Construction buyers have reported a near record decline in subcontractor availability.

Latest results for the bellwether IHS Markit/CIPS UK Construction PMI Total Activity Index show a lack of subcontractors and materials shortages hampered growth last month.

The index registered 58.7 in July – down sharply from June’s 24-year high of 66.3 but still well above the crucial 50.0 no-change threshold.

The latest decline in subcontractor availability was the second-fastest since the survey began in 1997, exceeded only by that seen  during the lockdown in April 2020.

Tim Moore, Economics Director at IHS Markit, said: “Long lead times for materials and shrinking subcontractor availability were cited as factors holding back work on site.

“Around two-thirds of the survey panel experienced longer wait times for supplier deliveries in July, while just 2% reported an improvement since the previous month.

“July data marked the first real slowdown in the construction recovery since the lockdown at the start of this year. It was unsurprising that UK construction companies  were unable to maintain output growth at the 24-year high seen in June, especially with widespread supply shortages and constrained capacity to take on additional orders.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, added: “The pervasive weaknesses in supply chains along with a lack of staff and contractor availability were laid bare as construction lost some of its get-up-and-go.

“The rampant rise in prices for raw materials and transportation continued to be the construction’s heavy load along with historically long delivery times.

“Though there was a slight improvement in supplier performance from June’s record low, it was partly as a result of frustrated supply chain managers reining back on purchases that were unlikely to arrive when needed.

“Businesses were also unable to expand on staff capacity, where even the most prolific hiring periods since 2014 was insufficient for builders’ ability to complete work in hand.

“Faced with transport disruptions, shortages of essentials and Brexit delays, the initial spurt of activity this year is fast hitting the rocks.

“Building optimism was dampened to the lowest since January as it is difficult to foresee when all these challenges are likely to subside.”

Fraser Johns, finance director at construction firm Beard, said: “We know these are challenges that are not set to go away any time soon, so in order to move forward it’s going to be crucial to take a proactive approach.

“Working in collaboration with suppliers and subcontractors, including ensuring prompt payment, will go some way to mitigate the risk of projects falling through.

“But customers need to be aware of the issues facing the industry is facing as well. Being transparent at the point of submitting tenders about the need to order certain materials early to ensure delivery on time, using two stage procurement processes, will help to overcome some of these issues.”

Equans, the new name for Engie’s services-led operations, has named former Vinci UK MD Jean-Philippe Loiseau as the new chief of its UK & Ireland business.

Loiseau will join in September and succeeds current CEO Nicola Lovett, who leaves the £2bn turnover UK business to pursue new challenges outside of the group.

He has previously led a number of Vinci’s Group’s European subsidiaries, including Vinci’s FM and construction businesses in the UK.

He also managed Antea, an independent environmental services company for ten years.

Jérôme Stubler, Equans CEO, said: “I would like to thank Nicola for the part she has played in the establishment and launch of our new business and for the great dedication and leadership she has shown throughout her successful career with Engie.

“The UK is an important market for Equans and I am pleased to welcome Jean-Philippe, who is a strong, experienced leader with the qualities to implement the next phase of growth for our UK & Ireland business, while continuing to deliver high performance outcomes for our customers”.

Last month, Engie announced the creation of Equans, bringing together its global service activities under a new brand, creating a market leader in the sector with 74,000 employees and revenues of 12 bn euros.

In the UK & Ireland, all of Engie’s activity in technical services, facilities management, construction and regeneration and and renewables, now come under the Equans brand.

Equans UK & Ireland employs 13,500 people – a significant part of the overall new global operation.

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=205

Taylor Wimpey is on course to post an operating profit of £820m this year as the house builder delivered a record first half performance.

The firm completed 7,303 homes in the six months to July 4 2021 compared to 2,771 last year as pre-tax profit recovered to £287.5m from a £39.8m loss on revenue up to 2,196.3m from £754.6m.

Pete Redfern, Chief Executive,said: “We have delivered a record first half performance and a strong operating profit margin performance of 19.3%, which reflects tight cost discipline as well as higher completions in the period.

“Our focus remains on driving further improvement in our operating profit margin and accelerated outlet-driven volume growth from 2023.

“Backed by last year’s equity raise we stepped up our activity in the land market before competition returned and we successfully increased our land pipeline with high-quality sites that will deliver a strong financial performance.

“We are progressing this land through the planning stages as expected, providing excellent momentum for growth, enhanced returns for our stakeholders and increased numbers of new homes.

“We have a clear purpose to deliver high-quality homes and create thriving communities and a strategy to ensure the long term sustainability of the business.

“We now expect to deliver 2021 full year Group operating profit of c.£820 million, above the top end of consensus, with UK completions (excluding joint ventures) expected to be towards the upper end of our guidance range of 13,200 to 14,000.”

Taylor Wimpey is now targeting profit margins of 22% and added “looking further ahead, we have excellent momentum going into the medium term and are well positioned for accelerated volume growth from 2023.”

