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Civil Engineering - UK - January 2017

Published By :

Mintel

Published Date : Feb 2017

Category :

Construction

No. of Pages : N/A

The major projects set to drive civil engineering construction output over the next five years include Crossrail, Hinkley Point C, Thames Tideway Tunnel, major road schemes, Network Rail’s modernisation programme, and, once fully approved, HS2. However, shortages in skilled labour and construction materials capacity will pose challenges to the industry, with those areas requiring considerable investment. The labour and skills shortage could be further exacerbated by Brexit if the UK restricts EU migrants, potentially putting infrastructure projects at risk

Table of Content

Executive Summary
The market
Following a very buoyant 2015, civil engineering activity slows in 2016
Figure 1: New civil engineering construction output in Great Britain, 201216
Electricity infrastructure sector has shown the strongest growth over the past five years
Roads sector accounts for a quarter of civil engineering construction output in 2016
Figure 2: New civil engineering construction output in Great Britain, by sector, 201216
Civil engineering sector set for further strong growth over the next five years
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
Figure 4: Analysis of the civil engineering industry by type of activity, number of companies & % of total, 2016
What we think

Key Insights
What are the current government’s plans for infrastructure spending? Which sectors are set to attract the highest public and private spending?
What are the potential implications of Brexit for UK Infrastructure investment?
Is Brexit likely to exacerbate current labour skills shortages?
Are frequent government policy changes affecting investor confidence in the renewable energy infrastructure sector?
What does the adoption of a new regulatory framework in the water and sewerage industry mean for the supply chain, including civil engineering contractors?

Introduction
Definitions
Methodology
Abbreviations
Market Positioning
Figure 5: Total New Construction and Civil Engineering Output in Great Britain, 201216

UK Economy
Overview
Figure 6: UK GDP quarterly development, 2003-16
Figure 7: UK GDP in economic downturns and recoveries since 1979
Inflation
Interest rates
House prices
Figure 8: UK House price changes, 2004-2016
Consumer spending
Manufacturing
Figure 9: UK manufacturing, 2014-16
Business investment
Figure 10: UK GFCF 2003-16

Market Factors
Water & Sewerage
Industry regulation
Legislative environment
European Water Framework Directive (WFD)
Urban Waste Water Treatment Directive (UWWTD)
Figure 11: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 1990-15
Figure 12: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 199015
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
Gas & Electricity
Price Controls
Environmental and Legislative Factors
Carbon Budgets
Climate Change Levy
Climate Change Agreements
Renewables Obligation
Electricity Market Reform
Contracts for Difference (CfDs)
Capacity Market (CM)
Airports
Communications
Railways
Rail network funding and regulation
Sir Peter Hendy’s re-plan for Network Rail’s enhancement programme 2014-19
Drivers of investment in rail industry
Additional funding for rail infrastructure announced in 2016 autumn statement
High Speed Two (HS2) and proposed major schemes
Ports & Harbours
Roads
Reform of Highways Agency

Market Size & Segmentation
Key points
Market size
Figure 13: Civil engineering construction output in Great Britain, 2012-16
Figure 14: Civil engineering construction output in Great Britain, 2012-16
Market segmentation
Figure 15: Civil engineering construction output in Great Britain, by sector, 2012-16
Figure 16: Civil engineering construction output in Great Britain, by sector, 2012 and 2016

Water & Sewerage Sector
Key points
Water & Sewerage Capital Expenditure
Figure 17: Total capital expenditure by water and sewerage companies in England & Wales, 2005-10 and 2010-15
Figure 18: Total capital expenditure by water-only companies in England & Wales, 2005-2010 and 2010-2015
Contracts for AMP5 tendered early to reduce boom and bust cycle
Figure 19: Actual UK capital expenditure on water and sewerage services, 2009/10-2014/15
Figure 20: UK capital expenditure on water and sewerage services, 2010/11-2014/15
Figure 21: UK Capital Expenditure on Water and Sewerage Services, 2010/11-2014/15
Figure 22: UK Capital Expenditure on Water and Sewerage Services, 2015/16
Water Civil Engineering Construction Output
Figure 23: Civil engineering construction output for the potable water industry in Great Britain, 2012-16
Sewerage Civil Engineering Construction Output
Figure 24: Civil engineering construction output for the sewerage industry in Great Britain, 2012-16

