The Highway Maintenance market in the UK is both
substantial and complex, and is a major part of UK infrastructure spending -
though Government cutbacks have impacted on some sectors of the market.
However, the Government is showing signs of recognising
the need to invest more in road building and other transport projects, and the poor
winters over the last 2 years have generated some extra funding for mending
potholes, the latter being a contentious issue at a local political level.
There is a complex structure of responsibility for
maintenance of highways. Motorways and major trunk roads are managed by
Highways England, while the remainder of the road network is managed by various
classes of local authorities, who either undertake the work with direct works
teams, or award contracts to contractors to undertake the work on their behalf.
As the chart shows, the market is split between direct labour organisations
which are part of the council, and long term contracts awarded to external
organisations specialising in term maintenance contracts.
There has been some rationalisation of local government
authorities in the last 40 years and the practice of local authorities awarding
long term maintenance contracts has steadily increased since the 1970s. Early
contracts were of a short duration and it was difficult to organise and
generate a reasonable level of consistency and profitability, so contract
periods have lengthened allowing the contractor a chance to invest in plant and
equipment necessary for the contract, and as a result current contracts run
from 3-5 years up to 25 year PFI contracts.
There has been a growth in contractor involvement in this
market and companies such as Lafarge Tarmac, Amey, Ringway, Balfour Beatty,
Kier etc. have taken many of these contracts in the last 20 years. As a result,
as of mid-2015, some 50% of all authorities have now created long term
contracts for maintaining highways in their areas, though the split varies
significantly between types of authorities and regions of the country.
“Contractors with a
more general construction background have been very active in recent years as
they have recognised good opportunities in the highway maintenance sector” Said Andrew Hartley,
Director of AMA Research. “Examples of
construction companies that now have a considerable involvement in highway
maintenance and the wider infrastructure market include Kier, which has
acquired May Gurney and Mouchel, and Amey. We anticipate that other ‘traditional’
construction companies will enter this market in the next few years through
acquisitions and partnerships.”
The government is keen to explore more opportunities to
bring private finance and expertise into the road network. The national network
is complete although there are plans to improve sections of motorways which are
most heavily trafficked, but there is a need to improve the regional network by
improving roads which link national network motorways and also improving local
A roads. The government is examining the possibility of letting contracts in
these areas which will embrace maintenance of existing roads and undertaking
improvements, many of which are mentioned in the recently published DTP Road
Investment Strategy. The combination of term maintenance contracts and new
forms of regional contracts, and the anticipated increase in funding, should
offer significant opportunities for the private sector.
The report also reviews some of the key product sectors,
such as road surfacing materials (asphalt, macadams, aggregates etc),reinstatement
products, street lighting etc., which are key components of the highways
maintenance market
The ‘Highway Maintenance Market Report –
UK 2015-2019 Analysis’ is published by AMA Research, a leading provider of
market research and consultancy services with over 25 years’ experience within
the construction and home improvement markets. The report is available now and
can be ordered online at www.amaresearch.co.uk or by calling 01242
235724.