2023
9
UK Civil Engineering Market Report 2023
2023-02-03T03:09:10+00:00
OX1154811
1495
160193
[{"name":"Engineering","url":"https:\/\/store.mintel.com\/industries\/business-industrial\/engineering"}]
Report
en_GB
“The government’s commitment to infrastructure spending to drive economic growth, its commitment to the levelling-up agenda, the need for decarbonisation and infrastructure resilience in the face of climate change and…

UK Civil Engineering Market Report 2023

£ 1,495 (Excl.Tax)

Description

The Civil Engineering Market Report 2023 offers comprehensive insights into the construction and civil engineering market, including civil engineering market size, segmentation, trends, and projections. Our analysis examines the civil engineering market’s role in the UK economic recovery and progress towards Net Zero, the influence of government policies and the impact of the cost of living crisis on the civil engineering market. Uncover the latest developments in the industry and respond to changing market drivers with Mintel’s market research.

Civil Engineering Market Overview

Apart from the COVID-19-related disruption in 2020, the civil engineering market has been relatively buoyant in recent years, with growth largely driven by the rail and roads transport sectors.

Civil engineering construction output is estimated to reach £44.7bn in 2022, a 9% increase. Major projects have sustained growth, but output in volume terms is believed to have been moderate due to rising costs. The civil engineering market is not immune to inflation, high-interest rates and economic downturn, which has caused a number of public projects to be paused in order to prioritise others. Small and medium-sized projects are most at risk of delay. Uncertainty about the UK economy and rising costs is also leading to client hesitancy, resulting in delays of planning decisions and project starts.

Civil Engineering Market Trends & Challenges

The civil engineering market and construction contractors face constant pressure to improve margins, reduce costs and improve predictability, and developing long-term relationships with key strategic suppliers is crucial in delivering this strategy. This involves companies motivating their contractors to be proactive, develop new approaches and solutions, and work with them to reduce risk.

Civil engineering companies are also required to develop a wider set of skills and competencies to compete in sectors increasingly focused on operational efficiencies, active asset management, low-carbon and sustainable technologies, innovation and a long-term approach to planning and delivery.

  • Civil engineering market size: In 2022, civil engineering construction output rose by an estimated 9% to £44.7 billion.
  • Civil engineering market share: The railway sector claims 31% share of the engineering output in the UK in 2022.

Find a comprehensive breakdown of civil engineering market size and market share in the full report, alongside our expert’s comments.

Civil Engineering Market Future Opportunities

Despite current challenges, the government’s commitment to infrastructure spending, levelling-up, decarbonisation and infrastructure resilience should ensure sustained growth in the civil engineering market in the future.

It’s crucial for civil engineering companies to embrace digitalisation, which can offer substantial benefits in an industry grappling with high risk and an acute need to increase efficiency and productivity. Companies need to develop digital capabilities and invest in data-driven technologies, which help to open up new opportunities and encourage collaboration and better integration with supply chains.

To discover more about the UK Civil Engineering Market Report 2023, read our UK Mechanical and Electrical Engineering Market Report 2022, or take a look at our other Engineering Market Research.

Quickly Understand

  • How current challenges of inflation and economic uncertainty are impacting the civil engineering market.
  • The civil engineering market’s role in the UK’s economic recovery and progress towards Net Zero.
  • The impact of government policies and regulatory changes on the civil engineering market.
  • Key market drivers across the various civil engineering construction sectors.
  • Five-year market outlook and examines the civil engineering market size.

Leading Brands in the Civil Engineering Market

British Water’s Supply Chain Taskforce, Scottish Hydro Electric Transmission, National Grid Electricity Transmission, Scottish Power Transmission, Northern Gas Networks, Southern Gas Networks, Cadent, Wales & West Utilities, Gatwick Airport, Heathrow Airport.

Expert Analysis from a Specialist in the Industrial Sector

This report, written by Claudia Preedy, a leading analyst in the industrial sector, delivers in-depth commentary and analysis to highlight current trends in the civil engineering market and add expert context to the numbers.

The government’s commitment to infrastructure spending to drive economic growth, its commitment to the levelling-up agenda, the need for decarbonisation and infrastructure resilience in the face of climate change and the progression towards the Net Zero by 2050 target should ensure sustained growth in the civil engineering market over the coming years. However, the sector continues to face challenges that are expected to curtail activity in the short to medium term. Current key challenges include inflation and economic uncertainty resulting in client hesitancy, planning decision delays and the reprioritisation of public infrastructure projects.”