Electricity Sector
Key points
Electricity Distribution Capital Expenditure
Figure 25: UK gross capital expenditure by electricity distribution network operators, 2011/122015/15
Figure 26: UK gross capital expenditure by the electricity distribution network operators, 2011/12-2015/16
DNO’s total spending in DPCR5 is lower than set by Ofgem
Figure 27: Breakdown of total expenditure by DNOs during DPCR5, by area 20112015
DPCR5 witnesses launch of Low Carbon Networks Fund
Rapid increase in distributed generation connected to DNOs’ networks
Figure 28: Distributed Generation connected to the distribution network during DPCR5, 2011-15
Figure 29: Distributed Generation connected to the distribution network during DPCR5, 2011-15
Electricity Transmission Capital Expenditure
Figure 30: Size of electricity transmission network in Great Britain, 2016
Figure 31: Capital expenditure by the electricity transmission industry in Great Britain, 2011/12-2015/16
Figure 32: Capital expenditure by the electricity transmission industry in Great Britain, 2011/12-2015/16
The Electricity Generation Mix
Figure 33: Analysis of electricity supplied in the UK, by type of fuel used in generation, 2010-15
Renewables generation
Figure 34: Renewable electricity generation in the UK, 2010-15
Offshore Wind
Offshore wind costs falling fast
Green Investment Bank drive to boost investment in offshore wind
Coal generation
Nuclear generation
Figure 35: UK Nuclear Sites Planned Closure Dates, as of December 2016
Planned new nuclear power development marred by major delays
Gas/CCGT generation
Government to prioritise new gas-fired power stations
Distributed Generation
Interconnectors
Figure 36: Existing and planned interconnectors, as of June 2016
Electricity Civil Engineering Construction Output
Figure 37: Civil Engineering Construction Output for the Electricity Industry in Great Britain, 2012-16

Gas Sector
Key points
Industry overview
Gas Capital Expenditure
Figure 39: Total gas transmission and distribution capital expenditure, 2011/12-2015/16
Figure 40: Total gas transmission capital expenditure, 2011/12-15/16
Figure 41: Total gas distribution capital expenditure, 2011/12-2015/16
Figure 42: Total gas transmission and distribution capital expenditure, 2011/122015/16
Replacement Expenditure (Repex)
Figure 43: Cumulative replacement expenditure during GDPRC1 2008-13, by GDN and type
Civil Engineering Construction Output
Figure 44: Civil Engineering Construction Output for the Gas Industry in Great Britain, 2012-16

Airports Sector
Key points
Figure 45: 10 largest airports in the UK, 2010-15
Figure 46: Civil engineering construction output for the air transport industry in Great Britain, 2011-15

Communications Sector
Key points
Figure 48: Key market developments in the Telecoms Sector, 2010-15
Figure 49: Civil Engineering Construction Output for the Communications Industry in Great Britain, 2012-16
Figure 50: Civil engineering construction output for the communications industry in Great Britain, 2011-15

Railways Sector
Key points
Capital Expenditure
Figure 51: Renewal expenditure by asset, 2015 and 2016
Figure 52: Private sector investment in track and signalling, 2012-16
Figure 53: Private sector investment in stations, 2012-16
Figure 54: Analysis of enhancement expenditure in England and Wales, by type, 2010-14
Figure 55: Analysis of enhancement expenditure on non-PR08 funded schemes by type, 2010-14
Figure 56: Analysis of enhancement expenditure in Scotland, by type, 2010-2014
Figure 57: Analysis of enhancement expenditure in Great Britain, by type, 2015
Railways Civil Engineering Output
Figure 58: Civil Engineering Construction Output for the Rail Transport Sector in Great Britain, 2012-16

Harbours Sector
Key points
Overview
Recent port expansion projects
Figure 59: Civil engineering construction output for the harbours and waterways sectors in Great Britain, 2012-16