The firm has set aside £165m for fire safety cladding. It said: “Where we own the buildings, we are undertaking assessments on the buildings and where works are required, we are procuring those works. Where a third party owns the building and we have been contacted by the freeholder or management company we are engaging with them in relation to the assessment process.”

Taylor Wimpey said rising house prices were offsetting increases in materials.

It said: “Whilst there is pressure on pricing and supply chains for certain materials such as timber and steel owing to strong global demand, healthy increases in house prices are fully offsetting build cost inflation.

“Our central procurement team and logistics business continues to work closely with our supply chain to understand and track the origins of our components and subcomponents and stocking levels within the supply chain. This helps provide visibility of our materials supply, identifying and pre-empting potential bottlenecks.”

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=174

West Midlands Combined Authority has started prequalifying firms to design and build three stations on the Camp Hill railway line reopening in the Midlands.

The Camp Hill line stations closed during 1941 and since then the line has been used only by freight and non-stop passenger services.

Reopening for passenger services involves constructing three stations at Moseley, Kings Heath and Hazelwell including supporting rail infrastructure works.

These new stations will provide regular train services into Birmingham New Street, with quick journey times offering commuters a genuine alternative to their car.

Authority procurement chiefs plan to use an NEC 4 target cost contract including clause X1 to alleviate contractors’ risk on material price fluctuations on volatile material like timber, concrete and steel.

Firms have until the end of August to submit an interest in bidding for all three stations. Shortlisted firms will then be invited to bid on 30 September.

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=161

The government has boosted its “active travel” budget by another £81m to £338m.

The money will promote cycling and walking across the country and further increase the construction of bike lanes.

The government said: “This funding will help see the construction of hundreds of miles of new high-quality cycle lanes.”

A new version of the Highway Code is also being published which “ensures road users who can do the greatest harm have the greatest responsibility to reduce the danger they may pose to others.”

The new code will also give “guidance on safe passing distances and speeds and ensuring that cyclists have priority at junctions when travelling straight ahead.”

Transport Secretary Grant Shapps said: “Millions of us have found over the past year how cycling and walking are great ways to stay fit, ease congestion on the roads and do your bit for the environment.

“As we build back greener from the pandemic, we’re determined to keep that trend going by making active travel easier and safer for everyone.

“This £338 million package marks the start of what promises to be a great summer of cycling and walking, enabling more people to make those sustainable travel choices that make our air cleaner and cities greener.”

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=141

Campaigners have won a court battle to block the £1.7bn construction of a road tunnel near Stonehenge.

Mr Justice Holgate has ruled that a decision to allow a dual carriage way road and tunnel to be built within the ancient World Heritage Site was unlawful.

The judgment effectively quashes development consent for the A303 improvement project which was granted by Transport Secretary Grant Shapps.

Shapps will now have to decide whether to appeal against the judge’s ruling that he had not properly assessed the risk of harm to the World Heritage Site

The judge further concluded that Shapps had made an error of law by failing to consider alternatives to the scheme, such as a longer tunnel, which may have been less damaging to the Stonehenge.

Highways England said: “We now have to wait while the Department for Transport considers its options.

“This is a setback, but we remain confident our project is the best solution to the ongoing issues along the A303 past Stonehenge and was developed after a long and extensive collaboration with our key stakeholders.

“We are hugely disappointed by the decision, and we know this will also dismay many people in the local community who have waited decades for a solution and all those who use the road to travel to work or on holiday in the south west.”

John Adams, Acting Chairman of the Stonehenge Alliance, said: “We could not be more pleased about the outcome of the legal challenge.

“The Stonehenge Alliance has campaigned from the start for a longer tunnel if a tunnel should be considered necessary. Ideally, such a tunnel would begin and end outside the WHS.

“But now that we are facing a climate emergency, it is all the more important that this ruling should be a wake-up call for the Government. It should look again at its roads programme and take action to reduce road traffic and eliminate any need to build new and wider roads that threaten the environment as well as our cultural heritage.”

Leigh Day solicitor Rowan Smith said: “This is a huge victory, which means, for now, Stonehenge is safe.

“The judgment is a clear vindication of our client’s tremendous efforts in campaigning to protect the World Heritage Site.

“The development consent for this damaging tunnel has been declared unlawful and is now quashed, and the Government will have to go back to the drawing board before a new decision can be made. Meanwhile, one of the country’s most cherished heritage assets cannot be harmed.”

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=134

Texas is in a League of its Own

Through the first half of 2021, the monthly average of seasonally adjusted and annualized (SAAR) housing starts in the U.S. has been +23.2% compared with January-June 2020. The one-quarter increase in groundbreakings warrants the ‘mini-boom’ description being applied to the U.S. homebuilding market.

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=116

Why UK contractors are turning to technology to help them work more efficiently amid an ever-changing construction materials landscape.

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=113

Listed below are ConstructConnect’s Hot Commercial Construction Projects, both public and private, for the week. Our Hot Projects showcases three currently bidding or sub-bidding projects from all 50 states and the District of Columbia pulled from our extensive database of construction leads.

Did you miss our previous article…
https://www.clarkeconstructioncreations.com/?p=97