Mairead

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Construction costs: hitting new high

The proportion of construction companies reporting higher-than-normal cost increases hit a new record in late May, data from the Office for National Statistics revealed.

More than two in five companies (44 %) surveyed said that in the two weeks to May 30 they had seen their costs rise more than normal. It is the highest number on record since the ONS began its survey just after the start of the pandemic last year.

Just over one in five (26 %) reported that prices had not increased more than usual. Less than five percent said that some prices had risen while others had fallen, but no company reported that most prices fell.

A quarter said they were not sure how prices had changed or that the question about price changes did not apply to them. ONS surveyed 750 construction companies.

The director of economics for the Construction Products Association, Professor Noble Francis, said that while the ONS data was volatile, there was a clear trend of rising costs over the past nine months.

Material cost inflation due to shortages has been a growing problem in recent months. Steel, wood, cement, aggregates, plastic and shingles are among the products that have been on the Construction Leadership Council’s list of products facing supply restrictions.

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Work levels fall for first time this year

Construction production fell 2% in April, the first drop recorded since December 2020.

Both new construction work and repair and maintenance recorded lower levels of work in April compared with March. Output levels remained above the pre-pandemic peak recorded in February 2020, however.

The residential and commercial sectors led the decline in new construction, falling 9.8% and 6.3% respectively. However, the strong recovery observed in recent months meant that in the less volatile quarter-on-quarter comparison, the production levels of the two sectors increased 4.8% and 7.6%, respectively.

Infrastructure, which has had the strongest performance since the beginning of last year, continued to grow in April with an 11 percent increase in production. The public sector and private industrial construction registered small increases in work levels.

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Chiltern tunnelling works contaminating local water supplies

HS2’s senior project manager admitted that the tunnel construction work faced a “significant challenge” in stopping the leakage of cement to water sources.

They have revealed how the teams building the railway’s longest tunnels plan to prevent water supplies from becoming contaminated after admitting the work was causing “real nervousness” to a local water supplier.

Last month, a court forced the £ 100bn railway to disclose documents assessing the risk to local water supplies posed by tunnelling works for the project’s 16km tunnels under the Chiltern Hills.

The documents revealed that six public water sources may need additional treatment works and others may need to be closed completely during tunnel construction due to the risk of cement contaminating drinking water supplies.

HS2 admitted that tunnelling would “carry risks”, adding that ground investigation teams had found around 50 faults along the route.

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Redbridge Council gives green light to ‘Tesco town’

Collaboration between supermarket firm and housebuilder to provide urban village in east London

Housebuilder Weston Homes and supermarket firm Tesco have obtained a resolution to grant planning permission for their joint plans for a 1,280-home project in Goodmayes.

They secured the go-ahead from Redbridge council to transform an existing Tesco store and car park into a new community called Lorimer Village, which has a gross development value of £ 500m.

The scheme includes a total of 14 towers, rising to 22 storeys, alongside plans for rebuilding the store. It will also include a primary school, a village hall, a landscaped garden and public transport improvements.

The development will also be 100% electric powered, making use of 682 solar PV panels.

The scheme, of which 35% will be affordable housing, was designed by RDA Architects and will take around 8 years to be finished, it’s expected to start in early 2022.

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Post-pandemic construction industry recovery

The volume of contracts signed in April indicates a brighter future for construction industry, while project starts are still below pre-pandemic levels, the past few months have seen a strong rise, the development pipeline is now ahead of 2019 levels, pointing to the prospect of a recovery in starts over the coming months.

The fastest growth was in large projects, starts among these larger jobs has increased by 23% over the previous three months and by 69% over the same period last year.

Compared with the previous three months, the value of contracts awarded has increased by 36%, an increase of 50% over the same period last year, and an increase of 12% over the same period in 2019. Major contract awards of more than £100M increased by 44% in the three months to April, which is 97% higher than the level a year ago.

Underlying contract awards increased by 34% on the preceding three months to stand 38% higher than a year ago.

