COVID-19 continues to impact construction projects in the UK and the wider economy. Read on for the latest industry insights.
The new lockdown brings the R number below 1
The rise in COVID-19 infections through September and October triggered a new national lockdown in England on 5th November. From today, 2nd December, the lockdown will be lifted and a new tiered system will replace it. There will be 3 tiers of restrictions, with tougher measures than the previous tiers, in an effort to keep the virus under control. Northern Ireland, meanwhile, remains in a two-week circuit breaker lockdown and each area of Scotland has been placed in one of five tiers. Restrictions in Wales were eased in early November.
The React 1 study by Imperial College London has estimated that the reproduction rate of the virus (R number) in England fell to 0.88 during the lockdown in November. The official R number updated by the government on 27th November is also 0.9-1.0 for the whole of the UK. This is the first time that the R number is below 1.0 since August. This is good news for the UK society and economy. Although the absolute numbers are still high, it means that they are slowly coming down.
COVID-19 continues to impact construction jobs in the UK
Despite the good news in terms of infection figures, COVID-19 continues to impact construction projects and jobs. For example, online jobs directory Search recently admitted a 44% drop in construction jobs posted compared to last year. They have also seen an increase in short-term positions, often lasting no longer than a week. According to Search, this has created a challenge which is pushing many people out of the construction industry.
Construction union Unite is also asking the government to enforce stricter rules to slow down the rising COVID-19 transmissions in the industry. They are especially concerned about building construction, where the use of masks is not mandatory and social distancing cannot be maintained. In most cases, poor ventilation makes it even worse. Jerry Swain, Unite national officer for construction, recently said:
‘While larger sites, particularly where Unite has been actively involved, have been better in ensuring COVID-19 safe working practices are enacted, such measures on smaller sites and in the domestic sector are either weak or non-existent. Since the beginning of the pandemic, Unite has argued that construction employers need to ensure that workers are protected from when they leave home until when they return home at night. The increased level of transmission in the sector demonstrates this is simply not happening.’
Contracts value and new building construction also hit
In terms of contract awards, October figures showed a 9.4% decrease in awarded contract values over the previous month. Compared to the same month last year, that’s a 1.1% decrease. However, conversely, the number of contract awards has actually increased and is seen as a potential positive impact of COVID-19 in the construction sector. This is giving some level of confidence in the industry sector as a whole. The fact that sites have remained open during the second national lockdown also reinforces that level of confidence.
The architectural sector has also been negatively impacted, especially in London. A recent study by Deloitte shows that new office construction in central London has declined by half in six months. This is a direct consequence of the ‘new normal’ being based on remote working. What we are seeing is a shift from new building construction to major refurbishment projects.
COVID-19 impacts construction on the aviation and rail sectors
During the month of November, DfT has revealed a breakdown of the cost of financial measures introduced to keep the rail and aviation sectors working during the pandemic. On the aviation sector, DfT gave over £8.5bn in grants, loans and export guarantees. A DfT spokesperson said the priority has ‘always been to protect the public and manage the spread of Covid-19’. Some airports, like London City Airport, do not expect passenger levels to go back to normal until 2024. On the rail side of things, DfT paid £2.28bn to train operating companies, together with two packages of support to TfL, one for £1.7bn and a previous one for £1.6bn.
On 25th November, the government committed to funding Crossrail to completion. This was a major announcement in the National Infrastructure Strategy to ensure the completion of this £19bn project. The COVID-19 crisis has pushed the opening date of the Elizabeth Line to 2022. But at least now there is confirmation from the government that it will be finished. However, not everything is good news for Crossrail. In fact, the project has recently revealed that construction injuries have increased as focus switched from standard safety protocols to prevent the spread of the virus. Apparently, implementing the COVID-19 measures distracted the project team away from the risks on site.
Positive impacts of COVID-19 on construction industry
Luckily, not everything is bad news. Although there are still many significant disruptions to construction projects, some contractors appear to have overcome the crisis and thrive regardless. Major contractor Morgan Sindall, for example, has announced that their profit will exceed prior predictions. Based on this, they will even resume the payment of dividends. Chief executive John Morgan recently said:
‘Following the disruption earlier in the year, all of the group’s activities are now fully operational again and delivering high levels of productivity.’
It is clear that COVID-19 continues to impact construction projects, and the whole sector needs to stay alert and continue to take action to recover. But we are also seeing how it’s possible to take advantage of every challenge and make it an opportunity.
And if you are struggling to deliver BIM projects because of the pandemic, get in touch with us to discuss how we can help you.