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Description

Description

“Ahead of the 2019 general election, the Conservative party pledged to spend £100 billion on public infrastructure over the next five years, taking government investment to levels not seen for almost 50 years. This suggests a potentially significant boost to the civil engineering sector, although some economists have expressed doubt over whether the government will be able to deliver such a large amount of spending. Shortages in skilled labour across the construction industry may also hamper progress on the ambitious infrastructure investment programme. Thus, while the outlook for civil engineering activity is overwhelmingly positive, the timing of demand and workloads remain highly unpredictable.”
– Claudia Preedy, B2B Analyst

While the government’s commitment to significant infrastructure spending provides a positive impetus for civil engineering demand, the vague pipeline of projects is leading to volatile and unpredictable demand.

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Investment in transport infrastructure drives recent growth in civil engineering construction output
              • Figure 1: New civil engineering construction output in Great Britain, 2015-19
            • Rail represents largest sector for civil engineering construction activity in 2019
              • Civil engineering activity in electricity sector slows in 2018 and 2019
                • Roads represent third largest sector for civil engineering construction activity in 2019
                  • Figure 2: Civil engineering construction output in Great Britain, by sector, 2019, (% of total)
                • Outlook for UK civil engineering sector remains positive, but with uncertainty over the delivery of major projects
                  • Figure 3: Forecast new civil engineering construction output in Great Britain, 2020-24
                • Government’s infrastructure pipeline criticised for being a “wishlist”, leading to volatile and unpredictable demand in construction industry
                  • Companies and brands
                    • Major Civils contractors launch transformation programmes as low margin bidding and project delays lead to financial difficulties
                      • Trend towards long-term partnerships and alliances, especially in utilities sector
                        • What we think
                        • Issues and Insights

                          • While the government’s commitment to significant infrastructure spending provides a positive impetus for civil engineering demand, the vague pipeline of projects is leading to volatile and unpredictable demand
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Investment in transport infrastructure drives recent growth in civil engineering construction output
                                  • Rail represents largest sector for civil engineering construction activity in 2019
                                    • Civil engineering activity in electricity sector slows in 2018 and 2019
                                      • Roads represent third largest sector for civil engineering construction activity in 2019
                                        • Outlook for UK civil engineering sector remains positive, but timing of delivery of a number of major projects remains highly unpredictable
                                          • Government’s infrastructure pipeline criticised for being a “wish list”, leading to volatile and unpredictable demand in construction industry
                                            • Skills shortages continue to pose challenges for industry
                                            • Market Size

                                                • Figure 4: Civil engineering construction output in Great Britain, 2015-19
                                                • Figure 5: Civil engineering construction output in Great Britain, 2015-19
                                                • Figure 6: Total new construction and civil engineering output in Great Britain, 2015-19
                                            • Market Segmentation

                                                  • Figure 7: Civil engineering construction output in Great Britain, by sector, 2015-198
                                                  • Figure 8: Civil engineering construction output in Great Britain, by sector, 2015-19
                                                • Regional civil engineering construction output
                                                  • Figure 9: Analysis of civil engineering output, by region, 2016-18
                                              • Water & Sewerage Sector

                                                • Water & sewerage capital expenditure
                                                    • Figure 10: UK capital expenditure on water and sewerage services, 2015/16-2018/19
                                                  • Water civil engineering construction output
                                                    • Figure 11: Civil engineering construction output for the potable water industry in Great Britain, 2015-19
                                                  • Sewerage civil engineering construction output
                                                    • Figure 12: Civil engineering construction output for the sewerage industry in Great Britain, 2015-19
                                                • Electricity Sector

