COVID-19 continues to impact construction projects in the UK and the wider economy. Read on for the latest industry insights.
Slow but steady progress in the fight against COVID-19
As summer comes to an end, the UK is braced for a potential increase in COVID-19 spread over autumn and winter. Whilst more than 64% of the population has already been fully vaccinated, COVID cases have been increasing since the last week of July. By mid-September, daily cases of coronavirus infections average around 38,000. Although these numbers may sound alarming at first, daily deaths seem to be under control.
With a peak of 209 deaths on 7th September, these numbers look fairly optimistic compared to the peak of 1,824 deaths on 20th January. The vaccination programme in the UK seems to be an effective measure to control the pandemic. However, a third dose of the vaccine, given as a booster, is likely to be administered soon as a preventive measure before the winter.
A dip in construction contracts
Although many people in the UK have gone back to their pre-covid lives, there is still a long way to go before the country achieves normality as a whole. In fact, COVID-19 continues to impact the economy and many industries, including construction projects.
According to Builders’ Conference, the total number of construction contracts has decreased since March, from over 600 to just 454 in August. However, August is traditionally a slow month in construction due to holidays, and this year was 9% higher than last year. This shows a slow recovery in the industry compared to last year. The total value of construction contracts awarded in August was £4.7 billion, almost the same as August 2020. On a positive note, this year’s value increased 42% compared to August 2019, before the pandemic.
Construction output falls due to COVID-19 impact
Despite the positive news, the latest data from the ONS show that construction output fell 1.6% in volume terms in July 2021. The current level of output is now below the pre-covid level of February 2020. Price increases and product shortages behind supply chain issues seem to be some of the root causes for the decline. The 1.6% fall in construction output was caused by a reduction in both new work and repair and maintenance.
However, the split by sector is really diverse. Whilst infrastructure is the best performing sector, with a 35.7% increase compared to February 2020, private commercial represents the worst-performing sector over the pandemic at 20.3% below its pre-covid levels.
Coronavirus impacts the future growth of construction
The current impact of COVID-19 on construction projects does not have much to do with past lockdowns. The current impacts actually come from increased health and safety measures, border restrictions and the impacts on the supply chain. Fraser Johns, finance director at Beard Construction, recently said:
‘With the ONS figures putting output below pre-covid levels for the first time in months, we are seeing the real long-term impact of the pandemic start to hit home. The supply chain issues and price rises which stem from the slowdown in production globally, and friction at the borders due to Brexit, have knocked customer confidence as the figures suggest a decline in new work for July 2021. This is a real concern in terms of future growth.’
This industry-wide concern is also reflected in the latest survey report by the Civil Engineering Contractors Association (CECA). Their Workload Trends Survey for 2021 Q2 found that although infrastructure works continue to increase, a majority of British firms cited issues with the supply of materials and products.
A better future is possible despite COVID-19’s impact on construction projects
One of the UK’s most controversial construction projects, HS2, has been severely impacted by COVID-19. This month of September, transport minister Baroness Vere said that the business case for Phase 2b’s western leg will assess the impact of changes in travel habits caused by the pandemic. She recognised that ‘this will be the first time the pandemic’s impact on HS2 will be undertaken.’
And to finish on a positive note, there is good news regarding the number of construction companies going into administration. The month of July saw a total of 17 companies collapsing, the highest number of the year. However, this actually represents a significant reduction compared to pre-covid levels. In fact, in February 2020 a total of 36 firms collapsed, more than double the number seen in July 2021.
The job-retention scheme and government loans help businesses continue to keep going across the construction industry. There is still a long way to go. And we need to work together as an industry to ensure we build back better. Innovations such as 3D printed houses and drones are key to drive recovery in construction.
Has COVID-19 impacted your construction projects? Let us know how in the comments section below!