Big plans for new infrastructure creates opportunities for civils contractors

One of the sectors across the industry to show some encouraging signs of growth in recent months has been civil engineering.

According to the latest Glenigan Index, the value of project starts in the civils sector rose in the third quarter to stand 11% up on the period a year earlier. An increase in the value of project starts in the utilities sector - which were up by almost a third on the period last year - was largely to thank for the upturn in activity.

Yet with much of the construction industry vulnerable to rising interest rates, there is good reason to believe that civils-related infrastructure and utilities work will provide contractors with a resilient source of new work over the year ahead. Indeed, Glenigan’s latest UK Construction Forecast 2022-24 (PDF) predicts the value of civil engineering project starts will rise by 5% next year and that activity will be maintained during 2024.

Accelerated starts

Putting aside the current political turmoil, the Government’s commitment to infrastructure investment bodes well for new contracts in the sector. In all, the Government’s new Growth Plan 2022 published last month identified 138 infrastructure projects - covering road and rail transport, nuclear, hydrogen, carbon capture, oil & gas, offshore wind, local growth, and digital - which it says will be ‘accelerated as fast as possible.’ Even if some more ambitious schemes fall by the wayside in the new Chancellor’s search for public spending cuts, the stated aim of the plan is to get the vast majority of projects starting construction by the end of 2023.

The signs are that work on the roads programme may already be being brought forward. One speech at the recent Conservative Party Conference suggested delays on the proposed £500 million A1 Morpeth to Ellingham trunk road dualling scheme are set to be lifted so the scheme can proceed. Glenigan data shows the scheme, which ranks as a nationally significant project, has now been split into two separate contracts (Project ID: 03291883).

Meanwhile, the £507 million A428 Black Cat to Caxton Gibbet dual carriageway west of Cambridge was also included in the Government’s Growth Plan to be accelerated (Project ID: 14433542).

Other significant new highway projects in the pipeline include the £345 million A46 Newark Bypass for National Highways where Skanska UK is the civil contractor and work is due to start in Autumn 2023 (Project ID: 19342016).

The start of work on some smaller schemes may also be hastened. Glenigan data highlights one project, the £350,000 A35 Devon Safer Road Scheme at Wareham, which was earmarked to be ‘accelerated’ in the Growth Plan with a view to work getting underway next year (Project ID: 22370801).

New infrastructure contracts

Whilst work on HS2 is supporting the total volume of rail-related civils work, Glenigan data shows that the high-speed rail project is also creating new infrastructure work at stations beyond the immediate route of the new line. For example, a £126 million Network Rail contract has recently been let for a remodelling of Darlington Railway Station so that it can benefit from its links to the HS2 line. Wilmott Dixon Construction is the main contractor on the project and work is due to start early in the new year and run for 27 months (Project ID: 17095885).

New activity in the utilities sector is likely to be buoyed by a continuing flow of renewable energy schemes for both the public and private sector. On one significant scheme in the Midlands, the £80 million Tudor Grange Low Energy Park for Solihull Metropolitan Borough Council, detailed plans have recently been approved and work is due to start at the end of this year and continue for 14 months (Project ID: 21038803).

Further north, detailed plans have been approved on the £26 million Thorpe Bank Solar Farm at Stockton on Tees. Work for Lightsource BP Renewable Energy Investments on installing a solar energy generation system is due to start next spring (Project ID: 19244673).