Table of Contents
Executive Summary
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- The market
- Electricity and railways sector drive civil engineering construction activity in 2017
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- Figure 1: New civil engineering construction output in Great Britain, 2013-17
- Electricity infrastructure sector has shown the strongest growth over the past five years
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- Figure 2: New civil engineering construction output in Great Britain, by sector, 2013-17
- Outlook for civil engineering sector remains positive over the next five years, supported by renewed government commitment
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- Figure 3: Forecast new civil engineering construction output in Great Britain, 2017-21
- Market factors
- Government places infrastructure investment at the heart of ambitious plans to close the UK’s productivity gap
- The largest sector in the current infrastructure and construction pipeline is energy
- Companies
- Trend towards long-term alliances and closer, integrated relationships in the utilities sector
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- Figure 4: Analysis of the civil engineering industry by type of activity, number of companies & of total, 2017
- What we think
Key Insights
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- What are the current government’s plans for infrastructure spending? Which sectors are set to drive infrastructure spending?
- How is the government looking to address lagging productivity in the wider construction sector?
- What are the potential implications of Brexit for UK infrastructure investment?
- Is Brexit likely to exacerbate current labour skills shortages?
Introduction
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- Definitions
- Methodology
- Abbreviations
- Market positioning
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- Figure 5: Total new construction and civil engineering output in Great Britain, 2013-17
UK Economy
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- Overview
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- Figure 6: Forecast GDP development 2017-23
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- Figure 7: UK GDP quarterly development, 2004-17
- Inflation
- Interest rates
- House prices
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- Figure 8: UK house price changes, 2006-17
- Consumer spending
- Manufacturing
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- Figure 9: UK manufacturing, 2014-17
- Business investment
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- Figure 10: UK GFCF, chained volume measures, seasonally adjusted, 2004-17
- Imports
- Exports
Market Factors
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- Water & sewerage
- Industry regulation
- Legislative environment
- European Water Framework Directive (WFD)
- Urban Waste Water Treatment Directive (UWWTD)
- The Drinking Water Directive
- Revised Bathing Water Directive
- Implications of Brexit on the UK water and sewerage sector
- Transfer of private sewers in England and Wales
- The Flood and Water Management Act 2010
- Water and sewerage retail competition opens up for all business customers in England in April 2017
- Gas & electricity
- Price controls
- UK energy policy
- UK committed to reducing carbon emissions by 80% below 1990 levels by 2050
- The government remains committed to tackling climate change despite Brexit vote
- New government policies urgently needed to achieve long-term emission reduction goals
- Government publishes long-awaited Clean Growth Plan in October 2017
- Levy Control Framework
- Renewable Energy Obligation (RO)
- Feed-in-Tariffs (FITs)
- Government commits to fresh FIT review before end of 2017
- Contracts for Difference (CfDs)
- First CfD auction concludes in February 2015
- Second CfD auction winning bids dominated by offshore wind, which has seen a dramatic fall in costs
- Next CFD auction scheduled for Spring 2019
- Annual Capacity Market auctions are held to help secure the UK’s energy supply
- Airports
- Communications
- Railways
- Rail network funding and regulation
- Sir Peter Hendy’s re-plan for Network Rail’s enhancement programme 2014-19
- The Shaw report
- Drivers of investment in rail industry
- Additional funding for rail infrastructure announced in 2016 autumn statement
- Rail sector announcements in Autumn Budget 2017
- High Speed Two (HS2) and proposed major schemes
- Ports & harbours
- Roads
Market Size & Segmentation
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- Key points
- Market size
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- Figure 11: Civil engineering construction output in Great Britain, 2013-17
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- Figure 12: Civil engineering construction output in Great Britain, 2013-17
- Market segmentation
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- Figure 13: Civil engineering construction output in Great Britain, by sector, 2013-17
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- Figure 14: Civil engineering construction output in Great Britain, by sector, 2013 and 2017
Water & Sewerage Sector
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- Key points
- Water & sewerage capital expenditure
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- Figure 15: UK capital expenditure on water and sewerage services, 2010/11-2014/15
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- Figure 16: UK capital expenditure on water and sewerage services, 2015/16-2016/17
- Water civil engineering construction output
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- Figure 17: Civil engineering construction output for the potable water industry in Great Britain, 2013-17
- Sewerage civil engineering construction output
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- Figure 18: Civil engineering construction output for the sewerage industry in Great Britain, 2013-17
Electricity Sector
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- Key points
- Electricity distribution capital expenditure
- Gross capital expenditure
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- Figure 19: UK gross capital expenditure by electricity distribution network operators, 2011/12-2016/17
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- Figure 20: UK gross capital expenditure by the electricity distribution network operators, 2012/13-2016/17
- Figure 21: Total expenditure by electricity distribution network operators in Great Britain, by type, 2015/16