                                                  • Electricity distribution capital expenditure
                                                      • Figure 13: UK gross capital expenditure by electricity distribution network operators, 2013/14-2018/19
                                                      • Figure 14: UK gross capital expenditure by electricity distribution network operators, 2013/14-2018/19
                                                    • Smart grid development to support low-carbon economy and aid transition to a more flexible energy system
                                                      • Increase in distributed generation
                                                          • Figure 15: Distributed generation connected to the distribution network, 2016/17, (MW)
                                                        • Electricity transmission capital expenditure
                                                            • Figure 16: Size of electricity transmission network in Great Britain, 2019
                                                            • Figure 17: Capital expenditure by the electricity transmission industry in Great Britain, 2014/15-2018/19
                                                            • Figure 18: Capital expenditure by the electricity transmission industry in Great Britain, 2014/15-2018/19
                                                          • The electricity generation mix
                                                              • Figure 19: Analysis of electricity generation in the UK, by type of fuel used, 2014-18
                                                              • Figure 20: Proportional importance of fuel source in UK electricity generation, 2014 and 2018
                                                            • Electricity civil engineering construction output
                                                              • Figure 21: Civil engineering construction output for the electricity industry in Great Britain, 2015-19
                                                              • Figure 22: Civil engineering construction output for the electricity industry in Great Britain, 2015-19
                                                          • Gas Sector

                                                            • Industry Overview
                                                              • Gas capital expenditure
                                                                • Figure 23: Total gas transmission and distribution capital expenditure, 2014/15-2018/19
                                                                • Figure 24: Total gas transmission capital expenditure, 2014/15-2018/19
                                                                • Figure 25: Total gas distribution capital expenditure, 2014/15-2018/19
                                                                • Figure 26: Total gas transmission and distribution capital expenditure, 2014/15-2018/19
                                                              • Replacement expenditure dominated by Iron Mains Replacement Programme
                                                                  • Figure 27: Length of iron gas mains replaced, by distribution network operator, 2013-18
                                                                • Gas civil engineering construction output
                                                                  • Figure 28: Civil engineering construction output for the gas industry in Great Britain, 2014-18
                                                              • Airports Sector

                                                                  • Figure 29: 10 largest airports in the UK, by air transport movements, 2014-18
                                                                  • Figure 30: Civil engineering construction output for the air transport industry in Great Britain, 2015-19
                                                              • Communications Sector

                                                                • Overview
                                                                    • Figure 31: Key market developments in the telecoms sector, 2013-18, (millions)
                                                                  • Mobile networks
                                                                    • Broadband networks
                                                                        • Figure 32: Civil engineering construction output for the communications industry in Great Britain, 2015-19
                                                                        • Figure 33: Civil engineering construction output for the communications industry in Great Britain, 2015-19
                                                                    • Railways Sector

                                                                      • Major rail modernisation programme has posed significant challenges for Network Rail
                                                                        • Enhancements and renewals expenditure
                                                                            • Figure 34: Analysis of enhancement expenditure in Great Britain, by type, 2015-19
                                                                            • Figure 35: Renewal expenditure by asset, 2018 and 2019
                                                                          • Railways civil engineering output
                                                                            • Figure 36: Civil engineering construction output for the rail transport sector in Great Britain, 2015-19
                                                                        • Harbours Sector

                                                                          • Overview
                                                                            • Recent port expansion projects
                                                                                • Figure 37: Civil engineering construction output for the harbours and waterways sectors in Great Britain, 2015-19
                                                                            • Roads Sector

                                                                              • Overview
                                                                                • Figure 38: Road network in Great Britain, by type, 2018
                                                                                • Figure 39: Road network expenditure in England, by activity and road type, 2012/13-2016/17
                                                                                • Figure 40: New construction and improvements of roads, motorways and all-purpose trunk roads, in England, 2014/15-2018/19, (kilometres)
                                                                              • Challenges with the Road Investment Strategy
                                                                                • Civil engineering construction output
                                                                                  • Figure 41: Civil engineering new road construction output in Great Britain, 2015-19
                                                                                  • Figure 42: Civil engineering new road construction output in Great Britain, 2015-19
                                                                              • Market Forecast

