The uncertainties created by Brexit have impacted the M&E market through delayed decisions on new construction projects, yet this is having a positive impact on R&M activity, where increased numbers of M&E contractors are concentrating. There have also been margin pressures introduced by the revaluation of the Pound sterling, with the ability to pass on cost increases from the high volume of imported products challenged by the timing of activity within the wider construction project. Selective tendering has become important to companies, and many have opted away from the more volatile new construction sector, turning instead to the more sustainable and visible income stream derived from the R&M sector.

Construction has become increasingly sector specific in its prospects, with major implications for the M&E sector. Retail sector activity is declining as a result of the trend towards e-commerce, but this is having a positive impact on warehouse construction, the growth of which has offset declines in the factory sector. A general election is expected to reveal ever more ambitious spending plans by all parties for the public sector, especially health and education, as these are important vote-winning policies. Technological progression is also introducing strong activity in the refurbishment and modernisation of data centres.

In the R&M sector the trend is clearly for regular maintenance contracts rather than ad hoc activity, and this has extended to the private housing sector, where large service providers are increasingly gaining work from traditional local tradesmen.

Green issues are also likely to expand opportunities for M&E contractors, with public support for issues around climate change likely to be a focus of attention for political parties in the lead up to an election.

Companies that provide mechanical & electrical (M&E) services usually provide the necessary skills required through a combination of in-house resources (usually a team of qualified engineers) and specialist ‘service partners’ contracted to provide assistance across the work spectrum.

Services are subjected to British Standard and other industry standards.

The following is a list of the main mechanical and electrical contracting services provided by the majority of companies, though some companies offer other specialist services:

• Heating and hot water installations

• Domestic water services, including infrastructure and storage systems

• Ventilating and air conditioning

• Acoustic control

• Electrical and lighting systems

• Emergency lighting

• Public health services, including water treatment

• Cooling towers

• Plumbing and drainage systems

• Control systems and building management systems

• Lighting protection

• Uninterruptible power supplies

• Fire engineering (alarms, hose reel and sprinkler systems)

• Access control

• Lifts

• Energy supply and management

• Security systems

The report is split into electrical work and mechanical work. It is difficult to split the above list into two categories as many services fall into both, but a general list for each category is compiled below.

Electrical work: ventilating and air conditioning, acoustic control, electrical and lighting systems, emergency lighting, control systems and building management systems, uninterruptible power supplies, fire alarms, access control, lifts, energy supply and management, security systems.

Mechanical work: heating and hot water installations, domestic water services including infrastructure and storage systems, public health services including water treatment, cooling towers, plumbing and drainage systems, lighting protection, hose reel and sprinkler systems, lifts.

M&E repair and maintenance services refer to the regular maintenance of building/plant and machinery/equipment to keep them in efficient working order. Examples of services provided in the case of mechanical failure include:

• annual maintenance schedule

• regular service calls

• itemised cost and history records

• measured cost saving

• maintenance budget management

• technology search

• out of hours maintenance (weekends/nights/annual shutdown)

For electrical breakdown or malfunction of equipment:

• experienced engineers and technicians available 24 hours per day, 365 days

• nationwide service

• specialist repairs sourced via an approved sub-contractor

• job price or contract price basis

• customised service contracts to cover breakdown and planned maintenance

The definitions used in this report for the construction sector are from the Department of the Environment, Transport and the Regions. A number of sectors are defined within the construction sector, comprising both publicly and privately financed projects.

The sectors include the following:

Public sector housing: comprising housing schemes, homes for the elderly and the provision within housing sites of roads and services for utilities, such as gas, water, electricity, sewage and drainage, financed either through local authorities or housing associations.

Private sector housing: comprising all privately-owned buildings for residential use, such as houses, flats, maisonettes, bungalows, cottages, and the provision of services to new developments.

Public sector non-residential: this is defined as comprising a number of activities:

• Coal mining: all new coal mine construction, such as sinking shafts, tunnelling etc.

• Schools: state schools or colleges, including technical colleges and institutes of agriculture.

• Universities: including halls of residence and research establishments.