Roads Sector
Key points
Overview
Figure 60: Road Network in Great Britain, by Type, 2015
Figure 61: Road Network Expenditure in England, by Activity and Road Type, 2010/11-2014/15
Figure 62: New Construction and Improvements of Roads, Motorways and All Purpose Trunk Roads, in England, 2011/12-2015/16
Figure 63: Civil engineering new road construction output in Great Britain, 2012-16
Figure 64: Civil Engineering New Road Construction Output in Great Britain, 2012-16

Seasonality Of Civil Engineering Construction Output
Overall
Figure 65: Seasonality of civil engineering, 2011-15
Water
Figure 66: Seasonality of Civil Engineering Output in the Water Sector, 2011-15
Sewerage
Figure 67: Seasonality of Civil Engineering Output in the Sewerage Sector, 2011-15
Electricity
Figure 68: Seasonality of Civil Engineering Output in the Electricity Sector, 2011-15
Gas, Communications and Air Transport
Figure 69: Seasonality of Civil Engineering Output in the Gas, Communications and Air Sector, 2011-15
Railways
Figure 70: Seasonality of Civil Engineering Output in the Railways Sector, 2011-15
Harbours
Figure 71: Seasonality of Civil Engineering Output in the Harbours Sector, 2011-15
Roads
Figure 72: Seasonality of Civil Engineering Output in the Roads Sector, 2011-15

Regional Civil Engineering Construction Output
Figure 73: Analysis of civil engineering output, by region, 2011-15
Industry Structure
Key points

Industry Development
Figure 74: Analysis of The Civil Engineering Industry By Type of Activity and Company Size, 2016
Company profiles

Amec Foster Wheeler
Figure 75: Financial analysis of AMEC Foster Wheeler, 2011-15

Amey
Figure 76: Financial analysis of Amey UK, 2011-15

Balfour Beatty
Balfour Beatty announces several profit warnings during 2014 and 2015 amid major challenges from construction contracts
Figure 77: Financial analysis of Balfour Beatty, 2011-15
Figure 78: Financial analysis of Balfour Beatty by segment, 2014-15

Land Lease Construction
Figure 79: Financial Analysis of Lend Lease Construction (EMEA), 2011-15

The Costain Group
Figure 80: Financial Analysis of Costain Group, 2011-15
Figure 81: Turnover analysis of Costain Group, by division, 2014-15

John Laing
Figure 82: Financial Analysis of John Laing, 2011-15

Carillion
Figure 83: Financial Analysis of Carillion, 2011-15

J Murphy & Sons
Figure 84: Financial Analysis of J Murphy & Sons, 201115

Bam Nuttall
Figure 85: Financial Analysis of Bam Nuttall, 201115

Interserve
Figure 86: Financial Analysis of Interserve, 2011-15
Figure 87: Turnover segmentation of Interserve, 2015

Skanska UK
Figure 88: Financial Analysis of Skanska UK, 201115

Mcnicholas Construction Holdings
Figure 89: Financial Analysis of McNicholas Construction (Holdings), 2012-16

Galliford Try Infrastructure
Figure 90: Financial Analysis of Galliford Try Infrastructure, 2011-15

Market Forecast
Key points
Market overview
Figure 91: Forecast civil engineering construction output in Great Britain, 2017-21
Figure 92: 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
Figure 93: National Infrastructure and Construction Pipeline, by sector, 2017-21
Figure 94: National Infrastructure and Construction Pipeline, by sector, as of Autumn 2016
Independent Infrastructure Commission is established in 2015 to help ensure the timely delivery of major infrastructure projects
Plans for Northern Powerhouse to provide a positive impetus for civil engineering sector in the North of England

Water & Sewerage Sector Forecast
Key points
Capital expenditure
England & Wales - AMP6 2015-20
Move towards long-term alliances and frameworks across industry
Figure 95: Forecast capital expenditure for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
Figure 96: Forecast capital expenditure for AMP6 in England & Wales, by water only company, 2015/16-2019/20
Major water & sewerage capital projects in pipeline
Figure 97: Water & Sewerage Infrastructure Pipeline, 201721
Thames Tideway Tunnel
Figure 98: Estimated cost of Thames Tideway Tunnel, 2015/16-2021/22+
Other capital investment plans by water and sewerage companies during AMP6 include:
Water Industry Development
Figure 99: Forecast Civil Engineering Output for the Water Sector, 201721
Sewerage Industry Development
Figure 100: Forecast Civil Engineering Output for the Sewerage Sector, 2017-21

