CJ50 Market data: Balfour Beatty storms to the 2006 top spot

PDF of market data Annual Review 2006

After 2005’s storming performance, 2006 proved a rather quieter year for UK construction. While 2005’s forward orders were up more than £5bn on 2004, 2006 saw new business fall back over £2bn, from £29bn to £26.8bn.

However, this apparent downturn can largely be explained by 2005’s huge infrastructure total, which shot up from £5.7bn in 2004 to more than £11bn in 2005. This fell back to a more representative £5.8bn in 2006.

Housing showed a healthy level of inflation, up to £3.47bn of forward orders from £2.8bn in 2005. Public sector work rose a whopping £3.7bn to £9.75bn.

Commercial work was a fraction down at nearly £7.8bn, and industrial business also fell from £932m in 2005 to £825m.

Much remained the same, however, with the top 10 full of familiar faces. Balfour Beatty was, to no-one’s surprise, overall chart-topper once more. Balfour spent five months at the top in 2006, including a solid period from August to October, again down on 2005’s record seven months.
The firm led the field with £3.52bn of forward orders. This was considerably down on last year’s monster haul of £4.6bn, but a convincing £1.64bn ahead of second-placed Skanska.

Infrastructure was Balfour’s key market once more, netting it £1.6bn, with public sector work bringing in a further £1.28bn. It topped the regional tables for the Midlands, Wales/South West and Scotland, and was a top 10 presence in every one.

Key projects among its huge 910 total – a volume far exceeding anyone else’s – included the £74m Birmingham Schools PFI project, won back in March and giving it its first number-one spot of the year.

Skanska had a fantastic 2006, powering up the table from eighth position to second with £1.87bn of work. Its flagship project was undoubtedly the redevelopment of Barts Hospital and the Royal London Hospital – at £700m, easily the largest single healthcare PFI awarded to date. This won Skanska the top spot in May, which it reclaimed in July thanks to more lucrative public sector work, notably the first Building Schools for the Future (BSF) programme in Bristol.

Skanska was the strongest contractor in London and the South East in 2006, and also, not surprisingly, boasted the most public sector work.
December winner Kier was third for the second year running, chasing Skanska with £1.68bn of work in the bag. It netted 534 contracts, the majority in the public, commercial and social housing sectors. A consistent performer throughout the year, it rarely left the top 10.

Bovis Lend Lease fell from second to fourth, although its mere 26 contracts brought in £1.64bn of forward orders, not a huge drop from 2005’s £1.78bn total. It achieved this without ever troubling the monthly top spot throughout the year. Its first key win of the year came early on, with February’s announcement of Lancashire County Council’s £250m BSF scheme.

April was another extremely lucrative month for Bovis, bringing in £300m of forward orders, the bulk of which was the £275m St David’s 2 shopping centre in Cardiff.

Laing O’Rourke, a solid top 10 performer throughout the year, was up two places to fifth, although it didn’t match its 2005 achievement of a monthly chart win. Its headline-grabbing Olympics management contract aside, the contractor took on a variety of work throughout the year, including: a £50m office scheme in January; the £33m Museum of Liverpool, won in April; the £90m widening of the A453 in June; and a £120m social housing contract in the South East, won in November.

Carillion’s acquisition of Mowlem didn’t prevent it dropping a place to sixth, although it led the table in April and November. A vast Ministry of Defence project secured the former, while the latter was thanks to the company’s share of the £363m Transport for London scheme to create the new East London Line. These tremendously busy periods were interspersed with a month of no forward-order activity at all; a familiar pattern to last year.

Morgan Sindall was also down a place to seventh. Its busiest months were March and August. The spring brought a healthy influx of infrastructure work, including a Morgan Est/Vinci Construction Grand Projets JV to design and build the new Kincardine crossing over the Forth River Estuary.
August’s £327m haul was largely made up of a seven-year, £210m engineering contract to upgrade gas networks across the North of England for United Utilities.

Sir Robert McAlpine was steady in eighth position, largely thanks to an explosive start to the year, with chart wins in January and February. It was comfortably ahead of the field on both occasions with a bulging commercial portfolio, including extensive redevelopment of Bristol’s town centre. It was way out in front in the overall commercial table, and made the top 10 in every region bar the North.

Ninth-placed Rok was a new entrant to the top 10, up from its relatively lowly 2005 position of 20th. It took over the lead in social housing, which brought in the bulk of its £862m workload. The North remains its most lucrative region.

Taylor Woodrow also pulled off a spectacular climb from 27th place to round off 2006’s top 10, largely thanks to a massive hospital win in June. The £367m overhaul of the St Helens, Whiston and Newton hospitals pushed Taywood to second place for the month, its highest placing of the year.
Can Balfour’s intimidating lead be threatened in 2007? CJ50 will track the trends month-by-month, so watch this space.