Public Sector Construction - UK 2006

Abstract

INTRODUCTION and OVERVIEW

AMA Research has recently published the 1st Edition of the Public Sector (Non-Residential Construction Market in the United Kingdom report. The report should be of particular interest to individuals and institutional investors, and provides a comprehensive and easy to use review of public sector (non-residential) construction.

Key features of this brand new building insight: -

• An overall review of the UK construction industry with estimated forecasts for growth over the next few years.
• Detailed assessment of the major sectors within public sector construction including education, healthcare, defence and law and order.
• An in-depth analysis of Government funding of public sector areas including education, healthcare and defence.
• A review of Government targets and current progress of construction initiatives within the education and healthcare sectors, such as Building Schools for the Future and the NHS Plan.
• A review of the major influences affecting the public sector construction market including increased government regulation governing minimum requirements for the energy performance of all new buildings and external factors such as rising energy prices and labour and transport costs.

Areas of particular interest include:-

• The way in which Government clients procure public sector construction work varies and the Report assesses some of the major procurement routes including PFI, NHS LIFT and Procure21.
• The use of prefabricated buildingsfor public sector work has increased as a result of government initiatives such as Building Schools for the Future and the emphasis of NHS care within the primary sector.
• A brief summary of the UK contracting industry and profiles leading contractors in the public sector construction market.
• Recent consolidation activity in the UK contracting industry has seen the restructuring and consolidation of a number of high profile contractors including Mowlem, M J Gleeson, Kajima, Jarvis and AMEC.
• Major restraining factors on growth in public sector construction include persistent high oil prices, increasing labour and materials costs and a shortage of skilled resources.
• Key drivers of growth in the public sector construction market and estimated forecasts for growth over the next few years

Key areas covered in the report:-

UK PUBLIC SECTOR CONSTRUCTION MARKET

• Value of Total Construction New Work Outputin the United Kingdom.
• Forecasts for construction output beyond 2005.
• Analysis of Public Sector Output in the UK Construction Industry with forecasts beyond 2005.
• Review of main public sector areas such as education, healthcare and defence.
• Analysis of the main drivers and constraints of growth in the construction industry.

FUNDING OF PUBLIC SECTOR WORK

• Analysis of public sector investment by the Government
• Review of the 2004 and 2007 Spending Reviews
• Current an forecast public sector investment
• Overall investment and capital expenditure in the education and healthcare sectors
• Review of Government targets and current progress of construction initiatives within the education and healthcare sectors, such as Building Schools for the Future and the NHS Plan.

PROCUREMENT OF PUBLIC SECTOR WORK

• Procurement processes for public sector work.
• Types of public sector procurement routes.
• Education work procurement routes including PFI.
• Healthcare work procurement routes including PFI, NHS LIFT and Procure21.
• Defence procurement routes.
• Specification issues including supply chain management.

FACTORS AFFECTING THE PUBLIC SECTOR CONSTRUCTION MARKET

• Analysis of the rise in construction costs and building materials prices with a review of recent % rises in specific building materials.
• The impact of rising energy prices on building materials with an analysis of wholesale energy prices.
• Overview of construction employment levels and labour costs.
• Major legislative drivers affecting the public sector construction market including energy performance of buildings and revisions to Part L of the Building Regulations
• Environmental concerns in public sector construction including sustainable construction.

