Table of Contents
Overview
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- What you need to know
- Covered in this Report
Executive Summary
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- The market
- Civil engineering construction output up by an estimated 7% in 2018
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- Figure 1: New civil engineering construction output in Great Britain, 2014-18
- Development of renewables generation capacity drives activity in electricity sector
- Government commits to the biggest programme of road investments since the 1970s
- Rail represents third largest sector for civil engineering construction activity
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- Figure 2: Civil engineering construction output in Great Britain, by sector, 2018, (% of total)
- UK civil engineering construction activity set for continued growth
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- Figure 3: Forecast new civil engineering construction output in Great Britain, 2019-23
- But concerns remain about the government’s ability to deliver major infrastructure projects
- Skills shortage is also posing challenges for industry
- Companies and brands
- Trend towards long-term partnerships and alliances, especially in utilities sector
- Civil engineering companies are required to develop a wider set of skills and competencies
- Low margin bidding in the aftermath of financial crisis and project delays leads to major contractors facing financial difficulties
- What we think
Issues and Insights
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- Infrastructure construction pipeline is healthy, but concerns remain about the government’s ability to deliver major projects
- The facts
- The implications
- Independent Infrastructure Commission set up to help ensure the timely delivery of major infrastructure projects
- The facts
- The implications
The Market – What You Need to Know
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- Partial year data indicates a rise of 7% in civil engineering construction output in 2018
- New renewables generation capacity drives activity in electricity sector
- Government commits to the biggest programme of road investments since the 1970s
- Rail represents third largest sector for civil engineering construction activity
- Outlook for UK civil engineering sector remains positive
- But concerns remain about the government’s ability to deliver major infrastructure projects
- Skills shortages is also posing challenges for industry
Market Size
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- Figure 4: Civil engineering construction output in Great Britain, 2014-18
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- Figure 5: Civil engineering construction output in Great Britain, 2014-18
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- Figure 6: Total new construction and civil engineering output in Great Britain, 2013-17
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Market Segmentation
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- Figure 7: Civil engineering construction output in Great Britain, by sector, 2014-18
- Figure 8: Civil engineering construction output in Great Britain, by sector, 2014-18
- Regional civil engineering construction output
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- Figure 9: Analysis of civil engineering output, by region, 2015-17
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Water & Sewerage Sector
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- Water & sewerage capital expenditure
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- Figure 10: UK capital expenditure on water and sewerage services, 2015/16-17/18
- English water companies plan to spend a record £50 billion+ in AMP7 (2020-25)
- Water civil engineering construction output
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- Figure 11: Civil engineering construction output for the potable water industry in Great Britain, 2014-18
- Sewerage civil engineering construction output
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- Figure 12: Civil engineering construction output for the sewerage industry in Great Britain, 2014-18
Electricity Sector
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- Electricity distribution capital expenditure
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- Figure 13: UK gross capital expenditure by electricity distribution network operators, 2012/13-2017/18
- Figure 14: UK gross capital expenditure by electricity distribution network operators, 2012/13-2017/18
- Smart grid development to support low-carbon economy and aid transition to a more flexible energy system
- Rapid increase in distributed generation
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- Figure 15: Distributed generation connected to the distribution network during DPCR5, 2012-17
- Figure 16: Distributed generation connected to the distribution network, 2016/17, (MW)
- Electricity transmission capital expenditure
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- Figure 17: Size of electricity transmission network in great Britain, 2018
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- Figure 18: Capital expenditure by the electricity transmission industry in Great Britain, 2013/14-2017/18
- Figure 19: Capital expenditure by the electricity transmission industry in Great Britain, 2013/14-2017/18
- The electricity generation mix
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- Figure 20: Analysis of electricity generation the UK, by type of fuel used, 2013-17
- Figure 21: Proportional importance of fuel source in UK electricity generation, 2013 and 2017
- Electricity civil engineering construction output
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- Figure 22: Civil engineering construction output for the electricity industry in Great Britain, 2014-18
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- Figure 23: Civil engineering construction output for the electricity industry in Great Britain, 2014-18
Gas Sector
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- Industry overview
- Gas capital expenditure
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- Figure 24: Total gas transmission and distribution capital expenditure, 2013/14-2017/18
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- Figure 25: Total gas transmission capital expenditure, 2013/14-2017/18
- Figure 26: Total gas distribution capital expenditure, 2013/14-2017/18
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- Figure 27: Total gas transmission and distribution capital expenditure, 2013/14-2017/18
- Replacement expenditure dominated by iron mains replacement programmes
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- Figure 28: Length of iron gas mains replaced, by distribution network operator, 2012-17
- Gas civil engineering construction output
