East of England to get major construction investment

A string of projects are planned for the East of England, which is forecast to have the highest annual growth rate in England, but everything hinges on funding.

Pictured: The SnOasis centre, an indoor winter sports arena – one of the projects planned for the East of England.

 

Job prospects in Suffolk are set to go downhill fast this year. Butfor once that doesn't spell disaster for local contractors because a £350m ski centre near Ipswich and four large PFI projects are expected to provide a major boost for the region.

Sir Robert McAlpine is racing favourite to build the SnOasis indoor winter sports resort which could create 3,500 construction jobs.Planning has finally been agreed for the scheme while the final financing details are thrashed-out ahead of a start on site.

But doubts over the funding will not surprise contractors in the eastern region that have seen a whole string of projects flounder due to a lack of finance.

GB Building Solutions regional director Peter Stone says: "Everything hinges around funding and that is the critical issue - it's all about finance.We are looking at funding as early as possible, usually right back at the prequalification stage,to see if the money will come through. We need to weed out jobs that potentially won't get funding because we don't want to spend three to six months working on a scheme and then find the job doesn't fly."

GB turns over around £65m in its eastern region and competition across the area is hottingup as firms chase a dwindling pool of private work and battle to win publiclyfunded projects.

Framework security

Kier Eastern's managing director Graham Howe says those contractors that are members of frameworks have an element of secure turnover giving them a backbone to rely on.He adds: "Those that rely on the private market are becoming increasingly competitive, with an ever-decreasing pool of work."

Kier Eastern currently has a 75%/25% split between public and private work including frameworks for the Ministry of Justice, Procure 21 health schemes and the Academies programme in the education sector.

Howe says: "We are turning over every stone we can to identify new work and we have worked hard to have a good mix of schemes across the region.Kier Eastern has a staff of 320 in the region and turned over £130m last year. A similar figure is anticipated for this year, despite the industry facing a number of challenges ahead."

Specialist contractors are finding it tough to win work and groundwork specialist Admor Civil Engineering has seen turnover plummet in recent months.Managing director Peter Little says: "About six weeks ago it was a question of 'recession - what recession?' but now things have suddenly become very tight."

Towards the back end of last year Admor was turning over £500,000 a month in its traditional private industrial and commercial sectors.Now turnover has dropped to a quarter of that and Admor has been forced to lay off eight of its 24 staff.

Little says: "We need new work as our jobs are a quick turnover of typically 12 weeks.There is work out there, but there are also a lot of very hungry companies - it's very very competitive."

Bespoke supply chain

Kier's Howe says they are being approached daily by trade contractors looking for work but have to be careful about the stability of subbies."We have quite a bespoke supply chain and have regular dialogue with suppliers to make sure people are commercially OK," he says. "We have lost six key subcontractors in the last six months due to cash-flow problems. It is really difficult on a live job when a subbie goes down so we try to ensure that we engage with healthy businesses."

GB's Stone adds: "We are getting a lot more spec enquiries from trade contractors, with a lot coming in from the housing sector. It's not just about accepting silly cheap prices because our reputation rests on our trade contractors so we have to be selective."

Recruitment consultants are still reporting a healthy turnover of staff across the east of England with Hays placing 1,000 temporary and permanent staff every month.Eastern region director Richard Lescott says the level of senior appointments earning £40,000-plus is holding up well,while the number of junior appointments has been hit harder.

"We are also seeing the erosion of salaries as people move from housing to commercial, then to the public sector, but there is no sign of any people in existing jobs having their salaries cut," he explains.

Infrastructure professionals and civil engineers remain in high demand alongside building services, FM and maintenance specialists.Lescott adds: "There is still a high demand for staff here because so many projects are planned across the region." Let's just hope that they all secure the necessary funding.

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Expert View: Mark Wenham, East of England Regional Strategic Advisor, ConstructionSkills

New data from the ConstructionSkills Network reveals continued demand for skills despite the recession. The report shows that, UK-wide, there will be two distinct periods for the industry: one of recession (through 2009 and into 2011) and one of gradual recovery (from 2011 to 2013).

The year-on-year data indicates that there will be a 3% contraction in 2009, followed by nil growth in output nationally in 2010, followed by a gradual return to low-level growth of 1% in 2011, 2% in 2012 and 3% in 2013. These figures result in an average annual output growth over the next five years of 0.5%.

However, the East of England is set to buck the trend with the highest annual average output growth rate at 0.9 per cent, apart from Northern Ireland.

The figures for the report also show that the East of England requires 2,890 new entrants every year between 2009 and 2013 if it is to reach the 247,000 workers needed to realise its construction commitments. This is being driven by three large port projects set to go ahead in the region in 2009 and 2010 at Shell Haven, Harwich and Felixstowe.

The East of England is the only region which is forecast to see growth across all areas of construction from infrastructure to public housing.

This outlook is fuelled by major projects due to break ground in the region over the forecast period, including the £350m SnOasis project - due to be the largest artificial ski slope in Europe - and four big PFI hospital projects with a total value of around £700m.

For more information visit www.constructionskills.net

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New work in the East

The SnOasis centre is the biggest single project on the horizon in the region but a host of other schemes are offering work opportunities for trade contractors across the east of England.

GB Building Solutions has won a £46m contract for a mental health facility in Northampton for St Andrew's Healthcare which will include 132 en-suite bedrooms and associated therapy areas.

A Wates-led consortium has also been named preferred bidder by Luton Borough Council for its £270m Building Schools for the Future programme.

The QED Wates consortium will revamp Luton's 13 secondary schools over the next four years with the first schemes due to start in June at Lea Manor High School, Challney High School for Girls, as well as Luton's two academies: Barnfield West and Barnfield South.

QED Wates is committed to using a substantial proportion of local labour, suppliers and subcontractors and to delivering over the next four years more than 138 apprenticeships.

A Kier-led team is preferred bidder on a £60m Private Finance Initiative scheme for police authorities in East Anglia. The Justice Support Services consortium - comprising Kier, the Bank of Scotland Corporate and Reliance Secure Task Management - will build six new investigation centres for the Norfolk and Suffolk Police Authorities.

Centres are currently planned for Wymondham, Aylsham, Great Yarmouth, Ipswich, Bury St Edmunds and King's Lynn.

The £26m project to revamp the National Construction College at Bircham Newton in west Norfolk is also due to start this summer.

Work on the college, which trains up to 5,000 people a year, is due to be complete by 2011.