- Smart grid development to support low-carbon economy
- Recent years have seen rapid increase in distributed generation connected to DNOs’ networks
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- Figure 22: Distributed Generation connected to the distribution network during DPCR5, 2011-15
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- Figure 23: Distributed Generation connected to the distribution network, 2015/16
- Electricity transmission capital expenditure
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- Figure 24: Size of electricity transmission network in Great Britain, 2017
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- Figure 25: Capital expenditure by the electricity transmission industry in Great Britain, 2012/13-2016/17
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- Figure 26: Capital expenditure by the electricity transmission industry in Great Britain, 2012/13-2016/17
- The electricity generation mix
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- Figure 27: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2011-16
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- Figure 28: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2016
- Renewables generation
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- Figure 29: Renewable electricity generation in the UK, 2011-16
- Offshore wind
- 33 offshore wind farms operational in UK
- UK is leading offshore wind market in Europe
- Offshore wind sees significant cost reductions
- Result of second CfD auction reveals further cost reductions for offshore wind
- Coal generation
- Nuclear generation
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- Figure 30: UK nuclear sites planned closure dates, as of December 2017
- Planned new nuclear power development marred by major delays
- Gas/CCGT generation
- Government to prioritise new gas-fired power stations
- Distributed generation
- Interconnectors
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- Figure 31: Existing and planned interconnectors, as of June 2017
- Electricity civil engineering construction output
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- Figure 32: Civil engineering construction output for the electricity industry in Great Britain, 2013-17
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- Figure 33: Civil engineering construction output for the electricity industry in Great Britain, 2013-17
Gas Sector
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- Key points
- Industry overview
- Gas capital expenditure
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- Figure 34: Total gas transmission and distribution capital expenditure, 2012/13-2016/17
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- Figure 35: Total gas transmission capital expenditure, 2012/13-16/17
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- Figure 36: Total gas distribution capital expenditure, 2012/13-2016/17
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- Figure 37: Total gas transmission and distribution capital expenditure, 2012/13-2016/17
- Replacement expenditure (Repex)
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- Figure 38: Length of iron gas mains replaced, by distribution network operator, 2011-16
- Civil engineering construction output
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- Figure 39: Civil engineering construction output for the gas industry in Great Britain, 2013-17
Airports Sector
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- Key points
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- Figure 40: 10 largest airports in the UK, 2011-16
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- Figure 41: Civil engineering construction output for the air transport industry in Great Britain, 2013-17
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- Figure 42: Civil engineering construction output for the air transport industry in Great Britain, 2013-17
Communications Sector
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- Key points
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- Figure 43: Key market developments in the telecoms sector, 2011-16
- Mobile networks
- Broadband networks
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- Figure 44: Civil engineering construction output for the communications industry in Great Britain, 2013-17
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- Figure 45: Civil engineering construction output for the communications industry in Great Britain, 2013-17
Railways Sector
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- Key points
- Capital expenditure
- Network Rail embarks on largest rail enhancement and investment programme in CP5 2014-19
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- Figure 46: Analysis of enhancement expenditure in Great Britain, by type, 2016-17
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- Figure 47: Renewal expenditure by asset, 2016 and 2017
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- Figure 48: Private sector investment in track and signalling, 2013-17
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- Figure 49: Private sector investment in stations, 2013-17
- Railways civil engineering output
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- Figure 50: Civil engineering construction output for the rail transport sector in Great Britain, 2013-17
Harbours Sector
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- Key points
- Overview
- Recent port expansion projects
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- Figure 51: Civil engineering construction output for the harbours and waterways sectors in Great Britain, 2013-17
Roads Sector
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- Key points
- Overview
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- Figure 52: Road network in Great Britain, by type, 2016
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- Figure 53: Road network expenditure in England, by activity and road type, 2011/12-2015/16
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- Figure 54: New construction and improvements of roads, motorways and all purpose trunk roads, in England, 2012/13-2016/17
- Progress and challenges with the road investment strategy
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- Figure 55: Civil engineering new road construction output in Great Britain, 2013-17
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- Figure 56: Civil engineering new road construction output in Great Britain, 2013-17
