2020 - a more-favourable year for healthcare construction?

Construction market forecasters say increase in NHS capital spending and larger number of smaller refurbishments will keep the market stable

Barbour ABI figures show a trend for a larger number of smaller-value schemes, with Scotland enjoying the largest share of contracts in November

2020 could be a more-favourable year for healthcare construction, as NHS England increases its capital budget and a large number of smaller projects move through the planning system.

Industry experts at construction forecast firms, Glenigan and Barbour ABI have issued their predictions for the healthcare market over the next 12 months, with mixed views on where the opportunities might lie.

Glenigan’s recently-published 2020-2021 Construction Industry Forecast states that ‘health-related construction is set to benefit from an uplift in NHS capital budgets over the next two years, particularly at NHS England where capital funding has risen by 14% to £6.7billion for 2019/20’.

It shows that one of the largest hospital-building schemes in the pipeline is the £90m extension of Leicester Royal Infirmary for University Hospital of Leicester NHS Trust.

Planning works for the scheme are currently underway and work is scheduled to start in 2021.

The report states: “Predicting construction activity is no easy task in the current political and economic climate. But, for all the current uncertainty, The Glenigan Construction Industry Forecast for 2020 and 2021 highlights a series of bright spots across the industry which should underpin the growth of new activity in the years ahead.”

The document also forecasts growth in other key construction sectors including private housebuilding, build to rent, and affordable housing.

However, Barbour ABI’s Economic Construction Review for December 2019 showed that, in November, the last month for which figures are available, the value of medical and health construction contract awards was £87m based on a three-month rolling average.

This is a decrease of 11.7% on October and is also 35.4% lower than for November 2018.

Predicting construction activity is no easy task in the current political and economic climate. But, for all the current uncertainty, The Glenigan Construction Industry Forecast for 2020 and 2021 highlights a series of bright spots across the industry which should underpin the growth of new activity in the years ahead

Quarterly data indicates that, in the three months to November 2019; the total value of medical and health contract awards was £260m.

And, while this is 18.2% higher than the previous quarter, it represents a decrease of 23.2% on the comparable quarter ending November 2018.

Contrasting with previous months, when single larger-value contracts were the focus; November saw a larger number of smaller-value contracts with a focus on extension and refurbishment works, a trend which is likely to continue.

Regional analysis indicates Scotland as the leading region in November, with an attributable share of 27.2% of awards.

The largest contract award in the region was the £3.4m Ward 2a Refurbishment at the Royal Hospital for Children in Glasgow.

Awarded to MPMH Construction and James Frew, the works involve refurbishment of the ward as well new mechanical and electrical works.

Wales was the second-largest region in November, accounting for 20.1% of contract awards in the sector.

In terms of project type, public hospitals were the leading sector, with 37.2% of contract awards, a decrease of 19.3% on November 2018.

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