Claudia Preedy

Claudia Preedy
Principal Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Categories covered in this Report
  2. Executive Summary

    • The five-year outlook for UK civil engineering
      • Figure 1: Five-year outlook for civil engineering, 2023-27
    • The market
    • Inflationary pressures and project delays curtail stronger growth in civil engineering activity in 2022
      • Figure 2: New civil engineering construction output in Great Britain, 2018-22
    • Roads sector
    • Rail sector
    • Electricity sector
      • Figure 3: Civil engineering construction output in Great Britain (% of total), by sector, 2022
    • Civil engineering construction activity set for growth but challenges remain
      • Figure 4: Forecast new civil engineering construction output in Great Britain, 2022-26
    • Companies and brands
    • Civil engineering companies are required to develop a wider set of skills and competencies
    • Increased cost pressures are leading to strained relationships between utility companies and contractors
  3. Issues and Insights

    • Productivity gap needs to be closed
    • Civil engineering companies need to develop a wider set of skills, embrace digitalisation, data-sharing and collaboration
  4. Market Size and Performance

    • Market overview
      • Figure 5: Civil engineering construction output in Great Britain, 2018-22
      • Figure 6: New civil engineering construction output in Great Britain, 2018-22
      • Figure 7: Total new construction and civil engineering output in Great Britain, 2018-22
    • Market segmentation
      • Figure 8: Civil engineering construction output in Great Britain, by sector, 2018-22
      • Figure 9: Civil engineering construction output in Great Britain, by sector, 2018-22
    • Regional civil engineering construction output
      • Figure 10: Analysis of civil engineering construction output, by region, 2019-22
  5. Water & Sewerage Sector

    • Trends in capital expenditure
    • Recent trend
      • Figure 11: UK capital expenditure on water and sewerage services, 2017-22
    • Longer-term trend in capital expenditure
      • Figure 12: Long-term trend in totex and capex in water and sewerage service (£bn at 2020/21 prices), England and Wales, 1996-21
    • Efforts to smooth investment cycles and supply chain challenges
    • Water civil engineering construction output
      • Figure 13: Civil engineering construction output for the potable water industry in Great Britain, 2018-22
    • Sewerage civil engineering construction output
      • Figure 14: Civil engineering construction output for the sewerage industry in Great Britain, 2018-22
  6. Electricity Sector

    • Electricity distribution capital expenditure
      • Figure 15: UK gross capital expenditure by electricity distribution network operators, 2018-22
      • Figure 16: UK gross capital expenditure by electricity distribution network operators, 2018-22
    • Smart grid development to support low-carbon economy and aid transition to a more flexible energy system
    • Electricity transmission capital expenditure
      • Figure 17: Size of electricity transmission network in Great Britain, 2022
    • Recent trend in capital expenditure
      • Figure 18: Capital expenditure by the electricity transmission industry in Great Britain, 2018-22
      • Figure 19: Capital expenditure by the electricity transmission industry in Great Britain, 2018-22
    • Changes in the electricity generation mix
      • Figure 20: Analysis of electricity generation in the UK, by type of fuel used, 2017-21
      • Figure 21: Proportional importance of fuel source in UK electricity generation, 2017 and 2021
    • Electricity civil engineering construction output
      • Figure 22: Civil engineering construction output for the electricity industry in Great Britain, 2018-22
      • Figure 23: Civil engineering construction output for the electricity industry in Great Britain, 2018-22
  7. Gas Sector

    • Industry overview
    • Gas capital expenditure
      • Figure 24: Total gas transmission and distribution capital expenditure, 2018-22
    • Iron Mains Replacement Programme dominates replacement expenditure
      • Figure 25: Length of iron gas mains replaced, by distribution network operator, 2016-21
    • Gas civil engineering construction output
      • Figure 26: Civil engineering construction output for the gas industry in Great Britain, 2018-22
  8. Airports Sector

    • Overview
      • Figure 27: 10 largest airports in the UK, by air transport movements, 2017-21
    • Civil engineering construction output
      • Figure 28: Civil engineering construction output for the air transport industry in Great Britain, 2018-22
  9. Communications Sector

    • Overview
      • Figure 29: Key market developments in the telecoms sector (m), 2016-21
    • Mobile networks
    • Broadband networks
    • Project Gigabit
    • Significant civil engineering works required to deliver nationwide full-fibre network
    • Civil engineering construction output
      • Figure 30: Civil engineering construction output for the communications industry in Great Britain, 2018-22
      • Figure 31: Civil engineering construction output for the communications industry in Great Britain, 2018-22
  10. Railways Sector

