COVID-19 continues to impact construction projects in the UK and the wider economy. Read on for the latest industry insights.
Another month has gone by with a national lockdown in England. Although the UK continues to be the fifth country in the world with more coronavirus cases, it seems that the government’s efforts are paying off. Daily infections peaked on the 8th of January with over 68,000 cases. Thanks to the lockdown and the vaccine, daily cases plunged to below 8,000 by the end of February.
Although cases are decreasing for much of the UK, there are still hotspots where infections are increasing. These are mostly in the Midlands, east and west coast of England and some areas of Northern Ireland and Scotland. This means that whilst most of the UK will try to come out of the lockdown as a whole nation, local restrictions may still be necessary.
More than a quarter of the population already received the first vaccine
According to the government’s latest figures, more than 20 million people had received the first dose of the vaccine by the end of February. And nearly 800,000 had received the second dose as well. The plan is to have everybody aged 18 and above vaccinated by 31st July. On the 22nd of February, the Prime Minister announced a roadmap to ease the lockdown in England. The roadmap includes four stages to cautiously ease the restrictions. The first step will take place on the 8th of March when schools will reopen and two people will be allowed to sit together outside. The last stage (or ‘new normal’) will not happen until at least 21st June, although this date may be delayed as needed.
COVID-19 hits construction projects’ output
At the beginning of March, however, COVID-19 continues to impact construction projects. According to the latest data released by the Office for National Statistics, construction output fell by 2.9% in December last year. However, the last quarter of the year, showed an increase in construction output by 4.6%.
And coming back to the vaccine, some engineering and construction employers are putting pressure on the government to give construction workers priority to get vaccinated. Although this is an understandable position, Construction Industry Council chief executive Graham Watts differs, as he recently said:
‘I am not in favour of construction workers being given priority for the vaccine. The government’s current programme is proceeding at pace and any change to a process that is governed by health and age will inevitably create a hiatus to the current momentum.’
Project outbreaks and profits suffering from pandemic
Meanwhile, COVID-19 outbreaks continue to impact construction projects. For example, the Edinburgh St James scheme was hit by a virus outbreak in the middle of February. Engineering firm Laing O’Rourke, which is leading the project, confirmed that 50 members of staff had to self-isolate after 11 workers were tested positive. The project was paused in April last year but restarted following the Scottish Government’s guidance The company has urged the construction sector to roll out rapid COVID-19 tests at project sites.
Construction profit margins are also being hit by the pandemic. An independent analysis carried out by consultant EY has shown 33 profit warnings in construction companies during 2020. According to the firm, this is significantly higher than the previous profit warnings issued in 2008 and 2012, which had a record of ‘only’ 19 warnings. They also found that construction companies were amongst the worst affected, indicating an increased risk of insolvency. In fact, one in eight construction companies has none or little confidence that they will survive beyond April this year.
COVID-19 has big impact on construction of HS2
HS2 is also suffering the impacts of coronavirus. The head of the Department for Transport has admitted they have no idea of future travel patterns. This is mostly a consequence of the working from home conditions imposed by COVID-19. And they may remain for years or decades. Some experts even think that working from home will continue as the ‘new normal’ for many, even after the virus is gone.
The government says that HS2 is part of a long-term infrastructure plan to serve future needs, designed to service needs for 100 or 150 years. Those opposed to the project argue that it will pollute more than it will save. In fact, a report published in February 2020 said the project would not offset CO2 emissions for more than 100 years. This is mostly because of the emissions created during tunnelling and construction. Although HS2 claims that this report is now outdated, they have not released any updated figures yet. What is clear is that the project is under a lot of pressure. Allan Cook, chairman of HS2 LTD handed in his resignation on the 1st of February. He will leave his role at the end of July with the start of the tunnelling.
Hinkley Point C – ramping up worker numbers
Nigel Cann, EDF’s construction delivery director at Hinkley Point C, has admitted that three months’ worth of work has been lost due to the pandemic. To compensate for this delay, they are planning to employ another 3,000 workers on site. This brings the total peak number to 8,500. The nuclear power plant’s opening date is now June 2026, with a cost between £22bn and £23bn.
In summary, it is clear that COVID-19 continues to impact construction projects in varying degrees throughout the country. With expected insolvency waves approaching for construction companies, the future for many is still uncertain. But we can only hope for the best as the vaccination programme is rolled out and the lockdown eased. From GlobalCAD we want to send you our best wishes, and if you need any BIM services to help your projects, do not hesitate to get in touch with us.