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Local MP objecting to Greenwich scheme

Local MP launches an objection to £800m Greenwich scheme, saying it is too tall

The development designed by OMA was planned to include four towers up to 36-storeys high

Labor MP from Greenwich and Woolwich, Matthew Pennycook, has written to the Labor-held local authority planning board formally aligning himself against U & I’s £ 770 million plan at Morden Wharf.

The project on the western side was presented for planning at the Greenwich council in June last year and work is expected to begin in 2023 if approved. It would consist of 1,500 homes and more than 17,000 square meters of commercial space in 12 buildings, including four towers between 21 and 36 storeys high.

A new road called Sea Witch Lane, named after a pub that was destroyed by a bomb in WWII, would run through the development into a public square.

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UK-specific issues are adding to global shortages

Consultant Says UK Specific Problems Add To Global Shortage

A combination of UK-specific factors may affect the construction sector’s recovery from this year’s pandemic, Aecom warned.

Rising labour costs due to post-Brexit emigration and permanent non-tariff barriers affecting UK construction product imports from the EU are driving up input costs, the consultant said.

The EU is a major source of supply to the UK for a wide range of building materials.

But some EU exporters have stopped supplying the UK due to additional red tape making it commercially unviable, while others have raised prices to cover new non-tariff barriers and additional administrative costs.

CPA data released in January also showed that the EU-born construction sector workforce declined by more than a quarter in the year to Q3 2020.

And while a record 42% drop in UK commercial exports to the EU in January partially recovered in February, exports in the other direction have seen a much weaker recovery.

EU imports rose just £1.2bn in February after a record drop of £6.7bn in January, according to the latest figures from ONS.

The issues have been outlined in Aecom’s market forecast for construction, which predicts bid prices will increase 2.4% from the second quarter of this year to the second quarter of 2022 and 3% over the next 12 months.

UK-specific cost pressures are occurring in the context of global material shortages caused by supply constraints and increased demand, especially in the US.

Steel prices have risen 25% in the 12 months to February this year, but although it had risen with the value of the dollar, the dollar fell out of sync at the end of February.

Aecom said the weakening of the dollar in recent months now runs the risk of driving up the price of steel and other metals further.

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Designs for 46-storey Westfield tower ready

Developer Unibail-Rodamco-Westfield (URW) and Glenn Howells Architects have unveiled the plan for a 46-storey tower next to the Westfield shopping centre, West London.

In 2017, Allies and Morrison was granted outline planning permission for 1,347 homes across three sites on behalf of developer URW, which owns the Westfield shopping centre and the surrounding land. Under the previous plans, the scheme was set to have 1,100 homes across eight blocks.

Glenn Howells has now submitted revised outline plan for the site, which would see 1,760 homes provided across nine blocks, the scheme would also feature a 34-storey tower, a 24-storey block and two 19-storey blocks.

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PAS 9980: Building fire safety assessment standard, consultation launched

A public consultation process for a new code of practice for fire risk appraisal, assessment of external wall construction and cladding of existing apartment blocks has been initiated.

The British Standards Institution is seeking information from people in the building, fire, housing and security industries, as well as consumers and residents.

The new standard, PAS 9980 (Fire risk appraisal and assessment of external wall construction and cladding of existing blocks of flats – Code of practice), will give guidance on undertaking a fire risk appraisal and assessment (FRAA) of the external wall construction of a multi-storey residential building.

The standard is intended for use by fire engineers and other building professionals tasked with advising on the fire risk of external wall construction of existing blocks of flats.

The consultation runs until 20 May, and the standard is due to be published in September.

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Plans for Birmingham health & science campus approved

Green light for the construction of a £210m campus dedicated to health and life science businesses in Birmingham.

The £210m Birmingham Health Innovation Campus will see 133,000 square feet of laboratory and office space built at the site in Selly Oak. The work is set to begin this summer, the developer, Bruntwood SciTech, expects the first phase of the project to be completed in 2023. A main contractor has not yet been formally appointed.

The campus is part of a larger masterplan for the area, which could see 657,000 square foot of office and lab space built over the next decade.

The campus project has received £11m of funding from the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) through the Local Fund and the Government’s Getting Building Fund.

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