Table of Contents

• 1.INTRODUCTION
• 2.SUMMARY
• 3.PUBLIC SECTOR CONSTRUCTION MARKET
  • 3.1CONSTRUCTION MARKET OVERVIEW
    • 3.1.1Value of Output -- Construction New Work
    • 3.1.2Construction Output in 2005
    • 3.1.3Outlook for 2006 and Beyond
  • 3.2PUBLIC SECTOR (NON-RESIDENTIAL) CONSTRUCTION MARKET
    • 3.2.1Public Sector Construction Output in 2005
    • 3.2.2Outlook for 2006 and Beyond
  • 3.3SECTORAL ANALYSIS
    • 3.3.1Healthcare Sector
    • 3.3.2Education Sector
    • 3.3.3Defence Sector
    • 3.3.4Other Public Sector Categories
• 4.FUNDING OF PUBLIC SECTOR WORK
  • 4.1PUBLIC SECTOR INVESTMENT
    • 4.1.1Current & Forecast Public Sector Investment
    • 4.1.2The 2004 Spending Review
    • 4.1.32007 Spending Review
    • 4.1.42005 Budget
  • 4.2EDUCATION SPENDING
    • 4.2.1Total Education Spending
    • 4.2.2DfES Spending
    • 4.2.3Education Capital Investment
    • 4.2.4Education Output - Government Targets and Progress to Date
  • 4.3HEALTHCARE SPENDING
    • 4.3.1Total Healthcare Spending
    • 4.3.2NHS Spending
    • 4.3.3Healthcare Capital Investment
    • 4.3.4Healthcare Output - Government Targets and Progress to Date
• 5PROCUREMENT OF PUBLIC SECTOR WORK
  • 5.1PROCUREMENT PROCESS FOR PUBLIC SECTOR WORK
    • 5.1.1Types of Procurement Route
    • 5.1.2Education Procurement
    • 5.1.3Healthcare Procurement
    • 5.1.4Defence Procurement
  • 5.2SPECIFICATION ISSUES
    • 5.2.1Supply Chain Management
• 6.CONSTRUCTION CONTRACTORS
  • 6.1STRUCTURE OF THE CONTRACTING INDUSTRY
    • 6.1.1Consolidation Activity
    • 6.1.2Consortia
  • 6.2KEY PUBLIC SECTOR CONTRACTORS PROFILES
    • 6.2.1Overview
    • 6.2.2Key Contractor Profiles
• 7.FACTORS AFFECTING PUBLIC SECTOR CONSTRUCTION
  • 7.1OVERVIEW
  • 7.2CONSTRUCTION EMPLOYMENT
    • 7.2.1Employment Levels
    • 7.2.2Labour Costs
    • 7.2.3Skills Shortages
  • 7.3CONSTRUCTION COSTS
    • 7.3.1Construction Materials Costs
    • 7.3.2Increased Energy Prices
  • 7.4LEGISLATIVE DRIVERS
    • 7.4.1Energy Performance of Buildings Directive
    • 7.4.2Building Regulations - Part L
  • 7.5ENVIRONMENTAL CONCERNS IN PUBLIC SECTOR CONSTRUCTION
    • 7.5.1Sustainable Construction
  • 7.6PREFABRICATED BUILDINGS
    • 7.6.1Application to Healthcare Projects
    • 7.6.2Application to Education Projects
    • 7.6.3Application to Defence Projects
• 8.FUTURE PROSPECTS
• TABLES AND CHARTS
  • TABLE 1GOVERNMENT SPENDING BY FUNCTION 2005-06 (£BN)
  • CHART 2VALUE OF CONSTRUCTION OUTPUT NEW WORK 1998-2005 (£ BILLION)
  • CHART 3VALUE OF CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2005
  • CHART 4PUBLIC SECTOR (NON-RESIDENTIAL) CONSTRUCTION OUTPUT - % BY TYPE OF WORK 2004
  • TABLE 5- SUMMARY OF PUBLIC SECTOR INVESTMENT AND MAJOR CAPITAL SPENDING PROGRAMMES IN EDUCATION & HEALTH
  • TABLE 6CONTRACTORS OUTPUT OF HEALTH SECTOR WORK (PUBLIC/PRIVATE) 1994-2005 (£M)
  • TABLE 7CONTRACTORS OUTPUT OF PUBLIC EDUCATION SECTOR WORK 1998-2005 (£M)
  • CHART 8PUBLIC SECTOR GOVERNMENT SPENDING - % BY FUNCTION 2005-06
  • TABLE 9PUBLIC SECTOR GROSS CAPITAL SPENDING 2004 - 2011 (£ BILLION)
  • TABLE 10PUBLIC SECTOR GROSS CAPITAL SPENDING 2004 - 2011 (£ BILLION)
  • CHART 11VALUE OF TOTAL UK EDUCATION EXPENDITURE 2004-2010 (£ BILLION)
  • TABLE 12DFES SPENDING 2002 -- 2008 (£BN)
  • CHART 13UK EDUCATION CAPITAL EXPENDITURE 2004-2008 (£ BILLION)
  • TABLE 14CONSTRUCTION ACTIVITY IN THE UK EDUCATION SECTOR -- PROGRESS TO DATE- SEPTEMBER 2005
  • CHART 15VALUE OF UK NHS EXPENDITURE 2003-2010 (£ BILLION)
  • TABLE 16UK NHS PRIMARY CARE TRUST SPENDING ALLOCATIONS -- 2003-2010 (£BN)
  • TABLE 17UK NHS CAPITAL SPENDING -- 2003-2010 (£M)
  • TABLE 18CONSTRUCTION ACTIVITY IN THE UK HEALTHCARE SECTOR -- PROGRESS TO DATE- SEPTEMBER 2005
  • CHART 19PUBLIC SECTOR PFI INVESTMENT IN 2006 (BY TYPE OF WORK)
  • TABLE 20INVESTMENT IN SCHOOL BUILDINGS UNDER THE PRIVATE FINANCE INITIATIVE (PFI)
  • TABLE 21ESTIMATED CAPITAL EXPENDITURE ON PFI HEALTH SCHEMES 1997-2007
  • TABLE 22MOD -- MAJOR ONGOING ESTATE PROJECTS 2002-2028 (WITH ESTIMATED COSTS) (£M)
  • TABLE 23MAIN PRIVATE CONTRACTORS - BY NUMBER OF EMPLOYEES 2004
  • TABLE 24LEADING EDUCATION CONTRACTORS AND PRINCIPAL CONSORTIA
  • TABLE 25LEADING HEALTHCARE CONTRACTORS AND PRINCIPAL CONSORTIA
  • TABLE 26LEADING CONTRACTORS BY PUBLIC SECTOR (NON-HOUSING) WORK WON (£M) -- 12 MONTHS TO JUNE 2005
  • TABLE 27% INCREASE IN BUILDING MATERIALS IN THE UK (JULY 2004-2005):
  • TABLE 28% INCREASES IN WHOLESALE ENERGY PRICES 2004-2005 (2ND QUARTER)*