    • Network Rail’s major rail modernisation programme
    • Investment in the rail industry
      • Figure 32: Investment in the rail industry in Great Britain, 2018-22
    • Network Rail enhancements and renewals expenditure
      • Figure 33: Network Rail’s enhancements expenditure, by key scheme, 2022
      • Figure 34: Renewal expenditure, by asset, 2021 and 2022
    • Railways’ civil engineering output
      • Figure 35: Civil engineering construction output for the rail transport sector in Great Britain, 2018-22
  11. Harbours Sector

    • Overview
    • Major port expansion projects
    • Civil engineering construction output
      • Figure 36: Civil engineering construction output for the harbours and waterways sectors in Great Britain, 2018-22
  12. Roads Sector

    • Overview
      • Figure 37: Road network in Great Britain, by type, 2021
    • Road Investment Strategy
    • National Highways’ new delivery models
    • New routes to market
    • The Regional Delivery Partnership Framework
    • The Smart Motorways Alliance
    • National Highways aims to deliver infrastructure projects faster
    • Civil engineering construction output
      • Figure 38: Civil engineering new road construction output in Great Britain, 2018-22
      • Figure 39: Civil engineering new road construction output in Great Britain, 2018-22
  13. Market Forecast

    • The five-year outlook for UK civil engineering
      • Figure 40: The five-year outlook for food and drink packaging, 2023-27
    • National Infrastructure Strategy
    • Slow progress is hampering delivering the aims of National Infrastructure Strategy
    • New National Infrastructure Bank
    • Chancellor recommits to infrastructure spending in 2022 Autumn Statement
    • National Infrastructure and Construction Pipeline
      • Figure 41: National Infrastructure and Construction Procurement Pipeline, by sector, 2021
      • Figure 42: Annual profile of planned infrastructure and construction pipeline investment, by sector, 2022-25
    • Civil engineering construction forecast
      • Figure 43: Forecast civil engineering construction output in Great Britain, 2023-27
      • Figure 44: Forecast new civil engineering construction output in Great Britain, 2023-27
    • Learnings from the last recession
      • Figure 45: Industry performance following the last recession (£m), 2008-16
    • Forecast methodology
  14. Water & Sewerage Sector Forecast

    • Ofwat approves a record £51bn of investment in the water sector in AMP7 (2020-25)
      • Figure 46: Infrastructure investment pipeline by water and sewerage companies, 2022-25
    • Water sector to invest £2.7bn in environmental projects to help green recovery from COVID-19
    • Environment Act 2021 creates significant drivers for capital investment
    • Asset health and resilience are set to be key features in the 2024 Price Review
    • Forecast civil engineering construction in the water and sewerage sector
      • Figure 47: Forecast civil engineering output for the water sector, 2023-27
      • Figure 48: Forecast civil engineering output for the sewerage sector, 2023-27
  15. Electricity Sector Forecast

    • Renewables capacity development pipeline
      • Figure 49: Renewable energy projects in pipeline, by technology, 2022
    • Civil engineering construction forecast in the electricity sector
      • Figure 50: Forecast civil engineering output for the electricity sector, 2023-27
      • Figure 51: Forecast civil engineering output for the electricity sector, 2023-27
  16. Gas Sector Forecast

      • Figure 52: Forecast civil engineering output for the gas sector, 2023-27
  17. Airport Sector Forecast

      • Figure 53: Forecast civil engineering output for the airports sector, 2023-27
  18. Communications Sector Forecast

      • Figure 54: Forecast civil engineering output for the communications sector, 2023-27
  19. Railways Sector Forecast

    • HS2 set to dominate rail infrastructure spending
    • Integrated Rail Plan for the Midlands and the North
    • National Rail sets key priorities for transition to CP7 (2025-29)
    • Implementation of Project Speed
    • Civil engineering construction forecast in the rail sector
      • Figure 55: Forecast civil engineering output for the rail sector, 2023-27
  20. Harbours Sector Forecast

      • Figure 56: Forecast civil engineering output for the harbours sector, 2023-27
  21. Roads Sector Forecast

    • RIS2 (2020-25) to see £24bn invested in strategic roads network
    • RIS2 projects plagued by rising costs and delays
    • National Highways plans to accelerate delivery of major road schemes
    • Civil engineering construction forecast in the roads sector
      • Figure 57: Forecast civil engineering output for the roads sector, 2023-27
      • Figure 58: Forecast civil engineering output for the roads sector, 2023-27
  22. Market Drivers – Water & Sewerage Sector

