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Utilities Construction Market - UK 2010-2014
AMA Research, June 2010, Pages: 81
The third edition of the report "Utilities Construction Market - UK 2010 -2014" represents an informed, up-to-date and detailed review of the market and offers excellent value for money.
Key sectors covered include:
- UTILITIES MARKET – construction output GB quarterly analysis of output & new orders, output by sector.
- WATER, ELECTRICTY, GAS & TELECOMS - output, quarterly analysis, influences, forecasts.
- PROCUREMENT AND KEY CONTRACTORS - EU Directives, recent contract awards, contractor profiles.
Key issues of particular interest:
- Performance of utilities sector against overall infrastructure market.
- Performance 2004-09 and forecasts for 2010 to 2014, key influencing factors, effects of capital investment programmes.
- Impact of recent energy legislation and European Directives on overall market growth and its effect on electricity generation in particular.
- Key regional differences in competition levels for individual sectors.
- Leading contractors working in the utilities sectors.
Leading contractors mentioned in the report include:
Alfred McAlpine, AMEC, Arup Group, Balfour Beatty, BAM Nuttall, Barhale Construction, Bechtel UK, Black and Veatch, Carillion, Clancy Docwra plc, Costain, Daniel Contractors, Galliford Try, Interserve, John Laing, Kier, Laing O’Rourke plc, May Gurney, McNicholas Construction, Morgan Sindall, Morrison Utilities, Murphy Group, Sir Robert McAlpine Plc, Skanska UK, Vinci Construction UK, WS Atkins.
Key areas covered in the report include:
UTILITIES MARKET OVERVIEW
- UK Construction Output – overview of UK construction market, mix by sector 2008 and 2009, key influencing factors, trends.
- Infrastructure and Utilities Market – size in terms of GB construction output, sector mix 2008-09, key trends in infrastructure sectors.
- Utilities Market – sector mix, output by sector, quarterly analysis by output and new orders, key influencing factors, future prospects.
- Utilities output forecasts – assessment of potential performance 2010-14, key influencing factors, and output forecasts to 2014.
SECTOR ANALYSIS - ELECTRICITY, GAS, WATER AND TELECOMS.
- Industry structure – by sector and by country for individual sectors, regulatory control, industry size, factors influencing structure of the industry, etc.
- Construction output by sector – 2004-09 with forecasts through to 2014, quarterly analysis of output and new orders.
- Future investment by sector – current plans for capital investment and future investment, influence of legislative or regulatory controls.
- Key trends in the market place - factors of influence; are the trends and factors of influence set to continue, or will there be changes?
- Identification of key companies for each sector – profiles of key utilities companies involved in each UK sector - eg water companies, gas & electricity generation, transmission & distribution organisations, leading telecoms companies.
- Current forecasts to 2014 – construction output by electricity, gas and total utilities in GB.
PROCUREMENT AND LEADING CONTRACTORS
- Procurement of utilities works – European Procurement Directives, exemptions for utilities companies, current contract thresholds and those applicable to utilities sector.
- Recent contract awards in utilities sector – includes recent AMP 5 contract awards in water sector as well as some major electricity contracts recently awarded.
- Structure of utilities contracting sector – analysis by employee numbers for water, electricity and communications sectors in 2009, recent corporate activities.
- Leading contractors in utilities sectors – company profile, area of activity, recent utilities works, contracts awarded, major clients in utilities sector, etc.
REVIEW OF FUTURE PROSPECTS
- Trends over the medium-term, and forecasts to 2014; key influencing factors within the market, potential influence of regulative and legislative changes.
- Recognition of need to secure UK’s future energy supplies – change to renewable generation as well as greater influence of nuclear power likely to boost electricity sector output.
