COVID-19 [February] update: its impact on construction projects

COVID-19 [February] update: its impact on construction projects

COVID-19 continues to impact construction projects in the UK and the wider economy. Read on for the latest industry insights.

Nearly a month has gone by since England went into its second nation-wide lockdown. Daily cases have dropped significantly, from a peak of 68,000 on the 8th of January, down to 18,600 on the 1st of February. Last Saturday, a record 598,389 first vaccinations were given to people. As we begin the month of February, almost half of the population aged above 70 have received their first vaccine. The government efforts to roll out the vaccines have brought the total number of people vaccinated to almost 9.3million.

The COVID-19 vaccines are given according to plan

Despite all these efforts, however, the lockdown in England will continue until at least 8th March. It is hoped that schools will be able to reopen by then. The main reason for such a prolonged lockdown is to avoid another wave of cases and deaths. In fact, experts believe that the easing of restrictions should be very slow. Dr Susan Hopkins, Public Health England’s Covid strategy chief said that ending the current lockdown must happen ‘very slowly, very cautiously.’

Mr Hancock, the Secretary of State for Health and Social Care, recently announced that the UK has ordered 40million more doses of the potentially new Valneva’s vaccine, bringing its total order to 100million. If the vaccine gets approval, it will be manufactured in Livingston in Scotland. Mr Hancock also confirmed that the UK has a total of 400million doses of vaccine on order. With a population of 68million people in the UK, it is clear that those vaccines are in excess of what the UK needs. In theory, the government will be sending vaccines to poorer nations. Mr Hancock said:

‘My attitude has always been we protect every UK citizen as fast as we can and at the same time we’re generous around the world.’

House-building construction amongst the most impacted by COVID-19

Whilst the vaccination programme continues in the midst of the lockdown in England, COVID-19 continues to impact construction projects. According to NHBC, housebuilders in the UK registered 23% fewer new homes in 2020 compared to 2019. This represents a drop from 160,319 new homes down to 123,151. Some cities have been more severely hit than others. Manchester, for example, saw a 42% drop. London and Glasgow were the only major cities in the UK to avoid this trend.

Another issue affecting the housing sector is a shortage of materials and tools. The impacts of COVID-19 in construction, together with the challenges imposed by Brexit, are putting many house-builders in difficult situations as they cannot get the necessary equipment. The problem gets exacerbated by a shortage of empty containers for transport, which is pushing the prices up. Timber, for example, has seen an increase in the price by a fifth. And although the sales of construction equipment went down 24.5% in 2020 compared to 2019, there was a 15% increase in December sales compared to the previous year.

House-building is still the biggest and most profitable sector of the construction industry. And coronavirus is making the top house-builders suffer. In fact, many house-builders in the UK have seen their profits impacted by COVID-19. Barratt Developments’ made a turnover of £3.4bn last year, some 27.8% less than the previous year. Pre-tax profit almost halved, down 45.9% to just £491m.

COVID-19 increases its impact on construction workers

Individuals in the construction sector also continue to feel the impact of COVID-19. According to the latest HMRC statistics, the number of furloughed staff is increasing. With a peak of 723,600 people in furlough on 14th April last year, the figure went down to 130,700 at the end of October. But HMRC figures show an increase to 169,700 at the end of November, and 193,400 at the end of December. This number represents 15% of the total construction workforce. The value of furlough claims to the government in December was £349m, up 116% on the claims in November.

Good news on the horizon for construction projects

Not everything has been negatively impacted by COVID-19 in construction though. Some good news for the industry, it was one of the only two sectors to see vacancies higher than a year ago. In the three months to December 2020, there were 2,000 more construction jobs available than the year before. This represents an 8.3% increase over the same period in 2019. Although unemployment is still 44% higher than the previous year, there is hope for the sector, with a 25% increase in construction jobs in the last 3 months of 2020 compared to the previous quarter.

Also, construction output has rebounded for the first time to pre-Covid levels in Great Britain. Construction output in November 2020 was £80m, an increase of 0.6% compared to the output in February 2020 before the pandemic. Month-on-month, there was also an increase of 1.9% in November compared to October.

As most experts say, it seems that the construction industry is one of the most resilient arenas when it comes to recovery from the impact of COVID-19. But of course we still need to push ever forward as an industry to ensure a bright future awaits. If you are struggling to deliver BIM projects, feel free to reach out to us for support!

 

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