                                                                                • Civil engineering construction forecast
                                                                                    • Figure 43: Forecast civil engineering construction output in Great Britain, 2020-24
                                                                                    • Figure 44: Forecast new civil engineering construction output in Great Britain, 2020-24
                                                                                  • Infrastructure investment at the heart of the government’s plans to close the UK’s productivity gap
                                                                                    • Infrastructure investment named as one of the five foundations of the government’s industrial strategy
                                                                                      • First National Infrastructure Assessment published in 2018
                                                                                        • National Infrastructure Strategy to set out details of £100 billion investment
                                                                                          • Government launches productivity programme for infrastructure
                                                                                            • National Infrastructure and Construction Pipeline
                                                                                              • NICP criticised for being a “wish list”, leading to volatile and unpredictable demand in the construction industry
                                                                                                  • Figure 45: National Infrastructure and Construction Pipeline, by sector, as of autumn 2018
                                                                                                  • Figure 46: National Infrastructure and Construction Pipeline, by sector, as of autumn 2018
                                                                                              • Water & Sewerage Sector Forecast

                                                                                                • Move towards totex in AMP6 and beyond set to reduce bias towards capital spending
                                                                                                  • Move towards long-term alliances and frameworks across industry
                                                                                                    • English water companies plan to spend a record £50 billion+ in AMP7 (2020-25)
                                                                                                      • Major water and sewerage capital projects in the pipeline
                                                                                                        • Figure 47: Water & sewerage infrastructure pipeline, as of autumn 2018
                                                                                                      • Thames Tideway Tunnel
                                                                                                          • Figure 48: Estimated cost of Thames Tideway Tunnel, 2016/17-2021/22+
                                                                                                        • Forecast civil engineering construction in water sector
                                                                                                          • Figure 49: Forecast civil engineering output for the water sector, 2020-24
                                                                                                        • Forecast civil engineering construction in the sewerage sector
                                                                                                          • Figure 50: Forecast civil engineering output for the sewerage sector, 2020-24
                                                                                                      • Electricity Sector Forecast

                                                                                                        • Electricity infrastructure projects in the National Infrastructure and Construction Pipeline
                                                                                                          • Figure 51: Electricity infrastructure pipeline, as of autumn 2018
                                                                                                        • Renewables capacity development pipeline
                                                                                                          • Figure 52: Renewable energy projects in pipeline, by technology, as of September 2019
                                                                                                        • Civil engineering construction forecast in the electricity sector
                                                                                                          • Figure 53: Forecast civil engineering output for the electricity sector, 2020-24
                                                                                                          • Figure 54: Forecast civil engineering output for the electricity sector, 2020-24
                                                                                                      • Gas Sector Forecast

                                                                                                        • Gas infrastructure projects in the National Infrastructure and Construction Pipeline
                                                                                                          • Figure 55: gas distribution and transmission infrastructure pipeline, as of autumn 2018
                                                                                                        • Transmission network capex forecast
                                                                                                          • Figure 56: Annual capital expenditure plans by National Grid Gas under RIIO-T1, by category, 2013/14-2020/21
                                                                                                        • Distribution network capex forecast
                                                                                                          • Figure 57: Annual capex plans under RIIO-GD1, by GDN, 2013/14-2020/21
                                                                                                          • Figure 58: Annual repex plans under RIIO-GD1, by GDN, 2013/14-2020/21
                                                                                                          • Figure 59: Forecast total capex and repex during RIIO-GD1, 2013/14-2020/21
                                                                                                        • Civil engineering construction forecast in the gas sector
                                                                                                          • Figure 60: Forecast civil engineering output for the gas sector, 2020-24
                                                                                                      • Airport Sector Forecast

                                                                                                            • Figure 61: Forecast civil engineering output for the airports sector, 2020-24
                                                                                                        • Communications Sector Forecast