1.2 SOURCES OF INFORMATION
2. SUMMARY AND FUTURE PROSPECTS
2.2 FUTURE PROSPECTS
3. ECONOMIC ENVIRONMENT
3.2 INFLATION & INTEREST RATES
3.4 HOUSEHOLD CONSUMPTION
3.5 HOUSING & CONSTRUCTION
3.7 POPULATION PROFILE
4. CONSTRUCTION OUTPUT IN THE UTILITIES SECTOR
4.1 THE UTILITIES CONSTRUCTION MARKET
4.2 OVERALL UK CONSTRUCTION OUTPUT
4.2.1 Sector Mix UK
4.2.2 Sector Mix 2008-09 United Kingdom
4.2.3 Infrastructure Output Great Britain
4.3 UTILITIES CONSTRUCTION OUTPUT
4.3.1 Output by Sector
4.3.2 Output and New Orders Quarterly Analysis
4.4 FUTURE PROSPECTS AND FORECASTS
5. UK UTILITIES MARKET
5.1 WATER INDUSTRY
5.1.1 Industry Structure
5.1.2 Industry Size
5.1.3 Construction Output in Water Sector
5.1.4 Output and New Orders Quarterly Analysis
5.1.5 Capital Investment
5.1.6 Water Companies
5.2 ELECTRICITY INDUSTRY
5.2.1 Structure and Size of the Electricity Industry
5.2.2 Construction Output in Electricity Sector
5.2.3 Output and New Orders Quarterly Analysis
5.2.4 Future Investment
5.2.5 Electricity Companies
5.3 GAS INDUSTRY
5.3.1 Structure and Size of the Industry
5.3.2 Construction Output in Gas, Communications and Air Sector
5.3.3 Output and New Orders Quarterly Analysis
5.3.4 Gas Companies
5.4 TELECOMS INDUSTRY
5.4.1 Structure of the Industry
5.4.2 Telecoms Industry Revenues
5.4.3 Capital Expenditure
6. UTILITIES PROCUREMENT AND MAJOR UTILITIES CONTRACTORS
6.1 PROCUREMENT OF UTILITIES WORK.
6.1.1 Current Directives
6.1.2 Current Contract Thresholds
6.1.3 Recently Awarded Utilities Contracts
6.2 STRUCTURE OF THE UTILITY CONTRACTING INDUSTRY
6.3 MAJOR CONTRACTORS INVOLVED IN THE UTILITIES SECTOR
LIST OF ABBREVIATIONS
CHART 1: UTILITIES MARKET GB CONSTRUCTION OUTPUT 2004 TO 2014 - BY VALUE (£BN AT CURRENT PRICES) 8
CHART 2: INTEREST RATES AND INFLATION (CPI) FROM 1992-2014 12
CHART 3: PDI & SAVINGS RATIO AT CURRENT PRICES 1992-2014 14
TABLE 4: EXCHANGE RATE FLUCTUATIONS 2004-2010 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 16
CHART 5: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION MID-2008 (‘000) 17
CHART 6: UK CONSTRUCTION OUTPUT (NEW WORK AND RMI) 2004 TO 2009– BY VALUE (£ BILLION AT CURRENT PRICES) 20
TABLE 7: UK CONSTRUCTION OUTPUT BY SECTOR 2009 – BY VALUE (£MILLION AT CURRENT PRICES) 22
CHART 8: UK CONSTRUCTION OUTPUT BY SECTOR 2008 AND 2009 - % BY VALUE 23
TABLE 9: GB CONSTRUCTION OUTPUT FOR INFRASTRUCTURE BY PUBLIC AND PRIVATE SECTOR 2004 TO 2009 – BY VALUE (£M AT CURRENT PRICES) 24
CHART 10: INFRASTRUCTURE OUTPUT BY SECTOR GREAT BRITAIN 2008 AND 2009 - % BY VALUE 25
TABLE 11: UTILITIES CONSTRUCTION OUTPUT AS PERCENTAGE OF TOTAL INFRASTRUCTURE OUTPUT (GREAT BRITAIN) 2004 TO 2009 – BY VALUE (£M AT CURRENT PRICES) 27
CHART 12: UTILITIES CONSTRUCTION OUTPUT GB BY SECTOR 2004 TO 2009 - BY VALUE (£M AT CURRENT PRICES) 28
TABLE 13: UTILITIES MARKET GB OUTPUT MIX BY SUB-SECTOR 2004, 2006 AND 2009 - % BY VALUE 29
CHART 14: UTILITIES OUTPUT AND NEW ORDERS GB QUARTERLY ANALYSIS Q1 2006 TO Q4 2009 – BY VALUE (£M AT CURRENT PRICES) 30
CHART 15: UTILITIES MARKET GB CONSTRUCTION OUTPUT 2009 TO 2014 - BY VALUE (£BN AT CURRENT PRICES) 31
TABLE 16: WATER INDUSTRY (ENGLAND AND WALES) TURNOVER & OPERATING PROFIT 2004-05 TO 2008-09 – BY VALUE (£M CURRENT PRICES) 35
CHART 17: WATER SECTOR CONSTRUCTION OUTPUT (GB) 2004 TO 2014– BY VALUE (£M AT CURRENT PRICES) 36
CHART 18: WATER INDUSTRY SECTOR OUTPUT AND NEW ORDERS GB QUARTERLY ANALYSIS Q1 2006 TO Q4 2009 – BY VALUE (£M AT CURRENT PRICES) 37
TABLE 19: GROSS CAPITAL INVESTMENT BY SERVICE – INDUSTRY £M 2004-05 TO 2008-09 BY VALUE (£M AT CURRENT PRICES) 38
TABLE 20: AVERAGE ANNUAL CAPITAL INVESTMENT BY WATER COMPANIES (ENGLAND AND WALES) 1990-95 TO 2010-15 – BY VALUE (£BN) 39
CHART 21: AMP 5 CAPITAL INVESTMENT PROGRAMME BY APPLICATION SECTOR 2010-15 - % BY VALUE 39
TABLE 22: COMPANIES SUPPLYING WATER ONLY SERVICES ENGLAND AND WALES 47
TABLE 23: NORTHERN IRELAND CURRENT ELECTRICITY SUPPLY LICENSE HOLDERS 49
CHART 24: ELECTRICITY SECTOR CONSTRUCTION OUTPUT (GB) 2004 TO 2014– BY VALUE (£ BILLION AT CURRENT PRICES) 50