Electricity Sector Forecast
Key points
Electricity infrastructure projects in the National Infrastructure and Construction Pipeline
Figure 101: Electricity Infrastructure Pipeline, 2017-21
Electricity Distribution Capital Expenditure
Figure 102: Forecast network investment of the electricity distribution network operators in Great Britain, by company, 2015/162022/23
Drivers for Future Capital Investment in Electricity Transmission Nework
Lack of clarity and frequent policy changes have created investment uncertainty in renewables
Figure 103: Renewable Energy Projects in Pipeline, by Technology, as of October 2016
Electricity Civil Engineering Construction Forecast
Figure 104: Forecast Civil Engineering Output for the Electricity Sector, 2017-21
Figure 105: Forecast Civil Engineering Output for the Electricity Sector, 2016-20

Gas Sector Forecast
Key points
Gas infrastructure projects in the National Infrastructure and Construction Pipeline
Figure 106: Gas Distribution and Transmission Infrastructure Pipeline, 2017-21
UK Gas Supply
Figure 107: Existing UK gas import infrastructure, as of November 2016
Figure 108: Proposed UK import projects, as of November 2016
Gas Distribution & Transmission Capital Expenditure
Innovation at centre of new price control model for gas distribution and transmission network
Transmission Network
Figure 109: Annual capital expenditure plans by National Grid Gas Under RIIO-T1, by Category, 2014-2021
Distribution Network
Figure 110: Annual capex plans under RIIO-GD1, by GDN, 2014-2021
Figure 111: Annual repex plans under RIIO-GD1, by GDN, 2014-2021
Figure 112: Forecast total capex and repex during RIIOGD1, 2013/142020/21
Civil Engineering Construction Output Forecast
Figure 113: Forecast Civil Engineering Construction Output for the Gas Sector, 201721

Airports Sector Forecast
Key points
Industry Development
Figure 114: Forecast civil engineering output for the airport transport sector, 201721

Communications Sector Forecast
Key points
NIC report criticises UK 4G mobile coverage and calls for more action on 5G
Communications infrastructure projects in the National Infrastructure and Construction Pipeline
Figure 115: Communications Infrastructure Pipeline, 2017-21
Figure 116: Forecast Civil Engineering Output for the Communications Sector, 201721

Railways Sector Forecast
Key points
Capacity constraints driving rail infrastructure investment
Rail infrastructure projects pipeline
Figure 117: Rail infrastructure pipeline, 20172021
Figure 118: Rail infrastructure projects pipeline, 2016
Additional funding for rail infrastructure announced in 2016 autumn statement
High Speed Two (HS2) and proposed major schemes
Network Rail Capital Expenditure in CP5
Figure 119: Forecast capital expenditure for CP5, by type, 2014/15-2018/19
Renewals expenditure in CP5
Figure 120: Forecast rail renewals expenditure for CP5, by activity, 2014/15-2018/19
Figure 121: Forecast rail renewals expenditure for CP5, 2014/15-2018/19
Enhancements expenditure in CP5
Figure 122: Cost of enhancement projects during CP5
Figure 123: Forecast Civil Engineering Construction Output for the Rail Sector, 2017-21

Harbours Sector Forecast
Key points
Growth in off-shore wind farm developments offers opportunities to UK ports
Strategic review of east coast port facilities
Figure 124: Forecast civil engineering construction output for the harbours sector, 201721

Roads Sector Forecast
Key points
2014 Road Investment Strategy signals the biggest investments in roads since the 1970s
2015 Autumn Statement
2016 Autumn Statement
Reform of Highways Agency
Figure 125: Forecast Civil Engineering Construction Output for the Roads Sector, 201721
Figure 126: Forecast Civil Engineering Construction Output for the Roads Sector, 201721

Further Sources & Contacts
Trade associations
Trade magazines
Trade exhibitions

List of Table

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