Construction Insights Update | NBS BIM for Manufacturers (April 2017)

Adrian Malleson

Head of Research, NBS

04/04/2017

Construction Insights Update

Overview

• The UK Economy

• Construction Output

• A changing world

• What this means for Architects

Construction Industry Update


Bank of England GDP Forecast August 2016

Source: Bank of England

“The largest revision to our GDP forecast since the MPC was formed almost two decadesago. “


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Source: ONS


“Growth has remained resilient since the referendum, with the UK posting the fastest rate inthe G7 last year.

The economy [is] now projected to expand by 2.0% in 2017 and around 1¾% thereafter.

Bank of England GDP Forecast February 2017



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£ to $

“Sterling’s decline was clearly prompted by the referendum result. It also seems likely that the foreign exchange market has decided the consequences are negative.

The most plausible explanation for the depreciation is that, in the eyes of the market, leaving the EU will make exporting harder and more costly. To help compensate the currency needs to be cheaper. “

Ben Broadbent – Bank of England


Inflation Projection

Inflation growth as a natural response to Stirling’s Depreciation.

It’s likely to weigh on consumer income.



What has led to this significant revision? There are four main reasons:

First: the government autumn statement indicated an easing of austerity measures.

Second: the outlook for the global economy is looking better than it did last year.

Third: the easing of “fiscal conditions” – a weaker pound and low interest rates - are helping the economy.

Fourth: consumer confidence remains strong. Households have not reduced spending. It was originally thought that the uncertainty caused by the referendum would mean consumers spend less. But no. Consumer spending continues to grow, in spite of an expectation of lower income caused by wage settlements not matching inflation.


Source: WTO


Source: OECD

Source: OBR


The biggest determinants of the UK’s medium-term prosperity will be the country’s newrelationship with the EU and the reforms that it catalyses.

Some of the adjustments to this new reality may prove difficult and many will take time. But the UK can handle change. It has one of the most flexible economies in the world. It benefits from a deep reservoir of human capital, world-class infrastructureand the rule of law. Its people are admired the world over for their strength under adversity.

Source Bank of England

Overview

• The UK Economy






The UK’s construction sector was in a strong position.

Between now and 2030, the UK was set to rise to become the world’s sixth largest construction market, overtaking Canada and Germany to also become Europe’s largest construction market.


“We forecast that the volume of total construction output in the UK will increase by an average of 2.9% pa between 2014 and 2030, with the strongest growth in the infrastructure sector and the slowest for non-housing work.” Oxford Economics


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2016 2017

Source: ONS


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% change Value (£M)

Source: ONS


Source: ONS

UK Construction Output in 2016 = £151,278 M (current prices, non seasonally adjusted)

Public Housing, 3%

Private Housing, 20%

Infrastructure, 13%

Public,

7%

Private Industrial, 3%

Private Commercial,

20%

Housing R&M, 18%

Infrastructure R&M,

5%

Other

R&M, 11%

UK Construction Output – by sector


Health,

8%

Education, 27%

Offices, 29%

Shops, 11%

Entertainment, 17%

Other, 7%

Other Public Non-Housing and Private Commercial (2016)

Value shown = £42,019 M (circa 28%)

Source: ONS

“The need for additional housing in England is between 232,000 to 300,000 new units per year” – UK Parliament

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UK Housing Completions

Local Authorities Housing Associations PrivateSource: DCLG


Sectors

• Housing : Continued modest growth in the coming years

• Commercial: Contraction, in part as a result of the Brexit decision

• Education: Continued growth spurred by the Priority School Building Programme and HE work

• Infrastructure: Strong performer with significant year on year growth


Some issues for the construction sector:

• Uncertainty & outcome of Brexit negotiations

• Investment

• Material costs

• Labour

Overview

• The UK Economy






Source: WTO

Global Poverty : 42% in 1981 to 10% in 2013Life Expectancy : 48 in 1950 to 71 in 2015Literacy: 36% in 1950 to 85% in 2014GDP per Capita 450 US$ in 1960 to $10,000 in

2015 (current prices)


Phase 1

Global Financial Crisis

Phase 2

Sovereign debt crisis

Phase 3

Deleveraging in EM, end of the

commodity super-cycle

Phase 4

Political and social change. Worsening of the growth/inflation

mix

Phase 5

De-Globalisation?

Overview

• The UK Economy






• Trade

• Working on projects in EU countries

• As an economy, trading with the EU

• Being able to use European products in the UK

• Freedom of movement

• Staff from other countries bring richness, diversity, different perspectives

• People from different countries, have specific strengths

• Spain – strong design approach

• Eastern Europe – strong technical skills

How important is the UK’s current integration into the EU? - Very

Source: NBS Research


• Immediate aftermath

• Staff upset

• EU staff feeling worried and unwelcome

• Workload

• Immediate dip in work

• Some EU projects put on hold, no new work

• Picked up latter part of 2016

• Although some say clients still holding back

• Trade

• Cost of some materials have increased

• Uncertainty



But architects are adept at managing through change

• Boom and bust (1990s and 2008).”

• Brexit

• Policy: New Labour investment into public buildings : Too much money, too quickly; but new procurement approach squeezing design

• Technology: BIM

• Skills shortage

• Changing role of the architect



Lower emissions

50%Reduction in greenhouse gas emissions

in the built environment.

Faster delivery

50%Reduction in the overall time, from inception to

completion, for new build and refurbished assets.

Lower costs

33%Reduction in the initial cost of

construction and the whole life cost of

built assets.

Improvement in exports

50%Reduction in the trade gap between total

Exports and total imports for construction

products and materials.


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Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports

2009 2010 2011 2012 2013 2014 2015

Trade in Services - Architectural (£m)

Source: ONS


Europe, 16%

America, 18%

Asia, 59%

Australia, 1%

Africa,

6%

UK Architecture Exports 2014

Source: Department of Culture, Media and Sport


Thank you

Adrian Malleson

[email protected]

linkedin.com/in/adrianmalleson

mailto:[email protected]

https://www.linkedin.com/in/adrianmalleson

Construction Insights Update | NBS BIM for Manufacturers (April 2017)

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Transcript of Construction Insights Update | NBS BIM for Manufacturers (April 2017)