CHART 25: ELECTRICITY SECTOR OUTPUT AND NEW ORDERS GB QUARTERLY ANALYSIS Q1 2006 TO Q4 2009 – BY VALUE (£M AT CURRENT PRICES) 51
TABLE 26: KEY FINANCIAL INDICATORS NATIONAL GRID UK OPERATIONS (£M) 54
CHART 27: GAS, COMMUNICATIONS & AIR SECTOR CONSTRUCTION OUTPUT (GB) 2004 TO 2014– BY VALUE (£BN AT CURRENT PRICES) 59
CHART 28: GAS, COMMUNICATIONS & AIR OUTPUT AND NEW ORDERS GB QUARTERLY ANALYSIS Q1 2006 TO Q3 2009 – BY VALUE (£M AT CURRENT PRICES) 60
CHART 29: UK FIXED AND MOBILE TELECOMS CONNECTIONS 2003 TO 2008 - % BY PROPORTION OF CONNECTIONS 63
CHART 30: UK TELECOMS INDUSTRY REVENUE BY SECTOR 2003 TO 2008 – VALUE (£BN) 64
TABLE 31: UK TELECOMS INDUSTRY REVENUE BY SERVICE TYPE 2003 TO 2008 – BY VALUE (£BN) 65
TABLE 32: UK TELECOMS INDUSTRY TOTAL NET CAPITAL EXPENDITURE BY SECTOR 2008 BY VALUE (£M) 66
TABLE 33: EU THRESHOLDS FOR ALL SECTORS 2007 AND 2010 69
TABLE 34: EU THRESHOLDS FOR UTILITIES CONTRACTS FROM 1ST JANUARY 2010 70
TABLE 35: UTILITIES CONSTRUCTION CONTRACTORS 2009 – SIZE OF BUSINESS BY NUMBER OF EMPLOYEES 72
TABLE 36: LEADING CONSTRUCTION CONTRACTORS INVOLVED WITH UTILITIES WORKS 73
Previously run as state controlled monopolies, the utilities market has been progressively opened to the forces of private competition over the last 25 years. However, significant regional differences exist between sectors regarding the “openness” of the respective markets.
Utilities construction output in 2009 reached £3.65bn however this represents 4% decline on the previous year, affected mainly by the reduction experience in electrical output. The chart, left, illustrates our estimates of market performance from 2004 with current forecasts of anticipated performance through to 2014. The good growth in 2008 was followed by a market adjustment in 2009 but still resulting in output levels for 2009 being 7% ahead of 2007.
A key feature of the utilities market is the longer-term, larger-scale projects that are let over a number of years which tend to have a smoothing effect on construction output for the utilities market. The water sector in particular is characterised by 5 year Asset Management Programmes (AMP) with levels of capital investment for these programmes determined by the water regulator.
In 2009, the water sector accounted for 51% of utilities construction output in Great Britain, with output having been underpinned by the end of the AMP 4 programme. The continued focus of the regulator on improved customer service and water quality initiatives in recent years has resulted in greater capital spending programmes on improvements to mains and also water and sewage treatment plants. The structure of the water sector is not uniform with greater levels of private company involvement in England and Wales compared with Scotland and Northern Ireland.
The electricity market Great Britain has been subject to private sector competition for a longer period than that in Northern Ireland, which has only experienced significant loosening of State involvement over the last 5-6 years. The scale of large power station projects and larger renewables commissioning has meant that construction output for the electricity sector has been more volatile than for water in recent years with electrical construction output peaking at £1bn in 2007-08 before declining to £896m in 2009.
Prospects for utilities construction remain relatively optimistic with construction output expected to experience moderate-good annual gains to 2014 when the market is expected to reach £4.4bn. Key to this progressive growth is likely to be the long-term capital investment programmes of key sectors and also growth in the electricity sector boosted by new nuclear build programmes and expected increases in renewable energy production capacities.
- Alfred McAlpine
- Arup Group
- Balfour Beatty
- BAM Nuttall
- Barhale Construction
- Bechtel UK
- Black and Veatch
- Clancy Docwra plc
- Daniel Contractors
- Galliford Try
- John Laing
- Laing O’Rourke plc
- May Gurney
- McNicholas Construction
- Morgan Sindall
- Morrison Utilities
- Murphy Group
- Sir Robert McAlpine Plc
- Skanska UK
- Vinci Construction UK
- WS Atkins