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- Figure 29: Civil engineering construction output for the gas industry in Great Britain, 2014-18
Airports Sector
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- Figure 30: 10 largest airports in the UK, by air transport movements, 2011-16
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- Figure 31: Civil engineering construction output for the air transport industry in Great Britain, 2014-18
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Communications Sector
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- Overview
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- Figure 32: Key market developments in the Telecoms Sector, 2012-17
- Mobile networks
- Broadband networks
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- Figure 33: Civil Engineering Construction Output for the Communications Industry in Great Britain, 2014-18
- Figure 34: Civil engineering construction output for the communications industry in Great Britain, 2014-18
Railways Sector
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- Network Rail embarks on largest rail enhancement and investment programme in CP5 2014-19
- Enhancements and renewals expenditure
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- Figure 35: Analysis of enhancement expenditure in Great Britain, by type, 2015-18
- Figure 36: Renewal expenditure by asset, 2017 and 2018
- Railways civil engineering output
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- Figure 37: Civil engineering construction output for the rail transport sector in Great Britain, 2014-18
Harbours Sector
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- Overview
- Recent port expansion projects
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- Figure 38: Civil engineering construction output for the harbours and waterways sectors in Great Britain, 2014-18
Roads Sector
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- Overview
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- Figure 39: Road network in Great Britain, by type, 2017
- Figure 40: Road network expenditure in England, by activity and road type, 2011/12-2015/16
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- Figure 41: New construction and improvements of roads, motorways and all purpose trunk roads, in England, 2012/13-2016/17, (kilometres)
- Challenges with the Road Investment Strategy
- Highways England appoints 13 contractors on its £8.7 billion Regional Delivery Partnership framework
- Civil engineering construction output
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- Figure 42: Civil engineering new road construction output in Great Britain, 2014-18
- Figure 43: Civil engineering new road construction output in Great Britain, 2014-18
Market Forecast
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- Civil engineering construction forecast
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- Figure 44: Forecast civil engineering construction output in Great Britain, 2019-23
- Figure 45: Forecast new civil engineering construction output in Great Britain, 2019-23
- 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
- First National Infrastructure Assessment published in summer 2018
- Government launches productivity programme for infrastructure
- Government extends UK Guarantee Scheme to attract private investment in infrastructure projects
- National Infrastructure & Construction Pipeline
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- Figure 46: National Infrastructure and Construction Pipeline, by sector, as of autumn 2018
- Figure 47: National infrastructure and construction pipeline, by sector, as of autumn 2018
Water & Sewerage Sector Forecast
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- Move towards totex in AMP6 and beyond set to reduce bias towards capital spending
- Move towards long-term alliances and frameworks across industry
- Total expenditure plans for AMP6
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- Figure 48: Total expenditure (totex) allowance for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
- English water companies plan to spend a record £50 billion+ in AMP7 (2020-25)
- Major water and sewerage capital projects in the pipeline
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- Figure 49: Water & sewerage infrastructure pipeline, as of autumn 2018
- Thames Tideway Tunnel
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- Figure 50: Estimated cost of Thames Tideway Tunnel, 2016/17-2021/22+
- Forecast civil engineering construction in water sector
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- Figure 51: Forecast civil engineering output for the water sector, 2019-23
- Forecast civil engineering construction in sewerage sector
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- Figure 52: Forecast civil engineering output for the sewerage sector, 2019-23
Electricity Sector Forecast
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- Electricity infrastructure projects in the National Infrastructure and Construction Pipeline
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- Figure 53: Electricity infrastructure pipeline, as of autumn 2018
- Renewables capacity development pipeline
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- Figure 54: Renewable energy projects in pipeline, by technology, as of August 2018
- Civil engineering construction forecast in the electricity sector
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- Figure 55: Forecast civil engineering output for the electricity sector, 2019-23
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- Figure 56: Forecast civil engineering output for the electricity sector, 2019-23
Gas Sector Forecast
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- Gas infrastructure projects in the National Infrastructure and Construction Pipeline
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- Figure 57: Gas distribution and transmission infrastructure pipeline, as of autumn 2018
- Transmission network capex forecast
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- Figure 58: Annual capital expenditure plans by National Grid Gas Under RIIO-T1, by category, 2014-21
- Distribution network capex forecast
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- Figure 59: Annual capex plans under RIIO-GD1, by GDN, 2014-2021
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- Figure 60: Annual Repex plans under RIIO-GD1, by GDN, 2014-2021
- Figure 61: Forecast total capex and repex during RIIO-GD1, 2013/14-2020/21
- Gas network operators to face tougher price controls from 2021
- Civil engineering construction forecast in the gas sector
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- Figure 62: Forecast civil engineering output for the gas sector, 2019-23
Airport Sector Forecast
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- Figure 63: Forecast civil engineering output for the airports sector, 2019-23
