Contracts Awarded In December Were More Than £2bn Higher Than Same Month In 2012

A new report has revealed that the value of construction projects in the UK increased by almost 70% last year.

The study by Barbour ABI's Economic & Construction Market Review also found that the value of new project contracts awarded last December reached £6 billion. The figure was £3.6 billon in the same month in 2012.

The Review, which uses data for every UK planning application as well information from the ONS, found that much of the growth was attributed to the residential construction sector which continues to be boosted by the Government's Help to Buy scheme.

Michael Dall, lead economist at Barbour ABI, said:

"Residential construction remained strong throughout the latter half of 2013 and has truly spurred on the growth of the industry. In the most part, the increase in residential activity can be attributed to the Government's Help to Buy scheme, but there are concerns that demand created by such schemes will surpass the rate of house building. This is a topic that will be the source of major debate over the next 12 months in the lead up to the 2015 elections.

"The performance of infrastructure as a sub-sector is also incredibly encouraging. The figures are a reflection of an exciting year of renewed optimism for the construction industry and, as a major contributor to figures for the industry as a whole, the sustained period of strong project values in this sector is good news and a key indicator for future growth.

"The National Infrastructure Plan, as published by the Government on December 4th 2013, updated the top 40 infrastructure projects in the pipeline for the UK, outlining a pathway for potential growth. An increase in new orders data recorded by Barbour ABI encourages me to suggest that the sector does have strong growth potential this year."

Expert Opinion

We welcome the findings of this report and have also seen a significant upturn in activity levels within the sector. <br/> <br/>“It is vital that UK businesses take full advantage of this market optimism whilst ensuring that they are fully protected. There is a tendency for businesses to get on with the work immediately after a contract has been awarded, but it is important to ensure that they are protected via their contract. Extra vigilance is required, as is using a specialist legal adviser with a proven track record in the sector. <br/> <br/>“As work opportunities increase for construction companies, we expect that businesses will see extra pressure on their cash flow due to a lag in getting paid under most standard forms and bespoke construction contracts, whilst still needing to pay one’s supply chain. <br/> <br/>“This can however be protected via robust contract drafting and negotiation and debt recovery services. In addition to providing these services, we advise construction firms on how to release cash via adjudication, winding up petitions and other mechanisms.” <br/>