Slow start to year for healthcare construction market

Activity in medical and healthcare construction down by 25%

The medical construction sector has seen a slow start to 2016, with activity slashed by more than a quarter during February.

According to the latest monthly Economic & Construction Market Review from Barbour ABI, the value of contracts in the medical and health sector was £238m in February based on a three-month rolling average.

However, despite a 25.5% drop on January this year, the figure is 18.3% higher than the values for February 2015.

In the three months to February the value of contracts increased by 42.1% on the previous three months, and was 33.7% up on the same period in 2015, indicating a longe- term increase in the value of contracts awarded in the sector.

Scotland was the main location of development in the sector last month, capturing 29% of activity, a substantial 22.7% increase on February 2015. This is primarily due to the award for the contract to build a new health and social care facility in Muirhouse, which has a construction value of £35m. The contract was awarded to Graham Construction and work will start soon on site.

London also saw a large proportion of the activity, accounting for 24.5% of the value of contracts awarded in February, an increase of 23.4% from the same month in 2015. This is mainly attributable to the contract for a new £21m maternity unit in north London.

In terms of the types of contracts being awarded, public hospitals are the dominant sub-sector, accounting for 53% of the value of contracts in February 2015, a 2% decrease from February 2015.

The Barbour ABI research reveals the top 10 clients and architects within the sector. For February, the top five clients providing the most work were Sandwell and West Birmingham Hospital NHS Trust, the Ministry of Defence, BS Stanford, Aneurin Bevan Health Board, and Hampshire Hospitals NHS Foundation Trust.

The top five architects in the sector were Billfinger, BDP, John Simpson and Partners, Steffian Bradley Architects and Stride Treglown.

Across all construction markets, February witnessed an increase in construction levels, with the value of new contracts awarded totalling £5.6 billion, based on a three month rolling average. This is a 4.2% increase from January and an 11.6% increase on the value recorded in February 2015. The number of construction projects within the UK in February increased by 11.6% on January, 6.4% higher than February 2015.

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