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making the difference
Analysing the UK construction marketplace
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November 2018
Turner & Townsend
Agenda
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Agenda
Introduction
UK market overview Output, order books & TPI
London & South East market overview
Market outlook, tendering conditions, procurementroutes, sector performance
Key challenges in the market Key challenges A tale of two Brexits
Chris QuickDirector
Kris HudsonEconomist
Turner & Townsend
Who we are
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Turner & Townsend is an independent professional services company
specialising in programme management, project management, cost and
commercial management and advisory across the real estate,
infrastructure and natural resources sectors.
With 108 offices in 45 countries, we draw on our extensive global and
industry experience to manage risk while maximising value and
performance during the construction and operation of our clients’ assets.
Turner & Townsend
Turner & Townsend in the UK
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AberdeenBathBelfastBirminghamBristolCambridgeCardiffEdinburghGlasgowLeedsLondonManchesterNewcastleNottinghamReadingSheffield
Teesside
Dublin
2,500People
£238.9mUK Revenue
£26.7mOperative Profit
Turner & Townsend
London Expertise
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Grosvenor Square Ltd
20 Grosvenor Square
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Lelana
Hans Place
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Chalk Farm
101 Camley Street
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BPSDC
Battersea Power Station
1
Grosvenor Estates
Biscuit Factory
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Redrow PLC
Redrow Colindale
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TfL
Nine Elms OSD
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Damac
Aykon One
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Red Door Ventures
Triangle Site
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CGMA
New Covent Garden Market
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LB Croydon
New Addintgton
14
Groveworld
Wallis Road South
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Meadow Residential
Mill Hill
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LLDC
Olympicopolis
13
LB Hackney
Tiger Way
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Carter Jonas
Carrington Car Park
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LLDC
East Wide & Sweetwater
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Capco
Various
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Luton BC
Marsh Farm
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Legal & General
The Crescent
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Versant Homes Ltd
Compass House
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Finchatton
Cheval Place
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Aviva
Friar Street
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London & Regional
First Central Park Royal
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HKSH
Peninsular London
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LB Camden
Camden Infill Sites
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Raingate Ltd
Chancery Lane
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Teighmore
Shard & London Bridge
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LB of Brent
Brent Civic Centre
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Deerbrook
Sea Containers House
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QDDC
Chelsea Barracks
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Taylor Wimpey
102 Camley Street
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CBRE Ltd
Century Portfolio
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London & Regional
St Georges Court
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City of London
Wood Street Police
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IJM
Royal Mint Street
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PWC
7 More London
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Airbus D & S ltd
Airbus
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BP International Ltd
BP Building
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Ballymore
Embassy Gardens
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KPMG
Various
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Societe Generale
Project Marble
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Capital & Counties
the Henrietta
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Deerbrook
Medius House
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Youth Hostel Association
YHA Stratford
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All England Tennis Club
Wimbledon
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Starwood Capital
Ace Hotel Shoreditch
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CitizenM
Trinity Square
45
Capco
South Wells
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L&G
Jackson Square
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NEPRO
Romford Market
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Capco
Opera Terrace
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McArthur Glen
Ashford Outlet
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Land Securities
West 12 Shopping Centre
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Construction output - National
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Contractor order books - National
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Regional tender price inflation
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Market overview – construction cost change
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Current market outlook
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Current market tendering conditions
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Procurement route trend
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Sector performance
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London Market Trends - Housing
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Output
New orders
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London Market Trends - Commercial
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Output
New orders
0
2,000
4,000
6,000
8,000
10,000
12,000
2000 Q1 2003 Q1 2006 Q1 2009 Q1 2012 Q1 2015 Q1 2018 Q1
Output: £ million
Source: Office for National Statistics (ONS) Annualised
Turner & Townsend
Key challenges facing the market
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A tale of two Brexits
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• Brexit uncertainty is impacting confidence, with 26.8% of contractors predicting a cooling market over the next 12 months in London
• Financial sector exporting its services internationally
• 2 in 5 financial firms have confirmed at least one relocation destination to Dublin
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Brexit – a tale of two cities
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Brexit – a tale of two cities
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Responding to challenges and opportunities
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• Strike a balance between supply chain scrutiny and supply chain engagement
Supply chain scrutiny vs engagement
• Uncertainty triggered by Brexit, raising the prospect of certain contractual
agreements being invalidated
• Baseline cost, scope, risk and schedule health check reviews; understand exposure
Contract health checks
• Single stage tenders can heap additional stress on a fragile, strained supply chain
• Collaborative contractor relationships, with robust project controls and intelligent
procurement, fairly distributing risk
Procurement route considerations
• Cooling investor demand, forcing contractors to bid lower and squeeze margins
• Long term skills shortage exacerbated by a shrinking pool of EU workers
• Limited supply chain capacity and greater exposure to risks of insolvency
• Modest TPI and high levels of competition – a client’s market
Turner & Townsend
UK major programme spend profile
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Chris QuickDirector, Cost ManagementTurner & TownsendOne New Change, London, EC4M 9AFt: +44 (0) 20 7544 4000 | m: +44 (0) 7950 857423e: chris.quick@turntown.co.ukwww.turnerandtownsend.com
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