SPECIAL REPORT


market overview


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reaction to Brexit and the additional NHS funding promised following last year’s NHS 70th birthday celebrations. “The sector is currently adjusting


to the lower levels of investment in capital projects than in the early 2000s when PFI schemes for larger-scale hospital developments dominated health sector contract awards and output”, says the report “The planning pipeline remains


positive, but operating at a significantly- lower level than some other construction sectors.” And it says the recent trend of smaller


projects will continue, adding: “The focus of NHS budgets in recent years has been centred on improvement of services at the point of delivery and chronic disease prevention, rather than a large-scale building programme. “However, there are now critical


aspects of NHS provision that are under sustained pressure, in particular A&E provision in some regions, and social care provisions on a national basis. “Some extra funding schemes have


been put in place by the current Government and could provide further impetus for capital injections to extend and improve existing facilities in the medium to longer term.” Within the health sector the North


West was the largest region for contract values in 2018, at £626m, a 29% share. The second-largest region was


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London, with 22%, while Scotland also saw a significant amount of activity, at 17%, worth £378m in 2018.


Key players In terms of the pipeline moving forward, the report says: “Following a static year in 2017, the value of medical and health contracts achieving detailed planning stage in 2018 improved by 39.3% in 2018 to reach £1.8billion. This good growth perhaps signals a more-positive outlook, but values have remained below the £2billion threshold during the last four years.” Analysts at Glenigan have also made


predictions about the market over the coming months. They report that, across all sectors,


construction activity dwindled by 6% during 2018. And they forecast a further 2%


decline in project starts in 2019, followed by a modest 3% upturn in fortunes during 2020. And this is a trend they say that will


filter down to the healthcare sector, with an expected 6% reduction in underlying project value for healthcare schemes during 2019, before a slight revival of 5% in 2020. In addition, the development pipeline


has shrunk, with an 11% drop in the value of health projects securing detailed planning consent during the first 10 months of 2018. In terms of the key players, the


Barbour ABI report lists the top 10 clients, architects and construction firms in terms of activity within the medical and healthcare sector last year. The top clients were the Royal


Liverpool and Broadgreen Hospital NHS Trust with two projects valued at £341m; and Aneurin Bevan Health Board with a single project worth £210m. Leading architects and contractors


were HKS Architects with two projects worth £355m; NBBJ, which worked on one project valued at £335m; Kier


construction, which led a whopping 21 projects valued at £302m; and Laing O’Rourke with one project worth £210m. In terms of where the opportunities


lie moving forward, Scotland remains a key area for activity, with an announcement on capital allocations expected shortly.


Further afield As mentioned, Scotland is emerging as a key future market for healthcare construction, having seen investment of more than £5billion over the past decade. And more is expected as the Government switches its priorities to joining up health and social care with a new generation of purpose-built community-based facilities. These will be delivered through five


hubCos, each with a private-sector development partner. Collectively, they are developing and


delivering a diverse pipeline of best- value, award-winning community infrastructure, currently valued at more than £2.3billion and anticipated to grow to over £3billion in the coming years. In Wales, projects with a value of less


than £4m are delivered by health boards, with larger-scale projects procured through the NHS Building for Wales frameworks. Seven contractors have been chosen


to work across the two frameworks, which are worth of total of £560m over the coming years.


www.glenigan.com www.barbour-abi.com


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