Substantial forward pipeline in the UK Transport Construction sector

In 2015, new construction output in the transport sector is forecast to rise and is expected to reach a value of over £8bn. Although output fell quite significantly in 2014 - following an increase of 6% in 2013 - the transport sector is characterised by several larger projects with long completion programmes. Infrastructure spending is a key element of the government’s long-term economic plan and, transport infrastructure is one of the major investment sectors for the construction industry. 

Rail accounts for the largest share of construction output at around 44%, though output in the rail sector has fallen in recent years. However, the UK rail sector has a substantial forward pipeline over the next 5 years under Network Rail’s programme, which includes some 5,000 projects such as Thameslink and Crossrail; the electrification of more than 850 miles of track, the Northern Hub Project to improve the rail links between cities in the North and redevelopment of many of stations.

While the Crossrail programme is now well under way, plans are also progressing on Crossrail 2, which has an estimated construction spend of around £25bn. In addition, the £40+billion HS2 is to proceed with the recommended Phase 1 route for the London to the West Midlands line, which is expected to offer considerable opportunities for infrastructure contractors and specialists. Between 9 and 11 Tier 1 contractors are to be appointed to the first phase of HS2 and, due to the scale of works packages, Tier 1 contractors will be expected to form joint ventures.

Road expenditure has continued to increase its share of the construction market. The roads sector is currently being boosted by several recent announcements in the sector, including the Government’s Roads Investment Strategy (RIS) and Transport Strategy for the North. The first phase of the RIS includes 100 major schemes to enhance, renew and transform the network; smart motorway projects to provide extra capacity on England’s roads; and new schemes in network problem areas and schemes to improve safety and ease congestion. In addition, major improvements to the north’s road network will continue including expansion and upgrades to the M6, M62, A1 and M1.

The main focus on development in the airport sector concerns proposals for airport expansion and additional runway capacity in the South East. A proposal for a new hub airport on the Isle of Grain in the Thames Estuary has been formally ruled out after a feasibility study found it could cost up to £90bn. The Airports Commission recently published its recommendations for expanding aviation capacity at Heathrow, and the Government are set to make a final decision in December 2015.

“The plans set out in the 2015 budget for investment in regional infrastructure schemes covering both road and rail, including the Transport Strategy for the North, should provide a boost to the sector” said Andrew Hartley, Director of AMA Research. “In the rail sector, CP5 is expected to see a gradual shift away from maintenance spending to more investment in new infrastructure, with output likely to be focused on larger scale programmes currently under development such as Crossrail, with HS2 and  anew London runway expected to contribute to further growth from 2020 onwards”.

The ‘Transport Infrastructure Construction and Refurbishment 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.