Seasonality of Civil Engineering Construction Output
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- Overall
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- Figure 57: Seasonality of civil engineering, 2012-16
- Water
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- Figure 58: Seasonality of civil engineering output in the water sector, 2012-16
- Sewerage
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- Figure 59: Seasonality of civil engineering output in the sewerage sector, 2012-16
- Electricity
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- Figure 60: Seasonality of civil engineering output in the electricity sector, 2012-16
- Gas, communications and air transport
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- Figure 61: Seasonality of civil engineering output in the gas, communications and air sector, 2012-16
- Railways
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- Figure 62: Seasonality of civil engineering output in the railways sector, 2012-16
- Harbours
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- Figure 63: Seasonality of civil engineering output in the harbours sector, 2012-16
- Roads
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- Figure 64: Seasonality of civil engineering output in the roads sector, 2012-16
Regional Civil Engineering Construction Output
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- Figure 65: Analysis of civil engineering output, by region, 2012-16
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Industry Structure
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- Key points
- Industry development
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- Figure 66: Analysis of the civil engineering industry by type of activity and company size, 2017
- Company profiles
AMEC Foster Wheeler
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- Transformation programme sees Amec Foster Wheeler sell non-core assets
- Amec Foster Wheeler acquired by Wood Group in October 2017
- Company outlook:
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- Figure 67: Financial analysis of AMEC Foster Wheeler, 2012-16
Amey
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- Recent acquisitions
- Amey UK launches transformation programme in 2016
- Key contract wins in 2016
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- Figure 68: Financial analysis of Amey UK, 2012-16
Balfour Beatty
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- Build to Last transformation programme launched in 2015
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- Figure 69: Financial analysis of Balfour Beatty, 2012-16
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- Figure 70: Financial analysis of Balfour Beatty by segment, 2015-16
Land Lease Construction
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- Company strategy and outlook:
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- Figure 71: Financial analysis of lend lease construction (Europe), 2012-16
The Costain Group
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- Company strategy and performance
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- Figure 72: Financial analysis of Costain Group, 2012-16
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- Figure 73: Turnover analysis of Costain Group, by division, 2014-16
John Laing
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- Company outlook:
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- Figure 74: Financial analysis of John Laing, 2012-16
Carillion
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- Carillion issues three profit warnings between July and September in 2017
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- Figure 75: Financial analysis of Carillion, 2012-16
J Murphy & Sons
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- Company outlook:
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- Figure 76: Financial analysis of J Murphy & Sons, 2012-16
Bam Nuttall
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- Company performance and outlook:
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- Figure 77: Financial analysis of Bam Nuttall, 2012-16
Interserve
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- Strategic focus in 2017
- Interserve issues profit warning in September 2017
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- Figure 78: Financial analysis of Interserve, 2012-16
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- Figure 79: Turnover segmentation of Interserve, 2016
Skanska UK
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- Skanska’s 2020 business plan:
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- Figure 80: Financial analysis of Skanska UK, 2012-16
Mcnicholas Construction Holdings
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- Kier acquires McNicholas Construction (Holdings)
- Company performance:
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- Figure 81: Financial analysis of McNicholas Construction (Holdings), 2012-16
Galliford Try Infrastructure
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- Galliford Try pulls out of bidding for large fixed-price infrastructure projects in 2017
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- Figure 82: Financial analysis of Galliford Try Infrastructure, 2012-16
Market Forecast
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- Key points
- Market overview
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- Figure 83: Forecast civil engineering construction output in Great Britain, 2018-22
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- Figure 84: Forecast civil engineering construction output in Great Britain, 2017-21
- 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
- Independent Infrastructure Commission to help ensure the timely delivery of major infrastructure projects
- Government launches productivity programme for infrastructure
- Government extends UK Guarantee Scheme to attract private investment in infrastructure projects
- Conservative government in support of Private Finance schemes
- National Infrastructure & Construction Pipeline
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- Figure 85: National Infrastructure and Construction Pipeline, by sector, as of autumn 2017
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- Figure 86: National Infrastructure and Construction Pipeline, by sector, as of autumn 2016
Water & Sewerage Sector Forecast
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- Key points
- Capital expenditure
- England & Wales - AMP6 2015-20