                                                                                                          • Communications infrastructure projects pipeline
                                                                                                            • Figure 62: Communications infrastructure pipeline, 2019-21
                                                                                                          • Civil engineering construction forecast in the communications sector
                                                                                                            • Figure 63: Forecast civil engineering output for the communications sector, 2020-24
                                                                                                        • Railways Sector Forecast

                                                                                                          • Detailed £10 billion rail enhancement pipeline revealed
                                                                                                            • Rail industry calls for long-term strategies which promote private investment in the sector
                                                                                                              • HS2 set to dominate rail infrastructure spending, but go-ahead still pending government’s final decision
                                                                                                                • Other proposed new major rail lines
                                                                                                                  • Northern Powerhouse Rail (formerly known as HS3)
                                                                                                                    • Crossrail 2
                                                                                                                      • Rail infrastructure projects pipeline
                                                                                                                        • Figure 64: Rail infrastructure projects pipeline, 2018
                                                                                                                      • Civil engineering construction forecast in the rail sector
                                                                                                                        • Figure 65: Forecast civil engineering output for the rail sector, 2020-24
                                                                                                                    • Harbours Sector Forecast

                                                                                                                          • Figure 66: Forecast civil engineering output for the harbours sector, 2020-24
                                                                                                                      • Roads Sector Forecast

                                                                                                                        • Government confirms further increase in road investment for period 2020-25
                                                                                                                          • Civil engineering construction forecast in the roads sector
                                                                                                                            • Figure 67: Forecast civil engineering output for the roads sector, 2020-24
                                                                                                                            • Figure 68: Forecast civil engineering output for the roads sector, 2020-24
                                                                                                                        • Market Drivers – Water & Sewerage Sector

                                                                                                                          • Future challenges facing the water and sewerage sector
                                                                                                                              • Figure 69: population projections for England, by region, 2016-36
                                                                                                                            • Industry regulation
                                                                                                                              • Legislative environment
                                                                                                                                • European Water Framework Directive
                                                                                                                                  • Urban Waste Water Treatment Directive
                                                                                                                                    • The Drinking Water Directive
                                                                                                                                      • Revised Bathing Water Directive
                                                                                                                                        • Transfer of private sewers in England and Wales
                                                                                                                                          • The Flood and Water Management Act 2010
                                                                                                                                            • Implications of Brexit on the UK water and sewerage sector
                                                                                                                                            • Market Drivers – Gas & Electricity Sectors

                                                                                                                                              • Price controls
                                                                                                                                                • Government commitment to reduce carbon emissions
                                                                                                                                                  • UK makes good progress in reducing CO2 emissions to date, but on track to miss targets between 2023 and 2032
                                                                                                                                                    • Policies to decarbonise electricity
                                                                                                                                                      • Renewables Obligation
                                                                                                                                                        • Feed-in Tariffs
                                                                                                                                                          • Carbon Price Floor
                                                                                                                                                            • Contracts for Difference
                                                                                                                                                              • Capacity Market
                                                                                                                                                                • The Renewable Heat Incentive
                                                                                                                                                                • Market Drivers – Airports Sector

                                                                                                                                                                  • Government backs construction of third runway at Heathrow Airport but go-ahead still uncertain
                                                                                                                                                                  • Market Drivers – Communications Sector

                                                                                                                                                                    • Government identifies roll-out of 5G and full-fibre connections as priority areas of investment
                                                                                                                                                                    • Market Drivers – Railways Sector

                                                                                                                                                                      • Drivers of investment in rail industry
                                                                                                                                                                        • Rail network funding and regulation
                                                                                                                                                                          • Network Rail launches transformation plan in 2016
                                                                                                                                                                            • Government publishes its strategic vision for rail
                                                                                                                                                                              • Network Rail to spend £42 billion on rail improvements in CP6 (2019-24)
                                                                                                                                                                              • Market Drivers – Ports & Harbours Sector

                                                                                                                                                                                • UK port demand set to increase
                                                                                                                                                                                • Market Drivers – Roads Sector

