Construction Industry Insights
New Records in 2022
The construction industry has proved it’s resilience over the last 12 months. Although sector activity was mixed, the industry overcame challenges and saw a record amount of contract awards and planning approvals.
2022 saw record levels – Barbour ABI’s view
According to the Barbour ABI January Snap Analysis,?the high planning activity in 2022 shows the demand for construction with record levels of contract awards (￡80bn). Planning approvals also achieved an all-time high of ￡105bn, beating the 2016 record. The residential and industrial sectors had a strong performance in 2022. Infrastructure was another area with record results, which was mainly down to renewable energy projects.
In contrast, commercially sensitive sectors (residential, commercial and hotel & leisure) are weaker, as well as the education sector. In fact, education was the only sector with below average levels of contract awards in 2022. Planning applications maintained at pre-pandemic levels after recovering well in 2021. Although, this is not inflation adjusted, so it’s lower really.
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Project starts softening – Glenigan’s view
2023 begins on a somewhat gloomy note, with starts softening during the final quarter of 2022. Glenigan predict project starts to decline by 2% in 2023.
Despite the economic uncertainty, some verticals rallied last year, especially commercial starts. Office starts rose 17% in Q4, up by a third on 2021 figures.
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Residential slipped back 5% according to Glenigan
Residential project starts slipped back 5% during Q4, and 15% compared with the same period of 2021. The current spike in inflation, higher taxes, and rising mortgage costs are expected to constrain activity in consumer related areas in 2023. This includes private housing, retail, and hotel & leisure.
Warehousing continues to provide bright spot
In 2022, warehousing performance reflected the changes initiated by coronavirus restrictions and supply chain adjustments made after leaving the EU. This contributed towards a 25% increase in the value of industrial starts last year, a new record for the sector.?Glenigan’s Construction Industry Forecast 2023-2024?predicts that activity in the sector will remain well above pre-pandemic levels this year.
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Construction industry forecasts for 2023
Tom Hall, Chief Economist at Barbour ABI predicts slower later stage planning and construction activity, particularly in the commercially sensitive sectors as the economy slows. Likewise, Glenigan’s construction industry predictions for 2023 show that project starts will fall by 2%.
Read on for the 2023 construction industry predictions from data analysts and economists at Glenigan, Experian and Barbour ABI.
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Glenigan’s predictions
Glenigan industry forecast for 2023 to 2024?shows that overall, project starts will slip back by 2% in 2023. Industrial, infrastructure, office starts and the education sector will provide brighter spots.
Growth in education project starts is expected to double
Glenigan predict a significant increase in project starts in the education sector after a poor performance in 2022. This remains in line with the?October 2021 Spending Review. It revealed that the Department of Education’s annual capital?budget will strengthen significantly over the next two years. The government’s programme to rebuild 500 schools in response to a predicted rise in school numbers has been slow to get going. However, there are around 300 school projects that have been prioritised (Glenigan Project ID: 14175517).
Warehouse construction projects will continue to bolster the industrial sector
Planning approvals for industrial projects were significantly higher in 2022 compared to the previous year. Similar to last year,?industrial projects will provide a bright spot for construction?in 2023.
There are firm development pipelines for the industrial sector thanks to:
? The growth of online business.
? Brexit and global supply chain problems which have encouraged businesses to hold more stock.
? Plus, there is a continuing strong demand for modern industrial space for manufacturers that is likely to support new orders in 2023.
Office starts provide another construction bright spot
Office starts are set to rise,?particularly small to medium developments. There was a 4% increase in new office starts in 2022 and a further 5% expected this year. In addition to these new build projects, office refurbishment work is also predicted to increase. Glenigan highlighted that the office development pipeline looks ‘notably healthy’ in London, the East of England and Yorkshire & Humberside.
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Major energy and infrastructure projects
Major projects?boost civil engineering?workload as the Government prioritises infrastructure and energy investment. This is partly because of new government measures to secure the UK’s energy independence. Read more about?renewed nuclear program and Energy bill.
In?January’s Barbour ABI’s Regional Review, the South East has the highest total of planning approvals for large infrastructure projects. This is followed by Yorkshire & Humberside and then the Midlands.
Consumer related construction projects will be suppressed
The current spike in inflation, higher taxes, and rising mortgage costs are expected to constrain activity in consumer related areas in 2023, such as retail, and hotel & leisure. Although interestingly, Glenigan also recently claimed that the immediate outlook for the?housing construction activity has been largely undisturbed?despite the house market uncertainty.
Barbour ABI Predict Slower Activity
2023 may well see slower activity, particularly in commercially sensitive sectors, as the economy slows, according to Barbour ABI.