    • Key challenges facing the water and sewerage sector to 2050
    • Climate emergency
    • Population growth
      • Figure 59: Population projections for England, by region, 2018-41
    • Asset health and skills
    • Improving the environment
    • Consumer and community expectations
    • Water UK proposes regulatory reforms
    • Industry regulation
    • Legislative environment
    • Implications of Brexit on the UK water and sewerage sector
    • Environment Act 2021
    • Thames Tideway Tunnel
      • Figure 60: Estimated cost of Thames Tideway Tunnel, 2018-26
  23. Market Drivers – Gas & Electricity Sectors

    • Price controls
    • Decarbonisation of UK energy system
      • Figure 61: Low-carbon power generation capacity targets, 2022
    • Ambition to achieve net zero emissions by 2050 will push up electricity demand
    • Transition to low carbon electricity systems requires substantial investment in electricity transmission network
    • Renewable electricity capacity development pipeline
      • Figure 62: Renewable energy projects in pipeline, by technology, 2022
    • Energy storage to play key role in transition to clean electricity supply system
    • Hydrogen has a central role in helping reach Net Zero by 2050
  24. Market Drivers – Airports Sector

    • UK airport expansions face uncertain future
  25. Market Drivers – Communications Sector

    • Government committed to roll-out of full-fibre and 5G networks
    • Project Gigabit
  26. Market Drivers – Railways Sector

    • Drivers of investment in rail industry
    • Impact of COVID-19
    • Rail network funding and regulation
    • Network Rail’s spending plans for CP6
    • Williams-Shapps Plan for Rail
    • Integrated Rail Plan for the North and Midlands
  27. Market Drivers – Ports & Harbours Sector

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

    • RIS2 (2020-25) to see £24bn invested in strategic roads network
    • Period of ‘rapid change’ ahead for the road network
    • Preparation for RIS3 (2025-30)
  29. Competitive Strategies

    • Balfour Beatty’s Build to Last programme
    • Laing O’Rourke’s Deliver 2025 mission
    • BAM Nuttall focuses on markets where it has proven competitive strengths
    • Kier simplifies portfolio of business
    • Costain adopts ‘leading edge’ strategy to transition to higher margin services
  30. Industry Developments and Issues

    • Productivity gap needs to be closed
    • Civil engineering companies need to develop a wider set of skills, embrace digitalisation, data-sharing and collaboration
    • Greater collaboration and better data sharing are key themes for engineers in 2023
    • Trend towards long-term partnerships and alliances, especially in utilities sector…
    • …but increased cost pressures are leading to strained relationships between utility companies and contractors
    • Industry structure
      • Figure 63: Analysis of the civil engineering industry, by type of activity and company size (£000 and number of companies), 2022
      • Figure 64: Analysis of the civil engineering industry, by type of activity, number of companies and % of total, 2022
  31. Company Profiles

    • Introduction
    • Balfour Beatty
    • Build to Last programme
    • Balfour Beatty exits water and gas sectors
    • Financial performance
      • Figure 65: Financial analysis of Balfour Beatty, 2017-21
      • Figure 66: Turnover analysis of Balfour Beatty, by segment, 2019-21
    • Costain Group
    • ‘Leading Edge’ strategy
    • Financial performance and outlook
      • Figure 67: Financial analysis of Costain Group, 2017-21
      • Figure 68: Turnover analysis of Costain Group, by segment, 2019-21
    • J Murphy & Sons
    • Group strategy
    • Financial performance
      • Figure 69: Financial analysis of J Murphy & Sons, 2017-21
    • BAM Nuttall
    • Focus on markets where BAM has proven competitive strengths
    • Financial performance
      • Figure 70: Financial analysis of BAM Nuttall, 2017-21
    • Skanska UK
    • Skanska adopts Laser Focus Plan to improve performance and focus on core business
    • Skanska sells its infrastructure services arm and exits utility contracting
    • Financial performance
      • Figure 71: Financial analysis of Skanska UK, 2017-21
    • Galliford Try Infrastructure
    • Corporate restructuring sees company focus on water and highways sectors
    • Strategy
    • Financial performance
      • Figure 72: Financial analysis of Galliford Try Infrastructure, 2018-22
  32. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Methodology
  33. Further Sources and Contacts

    • Trade associations
    • Association of Consulting Engineers
    • Civil Engineering Contractors Association
    • Institution of Civil Engineers
    • Trade magazines
    • Building
    • Civil Engineering Surveyor
    • EMAP Publishing Ltd
    • International Railway Journal
    • Modern Railways
    • New Civil Engineer
    • Plant & Civil Engineer
    • Railway Gazette International
    • Rail Professional
    • Water & Sewerage Journal
    • Utility Week
    • Trade events
    • Railtex/Infrarail 2023
    • Traffex 2023

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