s highest growth rate since the ONS started keeping track 13 years ago. Moreover, building officials and Scottish parliamentarians met at Holyrood last week to address the pressing need for unified renovation of the country’s draughty homes. Thirty people, including Grand Designs TV host and architect Natasha Huq, gathered at a CIOB retrofit roundtable in Holyrood to discuss ways to improve energy efficiency in buildings throughout the country.