UK Construction

VolkerWessels UK reported a 39% increase in pre-tax profit to £37.7m in 2022, accompanied by a 17% growth in revenue to £1,349m and an improved profit margin of 2.8%. However, the company faced a legal dispute with HM Revenue & Customs, resulting in a payment of £14m in tax, impacting its after-tax profitability. Despite this, VolkerWessels UK demonstrated strong financial performance and experienced growth across all sectors, with rail projects playing a significant role in revenue generation.

The UK Construction Purchasing Managers’ Index (PMI) recorded a slight decline in August, primarily due to a slump in house building, but the overall index remained positive, indicating ongoing growth in the sector. Resilient demand for commercial work and infrastructure projects helped offset the decline in residential activity, although concerns about the near-term economic outlook and rising risk aversion led to reduced optimism for future business activity.

Cardo Group has acquired Osborne Property Services Limited (OPSL), a company specializing in repairs, planned works, and asset management contracts for social housing landlords. The acquisition is part of Cardo Group’s strategic expansion plans in the south-east region, allowing them to operate from the south coast to London and the home counties. The acquisition is expected to enhance Cardo Group’s ability to provide social housing solutions across a wider geographical area. The financial terms of the acquisition have not been disclosed.

Mitie, a leading facilities management and professional services company, has completed the acquisition of JCA Engineering, a Stevenage-based company specializing in complex engineering projects. The acquisition is set to enhance Mitie’s project capabilities and expand its client base across various sectors.

The Department for Education has issued new guidance to teachers regarding closures due to the use of Reinforced Autoclaved Aerated Concrete (RAAC) in construction, stating that all areas and buildings with RAAC must be closed, irrespective of previous risk ratings, following recent incidents that have resulted in a loss of confidence in buildings containing RAAC.

The Department for Education (DfE) has ordered 104 UK schools to evacuate buildings containing reinforced autoclaved aerated concrete (RAAC) due to concerns about potential collapses. The government is providing funding to address immediate risks and support schools with temporary accommodations if needed. The NHS also plans to replace its most-affected buildings by 2030 and remove RAAC from its estate by 2035.

The Monklands Replacement Project (MRP) aims to replace University Hospital Monklands with a modern and sustainable hospital, with a focus on digitalization and carbon neutrality. NHS Lanarkshire is leading the project, and Laing O’Rourke has been appointed as the construction partner. The full business case is currently being finalized, and the new hospital is expected to open in 2031.

NHS Lanarkshire has signed a pre-construction services agreement with Laing O’Rourke to progress the Monklands Replacement Project, which aims to create Scotland’s first fully digital and net-zero carbon hospital.

Esskay Construction, a Warrington-based contractor, has been fined £90,000 for breaching three regulations under the Control of Asbestos Regulations 2012.

The construction sector has recently experienced a wage increase for “unskilled” laborers and plant operators, while overall wage growth on construction sites has averaged 4.7% from April to June compared to the same period last year. However, job placements have declined, indicating a labor shortage rather than a lack of work. Skilled craftsmen have been particularly affected, highlighting the shortage of workers in the industry. Wage growth in the second quarter of 2023 was lower than in the previous quarter, and inflation has outpaced salary growth, putting strain on workers’ purchasing power. The construction workforce has decreased since 2019, leading the Construction Leadership Council to call for the addition of trade roles to the government’s Shortage Occupation List to address the labor shortage. The Home Office has expanded the list to recognize the need for skilled workers in construction-related fields, demonstrating the government’s commitment to finding solutions. While the rise in wages provides some relief, the decline in job placements and the wage-inflation gap underscore the need for action to address the labor shortfall and ensure the industry’s continued growth and stability.