In the January Snap Analysis, Barbour ABI highlight that 2022 contract awards were another record-breaker for the industrial sector with ￡11.6bn down to warehousing. The Barbour ABI’s future expectation of the industrial sector remains low risk, following the same prediction as Glenigan analysts.
It’s hard to predict how the construction industry will react in 2023
Looking at the year ahead, it is ‘hard to predict the future at the moment’ according to Tom Hall, the Chief Economist at Barbour ABI. He continues to say that the real question is how much the construction industry will be effected by:
? The UK recession
? Cost of living crisis causing hardship for UK citizens
? Ongoing Brexit trade barriers
? Construction cost increases
? Tight labour market
Stable output for non-residential sectors – Predictions from Experian
Experian are forecasting a 1.7% dip in construction?activity for 2023 before returning to modest 1.2% growth in 2024. This includes a near 7% fall in new housing work due to falling home prices over the next two years, the cost of living crisis and higher borrowing rates.
Experian’s construction industry predictions for 2023 claim that non-residential sectors should escape with stable output or even see sluggish growth. Plus, there is a backlog of new orders for prisons, defence and some new hospital work, according to Experian.
This less pessimistic outlook for 2023 contrasts with the Construction Products Association which predicts a sharper?near 4% contraction in orders.
Reflecting on the year’s wins, challenges and recovery
2022 was a challenging year with industry-wide challenges that have tested the sector’s resilience. While Russia’s unprovoked invasion of Ukraine caused price rises and material shortages, contractors and clients have persevered, delivering projects to reinvigorate the economy.
In spite of the challenges, 2022 was a year of exciting developments at Elland Steel. We have worked on some remarkable projects, including delivering award-winning developments and supporting key sectors.
2023 marks our 50th anniversary and we have some exciting projects lined up for the months ahead. Here in our 2022 review, we have summarised last year’s highlights and reveal some of our upcoming projects.
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Achieving an excellent Net Promoter Score
In 2021, we earned a Net Promoter Score (NPS) of 75, an ‘excellent’ score for any industry.
As part of our 2022 review, we analysed the data collected from our client satisfaction surveys. After a continued our open dialogue with clients to gather feedback at various stages of our projects, we gained an incredible NPS of 82.
In the additional comments section, individual team members were thanked for being :
‘‘really helpful and collaborative’’
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‘‘a real pleasure to work with’’
‘‘very hands on which aided in the smooth execution of the works’’.
There was also more general feedback such as:
‘‘Elland Steel is a well set up and reliable company.’’
‘‘I’ve worked with ESS for over 30 years at 3 different main contractors.?They have always been one of my “go to” steelwork contractors.”
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Earning a quality award
Furthermore, we were given an award for ‘‘consistent levels of high quality’’ from the BAM North West office during their supply chain awards ceremony.
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Completing essential developments in 2022
In 2022, we proudly supported major industries as they started to recover from challenges in the industry.
In Whitechapel, we completed the complex redevelopment of Central House, now named?the Rowe. A steel fa?ade retention system was used whilst the internal concrete structure was remodelled. We removed the temporary steelwork and installed 6 new floors of steelwork on top of the concrete building.
At?Kings Cross S3, we supplied and installed the structural package for the 11 storey mixed use building, now named One Keskidee Square. This included fabricating 2550 tonnes of structural steel and temporary steel for the crane grillage.
Also in London, we supplied and installed the full structural package for the 5 storey?North Brent School.
And in York, we supported the delivery of the ABI, an?Acquired Brain Injury Hospital Unit?that supports brain injury rehabilitation.
We also assisted with the development of the?New Victoria in Manchester?– A complex application that required us to safely assemble hoops on the ground before lifting them up and installing them on floors 20 and 25.
In Leeds, we delivered the structural package for?11 & 12 Wellington Place. The linked twin structures creates a multi-storey office block, gym and car park.
At?Halifax Bus Station, we supplied and installed the structural package for its redevelopment. This included retaining the grade II listed fa?ade.
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Continuing work on regenerative schemes
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Our ongoing projects are all contributing to reinvigorating or regenerating cityscapes.
In Sunderland, work is well underway to complete the structural package for the?Maker & Faber offices?with Sir Robert McAlpine. The 6-storey Maker building was the first structure that we supplied and erected. It has no internal columns and a centrally positioned core. The second structure, Faber, is 5 storeys and features internal corridors.
We’ll be finishing the erection of the structural steel for 2 projects in the education sector. One is a new school in Greater London, alongside BAM Construction. The other is a five-storey multi-use building for the University of Hertfordshire, working with Morgan Sindall.
In Bradford, we will be finishing?One City Park?for Caddick Construction. The 5 storey office building is a stylish curved shape with roof top terraces.
With BAM Construction we’re due to finish erecting the structural package, as they transform an industrial site near St Pancras Hospital to create residential, retail and office spaces in Camden, London.
