COVID-19 continues to impact construction projects in the UK and the wider economy. Read on for the latest industry insights.
With over 2.6million cases and 75,000 deaths due to COVID-19, the UK is currently facing a challenging situation. Whilst daily cases back in the first wave of April were around 5,000, the new year is seeing figures above 57,000 cases per day. With three-quarters of England’s population starting 2021 in tier 4 – the toughest level – it became evident that more rigorous measures were required.
On Monday, 4th January 2021, Boris Johnson announced a national lockdown in England with immediate effect. Under the new lockdown, people can only leave home for shopping basic necessities, going to work or volunteer, exercising, seeking medical assistance or attending education (for those eligible). Colleges, primary and secondary schools will only remain open for vulnerable children and the children of critical workers.
The Prime Minister had also recently said that the faster-spreading variant of the virus in the South East will require ‘extra-special vigilance.’ The latest R number for the UK is estimated at 1.1-1.3. Moreover, a recent study on the new variant of the virus has concluded that it increases the R number by between 0.4 and 0.7.
NHS starts to roll out Oxford vaccines
On the positive side, more than one million people have already been vaccinated with the Pfizer/BioNTech vaccine over the last month. On 4th January, the NHS rolled out the first doses of the Oxford University/AstraZeneca coronavirus vaccine. The government has secured over 100 million doses of the vaccine. There are more than 730 vaccination sites across the UK. The vaccine will be given to the priority groups including care home residents and staff, people over 80 and health and care workers, then to the rest of the population in order of age and risk.
COVID-19 impacts construction contracts and output
Whilst we are all hoping for the vaccine to improve the situation, the current reality is that COVID-19 continues to impact the economy in general, and the construction industry in particular. Industry analysts Barbour ABI have recently published a Construction Market Review. They highlight that although there has been a marginal increase of 0.2% of the construction contract values awarded in Great Britain in November, it actually represents a 9.1% decrease compared to last year. The number of awards in November 2020 also decreased by 17.9% compared to the previous month and by 16.4% compared to the previous year.
On the other hand, the latest figures published by the Office for National Statistics show that construction output grew by 1% in October 2020, thanks to an increase in new work (0.3%) and repair and maintenance (2.3%). The level of construction output in October 2020 was 6.4% below February 2020.
Bridges and road schemes also hit by the pandemic
It is also possible to see COVID-19’s impact on specific construction projects. For example, the plans to construct the Nine Elms bridge in London has been paused. The £57M bridge would link housing developments in Nine Elms and Battersea with Westminster. However, Wandsworth Council has decided to suspend the scheme development as a consequence of rapidly changing travel choices.
The coronavirus pandemic also had a major impact on Kent’s £500M roads contract, which has been significantly delayed. The current contract with contractor Amey was supposed to end in September 2021. However, Kent County Council had to extend it for two years to allow future providers time to submit their bids. The Framework was finally out for tender at the beginning of December 2020.
COVID-19 has severely impacted railway construction
The rail industry has seen a major hit by COVID-19. In December 2020, the government announced cuts of £1bn from its rail enhancements pipeline following a Spending Review. The budget for the rail investment schemes was set at £10.4bn for the five year period between 2019-2024. But rail minister Chris Heaton-Harris said it had been cut to £9.4bn. It is still unclear which projects will go ahead. Railway Industry Association (RIA) chief executive Darren Caplan said the news is ‘very disappointing’. He also added that ‘taking our foot off the pedal now on rail investment will not help for when passengers return following the coronavirus pandemic.’
COVID-19 also hit Transport for London’s (TfL’s) Barking Riverside Extension scheme. The project was planned to be opened by December 2021 with a budget of £294.5M. However, due to COVID-19 restrictions, the project will not open until at least July 2022. The project’s estimated cost has also gone up by £32.5M, reaching a total budget of £327M.
It is clear that COVID-19 continues to impact construction projects in the UK. Let us place our hopes in the vaccination programme and continue to help the government by adhering to the restrictions.
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