- Move towards long-term alliances and frameworks across industry
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- Figure 87: Total expenditure (Totex) allowance for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
- Major water & sewerage capital projects in pipeline
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- Figure 88: Water & sewerage infrastructure pipeline, as of autumn 2017
- Thames Tideway Tunnel
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- Figure 89: Estimated cost of Thames Tideway Tunnel, 2016/17-2021/22+
- Water industry development
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- Figure 90: Forecast civil engineering output for the water sector, 2018-22
- Sewerage industry development
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- Figure 91: Forecast civil engineering output for the sewerage sector, 2018-22
Electricity Sector Forecast
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- Key points
- Electricity infrastructure projects in the National Infrastructure and Construction Pipeline
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- Figure 92: Electricity infrastructure pipeline, as of autumn 2017
- Electricity distribution capital expenditure
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- Figure 93: Forecast network investment of the electricity distribution network operators in Great Britain, by company, 2015/16-2022/23
- Drivers for future capital investment in electricity transmission network
- Tentative signs of investor confidence returning in the UK renewables sector
- Renewables capacity development pipeline
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- Figure 94: Renewable energy projects in pipeline, by technology, as of September 2017
- Electricity civil engineering construction forecast
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- Figure 95: Forecast civil engineering output for the electricity sector, 2018-22
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- Figure 96: Forecast civil engineering output for the electricity sector, 2016-20
Gas Sector Forecast
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- Key points
- Gas infrastructure projects in the National Infrastructure and Construction Pipeline
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- Figure 97: Gas distribution and transmission infrastructure pipeline, 2017-21
- UK gas supply
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- Figure 98: Existing UK gas import infrastructure, as of November 2017
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- Figure 99: Proposed UK import projects, as of November 2017
- Gas distribution & transmission capital expenditure
- Innovation at centre of new price control model for gas distribution and transmission network
- Gas network operators to face tougher price controls from 2021
- Transmission network
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- Figure 100: Annual capital expenditure plans by National Grid Gas under RIIO-T1, by category, 2014-21
- Distribution network
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- Figure 101: Annual capex plans under RIIO-GD1, by GDN, 2014-21
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- Figure 102: Annual repex plans under RIIO-GD1, by GDN, 2014-21
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- Figure 103: Forecast total capex and repex during RIIO-GD1, 2013/14-2020/21
- Civil engineering construction output forecast
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- Figure 104: Forecast civil engineering construction output for the gas sector, 2018-22
Airports Sector Forecast
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- Key points
- Industry development
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- Figure 105: Forecast civil engineering output for the airport transport sector, 2018-22
Communications Sector Forecast
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- Key points
- Government commits £1 billion of funding for digital communications
- Communications infrastructure projects pipeline
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- Figure 106: Communications infrastructure pipeline, 2018-21
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- Figure 107: Forecast civil engineering output for the communications sector, 2018-22
Railways Sector Forecast
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- Key points
- Capacity constraints driving rail infrastructure investment
- Rail infrastructure projects pipeline
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- Figure 108: Rail infrastructure pipeline, as of autumn 2017
- Figure 109: Rail infrastructure projects pipeline, 2017
- Additional funding for rail infrastructure announced in 2016 autumn statement
- Rail sector announcements in Autumn Budget 2017
- High Speed Two (HS2) and proposed major schemes
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- Figure 110: Forecast civil engineering construction output for the rail sector, 2018-22
Harbours Sector Forecast
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- Key points
- Growth in off-shore wind farm developments offers opportunities to UK ports
- Strategic review of east coast port facilities
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- Figure 111: Forecast civil engineering construction output for the harbours sector, 2018-22
Roads Sector Forecast
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- Key points
- First Road Investment Strategy, spanning April 2015 to March 2020, signals the biggest investments in roads since the 1970s
- 2015 autumn statement
- 2016 autumn statement
- Autumn budget 2017
- Second Road Investment Strategy in development
- Reform of Highways Agency
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- Figure 112: Forecast civil engineering construction output for the roads sector, 2018-22
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- Figure 113: Forecast civil engineering construction output for the roads sector, 2018-22
Further Sources & Contacts
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- Association of Consulting Engineers
- Civil Engineering Contractors Association
- Institution of Civil Engineers
- Trade magazines
- Building
- Civil Engineering Surveyor
- Construction News
- International Railway Journal
- Modern Railways
- New Civil Engineer
- Plant & Civil Engineer
- Railway Gazette International
- Rail Professional
- Water & Sewerage Journal
- Utility Week
- Trade exhibitions
- Infrarail 2018
- Traffex 2019
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