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Communications Sector Forecast
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- Communications infrastructure projects pipeline
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- Figure 64: Communications infrastructure pipeline, 2019-21
- Civil engineering construction forecast in the communications sector
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- Figure 65: Forecast civil engineering output for the communications sector, 2019-23
Railways Sector Forecast
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- Network Rail set to spend £35 billion in CP6 (2019-24)
- Rail infrastructure projects pipeline
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- Figure 66: Rail infrastructure projects pipeline, 2018
- Civil engineering construction forecast in the rail sector
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- Figure 67: Forecast civil engineering output for the rail sector, 2019-23
Harbours Sector Forecast
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- Growth in off-shore wind farm developments offers opportunities to UK ports
- Strategic review of east coast port facilities
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- Figure 68: Forecast civil engineering output for the harbours sector, 2019-23
Roads Sector Forecast
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- First Road Investment Strategy, spanning April 2015 to March 2020, signals biggest investment in roads since the 1970s
- Government confirms further increase in road investment for period 2020-25
- Civil engineering construction forecast in the roads sector
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- Figure 69: Forecast civil engineering output for the roads sector, 2019-23
- Figure 70: Forecast civil engineering output for the roads sector, 2019-23
Market Drivers – Water & Sewerage Sector
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- Future challenges facing the water and sewerage sector
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- Figure 71: UK population, by region, 2014-36
- 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
Market Drivers – Gas & Electricity Sectors
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- Price controls
- UK committed to reducing carbon emissions by 80% below 1990 levels by 2050
- UK currently on track to miss emission reduction targets between 2023 and 2032
- Policies to decarbonise electricity
- Renewables Obligation
- Feed-in Tariffs
- Carbon Price Floor
- Contracts for Difference
- Capacity Market
Market Drivers – Airports Sector
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- Government backs construction of third runway at Heathrow Airport to meet future capacity needs in the south east
Market Drivers – Communications Sector
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- Government identifies roll-out of 5G and full-fibre connections as priority areas of investment
Market Drivers – Railways Sector
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- Drivers of investment in rail industry
- Rail network funding and regulation
- Sir Peter Hendy’s re-plan for Network Rail’s enhancement programme 2014-19
- The Shaw report
- Network Rail launches transformation plan in 2016, implementing many of the measures set out in Shaw report
- Government publishes its strategic vision for rail
- Network Rail set to spend £35 billion in CP6 (2019-24)
Market Drivers – Ports & Harbours Sector
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- UK port demand set to increase
Market Drivers – Roads Sector
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- Government commits to biggest programme of road investment since the 1970s
- Government confirms further increase in road investment for period 2020-25
Companies and Brands – What You Need to Know
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- Low margin bidding post-financial crisis and project delays leads to major contractors facing financial difficulties
- Balfour Beatty now focusses on specific markets with inherent growth
- The Murphy Group aims to transform into an established tier one provider in core market sectors
- Skanska undergoes restructuring to improve performance and focus on core business
Industry Structure
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- Sector remains relatively fragmented
- Trend towards long-term partnerships and alliances, especially in utilities sector
- Civil engineering companies are required to develop a wider set of skills and competencies
- Low margin bidding post-financial crisis and project delays leads to major contractors facing financial difficulties
- Industry development
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- Figure 72: Analysis of the civil engineering industry by type of activity and company size, 2018, (Number of employees and number of companies)
- Figure 73: Analysis of the civil engineering industry by type of activity, number of companies and % of total, 2018
Company Profiles
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- Introduction
- Balfour Beatty
- Build to Last transformation programme launched in 2015
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- Figure 74: Financial analysis of Balfour Beatty, 2013-17
- Figure 75: Turnover analysis of Balfour Beatty, by segment, 2015-17
- The Costain Group
- Group strategy
- Company performance and outlook
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- Figure 76: Financial analysis of Costain Group, 2013-17
- Figure 77: Turnover analysis of Costain Group, by segment, 2015-17
- J Murphy & Sons
- Company strategy and outlook
- Recent performance
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- Figure 78: Financial analysis of J Murphy & Sons, 2013-17
- Bam Nuttall
- Company performance and outlook
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- Figure 79: Financial analysis of Bam Nuttall, 2013-17
- Skanska UK
- Skanska’s Profit with Purpose business plan
- Skanska undergoes restructuring to improve performance and focus on core business
- Financial performance and outlook
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- Figure 80: Financial analysis of Skanska UK, 2013-17
- Galliford Try Infrastructure
- Galliford Try pulls out of bidding for large fixed-price infrastructure projects in 2017
- Financial performance and outlook
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- Figure 81: Financial analysis of Galliford Try Infrastructure, 2013-17
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Trade associations
- Association of Consulting Engineers
- Civil Engineering Contractors Association
- Institution of Civil Engineers
- Trade magazines
- Building
- Civil Engineering Surveyor
- Construction News
- 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
- Infrarail 2020
- Traffex 2019
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