Also in London, the UoH?Specs Building?is almost complete, where we fabricated over 1200 tonnes of steel and installed 14,000 metres of metal decking. The 5-storey structure will be the University of Hertfordshire’s largest building.
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Looking forward to new construction projects
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In the coming months, we’ll be finishing work on the projects mentioned above, along with AWE and BAE projects. We will also be working on new developments, mainly for the public sector.
We’ll be installing the structural package for two healthcare projects: Chesterfield Mental Health and?Derbyshire Mental Health, working with Sir Robert McAlpine and Vinci.
Meanwhile in Manchester, we’ll be starting?plot 9a First Street?for BAM, which will be used as Government offices.
Although this year won’t offer a completely clean slate for the construction industry, the supply chain challenges already overcome and new ways of working adopted through 2022, set us in good stead for a better 2023.
Combining new structures with existing structural frames in a refurbishment project
Wigan Life Centre is a public services hub that delivers a range of council services and leisure facilities. The main contract was awarded to?Morgan Sindall, who in turn appointed Elland Steel to supply and install the structural package for both the north and south site.
The refurbishment project required the careful retention of the grade II listed fa?ade at the north site. This building also needed the fabrication and installation of 500 tonnes of new steelwork and metal decking.
Whereas, the south site involved repurposing the swimming pool and basement and adding 5 floors of new steelwork, totalling 1000 tonnes. Both sites had their own set of risks. The collaboration between pre-construction teams was fundamental to overcoming challenges on this development project.
The design challenges of combining the old with the new styles
LCE architects reimagined the building, reinventing it with a modern, open flowing design. The grade II listed fa?ade was paired with a glazed front elevation to maximise the natural daylight in the building.
The structural engineer was tasked with finding a way to achieve the architectural vision of a light open space whilst ensuring that the building was structurally sound.
The structural steel frame provided a column free solution for the main pool
At the south site, the requirements were analysed and a steel frame was recommended by the Structural Engineer. It would keep the overall weight of the frame to a minimum to produce an efficient substructure design.?The solution included a 27m-long by 7m deep ‘King truss’ with beams running to it, to achieve a column-free area for the main pool.
Working with the structural engineer, Elland Steel fabricated 500 tonnes of structural steel including the ‘King’ truss. This truss weighed 53t and it supports two floors and the roof. We shipped the trusses to site in six sections, assembling them on the ground, before lifting them into position to reduce the amount of work at height.
The end result: A refurbishment success that minimised risk
Built on the site of the former swimming pool, the new structure makes use of the old basement level, which was retained after the demolition process. This required close collaboration and risk management from all parties involved to maximise constructability. We also improved buildability by fabricating the steelwork in a way that it could be quickly assembled on the ground, before being lifted into position.
Using cloud survey techniques, an accurate representation of the existing structure allowed the merge of the new with the existing structure, in order to confidently plan as safe sequence of temporary works and careful modification of the existing structure.
Overcoming location challenges when building on top of London Underground
Installing structural steelwork directly above rail tunnels has several challenges that need to be addressed during the planning stage. Close collaboration is needed to plan the foundation structure, improve buildability and minimise acoustic vibrations.
Elland Steel Structures has successfully completed many contracts in busy locations with limited access, including?Central House?in London. This is one of the reasons why Elland Steel was awarded the contract for the?Kings Cross Bridge?office building.
This tight construction site was directly on top of the London underground, which meant complex enabling works.
As part of the structural package, we were asked to install 3 steel staircases and the floor and roof decking. This is in addition to the 230 tonnes of steel that we fabricated for the basement, upper and lower ground floors, levels 1 & 2 and the roof.
Ramboll assisted with complicated enabling works
Our collaboration with Ramboll and?Murphy group?helped improve buildability, particularly as?Ramboll?provided engineering expertise for the complex enabling works.
This started in the Underground line, when the ground floor supporting structure was established. The office block’s retained basement slab would actually be the tunnel soffit of the Metropolitan Line (of London underground) and the Moorgate Line (part of Network Rail).
The steelwork was designed to be lightweight so the imposed load on the foundations would not impact the infrastructure below. As well as this, the frame was designed to use part of the existing frame.
Minimising disruption
The site is surrounded by one of the busiest cross-sections in the capital. This meant that we needed to carefully plan ‘just-in-time’ deliveries. Due to the nature of the active rail-lines below, anti-vibration bearing springs were utilised in the structure and foundations. This minimised the transfer of sound and vibration from the trains below.
Close collaboration was vital to the success of the project
We asked for feedback at various stages of the project. Overall, we gained an excellent net promoter score of 90 for this project for our collaboration. We were particularly praised for our director-led approach to project management.
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