• Health: comprising hospitals, medical schools, clinics, welfare centres and adult training facilities.

• Offices: comprising local and central government offices, including town halls and offices for all public bodies except the armed forces and police headquarters.

• Factories: comprising all publicly-owned factories, shipyards, warehouses and skill centres.

• Garages: comprising buildings for storage, the repair and maintenance of road vehicles, transport workshops, bus depots, road goods transport depots and car parks.

• Shops: comprising municipal shopping developments for which the contract has been let by the local authority.

• Oil: comprising oil installations.

• Agriculture, entertainment, communications: comprising buildings and work on publicly-financed horticultural establishments, fen and agricultural drainage, and veterinary clinics; theatres, restaurants, public swimming baths, caravan sites at holiday resorts, works and buildings at sports grounds, stadiums, racecourses etc.; and Post Offices, the BBC and IBA installations.

• Miscellaneous: comprising all work not clearly covered by other previously identified headings, such as fire stations, police stations, prisons, reformatories, remand homes, civil defence work, UK Atomic Energy Authority work, council depots, museums, and libraries.

Private Industrial: comprising factories, warehouses, wholesale depots, and all other work and building for the purpose of industrial production or processing, oil refineries, concrete fixed leg oil production platforms (but excluding rigs), and private steel works.

Private commercial: comprising a number of separate sectors:

• Offices: including all office buildings and banks.

• Shops: comprising all buildings for retail distribution, such as shops, department stores, retail markets, and showrooms.

• Entertainment: comprising theatres, concert halls, cinemas, hotels, public houses, restaurants, cafés, holiday camps, swimming pools, works and buildings at sports grounds, stadiums and other places of sport or recreation, and youth hostels.

• Garages: comprising repair garages, petrol filling stations, bus depots, goods transport depots and any other works or buildings for the storage, repair and maintenance of road vehicles, and car parks.

• Schools and colleges: comprising schools and colleges in the private sector, financed wholly from private funds.

• Agriculture: comprising all buildings and work on farms and horticultural establishments.

• Health: comprising all private hospitals, nursing homes and clinics.

• Miscellaneous: comprising all work not clearly covered by other headings, such as exhibitions, caravan sites, churches and church halls.

Repair and maintenance is defined to include the following:

• Housing: including any conversion of, or extension to, any existing dwelling, and all other work such as improvement, renovation, refurbishment, planned maintenance, and any other type of expenditure on repairs or maintenance.

• All other sectors: comprising any repair and maintenance work of any type, including planned and contractual maintenance.

The definitions used in this report for the civil engineering sector are from the Department of the Environment, which broadly defines the sector as constituting infrastructure. A number of sectors are defined within this sector, comprising both public and privately financed projects.

The sectors include the following:

Water: comprising the construction of reservoirs, purification plants, dams, water works, pumping stations, water mains, hydraulic works and related construction activity.

Sewerage: comprising sewage disposal works, the laying of sewers and service drains.

Electricity: comprising building and civil engineering work for electrical undertakings, such as power stations, dams and other works on hydro-electric schemes, and any decommissioning of nuclear power stations.

Gas: comprising gas works, the laying of gas mains, and gas storage facilities.

Communications: comprising cabling for telecommunication and television facilities.

Air: comprising air terminals, runways, hangars, reception halls, and radar installations.

Harbours: comprising all works and buildings directly connected with harbours, wharfs, docks, piers, jetties, canals and water ways, sea walls, embankments and water defences.

Roads: comprising roads, pavements, bridges, footpaths, lighting, tunnels, flyovers and fencing.

There has been an increasing trend towards facilities management companies providing mechanical and electrical services, and an increasing number of mechanical and electrical contractors providing facilities management services. However, as such services are often bundled with others and provided under one facilities management contract, it is not always possible to analyse the value of the mechanical and electrical aspect of contracts. The value of such facilities management contracts may therefore not be included in this report. Facilities management services are analysed separately in the MBD report, The UK Facilities Management Market Development.

All values quoted in this report are at current prices unless otherwise specified.

For the purposes of this report, mechanical contracting in the new housing market includes heating and plumbing activity.