                                                                                                                                                                                  • Government commits to biggest programme of road investment since the 1970s
                                                                                                                                                                                    • Government confirms further increase in road investment over 2020-25
                                                                                                                                                                                    • Companies and Brands – What You Need to Know

                                                                                                                                                                                      • Balfour Beatty focusses on specific markets with inherent growth where it has the right expertise
                                                                                                                                                                                        • Skanska undergoes restructuring to improve performance and focus on core business
                                                                                                                                                                                          • Costain launches “leading edge” strategy
                                                                                                                                                                                          • Industry Structure

                                                                                                                                                                                            • Trend towards long-term partnerships and alliances, especially in utilities sector
                                                                                                                                                                                              • Civil engineering companies are required to develop a wider set of skills and competencies
                                                                                                                                                                                                • Major civils contractors launch transformation programmes as low margin bidding and project delays lead to financial difficulties
                                                                                                                                                                                                  • The government’s NICP has been criticised for being misleading and causing instability in the industry
                                                                                                                                                                                                    • Industry development
                                                                                                                                                                                                      • Figure 70: Analysis of the civil engineering industry by type of activity and company size, 2019, (number of employees and number of companies)
                                                                                                                                                                                                      • Figure 71: Analysis of the civil engineering industry by type of activity, number of companies and % of total, 2019
                                                                                                                                                                                                  • Company Profiles

                                                                                                                                                                                                    • Introduction
                                                                                                                                                                                                      • Balfour Beatty
                                                                                                                                                                                                        • Build to Last transformation programme launched in 2015
                                                                                                                                                                                                          • Balfour Beatty expects the outlook for infrastructure market to remain positive
                                                                                                                                                                                                            • Financial performance
                                                                                                                                                                                                              • Figure 72: Financial analysis of Balfour Beatty, 2014-18
                                                                                                                                                                                                              • Figure 73: Turnover analysis of Balfour Beatty, by segment, 2016-18
                                                                                                                                                                                                            • Costain Group
                                                                                                                                                                                                              • “Leading edge” strategy
                                                                                                                                                                                                                • Financial performance
                                                                                                                                                                                                                    • Figure 74: Financial analysis of Costain Group, 2014-18
                                                                                                                                                                                                                    • Figure 75: Turnover analysis of Costain Group, by segment, 2014-18
                                                                                                                                                                                                                  • J Murphy & Sons
                                                                                                                                                                                                                    • Group strategy
                                                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                                                        • Figure 76: Financial analysis of J Murphy & Sons, 2014-18
                                                                                                                                                                                                                      • Bam Nuttall
                                                                                                                                                                                                                        • Company performance and outlook
                                                                                                                                                                                                                            • Figure 77: Financial analysis of Bam Nuttall, 2014-18
                                                                                                                                                                                                                          • Skanska UK
                                                                                                                                                                                                                            • Skanska’s Profit with Purpose business plan
                                                                                                                                                                                                                              • Skanska undergoes restructuring to improve performance and focus on core business
                                                                                                                                                                                                                                • Financial performance and outlook
                                                                                                                                                                                                                                  • Figure 78: Financial analysis of Skanska UK, 2014-18
                                                                                                                                                                                                                                • Galliford Try Infrastructure
                                                                                                                                                                                                                                  • Galliford Try pulls out of bidding for large fixed-price infrastructure projects
                                                                                                                                                                                                                                    • Strategy
                                                                                                                                                                                                                                      • Financial performance and outlook
                                                                                                                                                                                                                                        • Figure 79: Financial analysis of Galliford Try Infrastructure, 2014-18
                                                                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                                          • Methodology
                                                                                                                                                                                                                                          • Further Sources and Contacts

                                                                                                                                                                                                                                            • Trade associations
                                                                                                                                                                                                                                              • Trade magazines
                                                                                                                                                                                                                                                • Construction News
                                                                                                                                                                                                                                                  • Trade events

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