{"id":150012,"date":"2025-04-02T14:42:19","date_gmt":"2025-04-02T13:42:19","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=150012"},"modified":"2025-04-02T14:42:44","modified_gmt":"2025-04-02T13:42:44","slug":"london-construction-market-could-shrink-due-reduced-capacity","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/london-construction-market-could-shrink-due-reduced-capacity\/150012\/","title":{"rendered":"London construction market could shrink due to reduced capacity"},"content":{"rendered":"

A report from AECOM has detailed issues with reduced capacity and a risk-averse environment and the effects this will have on projects in the Capital<\/h2>\n

The London construction market could be adversely affected by low-risk approaches, says AECOM\u2019s London Main Contractor Survey.<\/em><\/a><\/p>\n

The survey covers firms with a combined turnover of \u00a36bn, and found that tier one contractors have already filled their order books for 2025.<\/p>\n

New contracts tendered has reduced<\/h3>\n

The survey found that tendering activity in the region fell to 60% in 2024, down from 72% in 2023 and barely within the margin that the market has not experienced a major shock (defined by tendering falling below 60%).<\/p>\n

The report determines that this drop is due to a low-risk approach being taken when tendering as a response to recent economic instability and an adjustment period for new legislation, including the Building Safety Act.<\/p>\n

The housing target for London is 88,000 homes per year, whereas currently just 38,000 are being built.<\/p>\n

Further issues were highlighted with the skills shortage and a general labour shortage. The report says that the true scale of the issues is difficult to see due to the glacial pace at which many housebuilding schemes are being delivered. It is believed that while it is good that the new processes will mean projects are approved more quickly, it will be for nought if there is not enough skilled and unskilled labour to perform the work.<\/p>\n

London construction<\/a> market more stable than in recent years<\/h3>\n

Despite these warnings, the report also suggests that the current market is actually more stable than in preceding years, with a relatively good work pipeline and further government commitment to infrastructure delivery. Inflation estimates for construction firms in the London construction market are at 2.9% for 2025, down from the previously predicted 2.94%, and also down from last years inflation rate.<\/p>\n

Brian Smith, head of cost management at AECOM, said: \u201cThe feeling among the capital\u2019s largest contractors is that there are sufficient opportunities available to them. However, a range of market factors \u2013 from regulation to labour availability \u2013 mean they\u2019re filling their order books with caution. ISG\u2019s collapse in September was a wake-up call for the industry and, understandably, contractors aren\u2019t wishing to overreach themselves. As a result of this low-risk environment, we\u2019re seeing a broader capacity crunch developing, with sub-contractors facing a more competitive market to secure work.<\/p>\n

\u201cThe government is committed to delivering new homes and investing in vital infrastructure, which will increase contractors\u2019 confidence and appetite for risk longer-term. But this needs to be matched by greater support for the industry, which will help firms to increase their capacity to meet the growing project pipeline. This means bolstering training schemes to bring new people to the sector and addressing the UK\u2019s loss of European labour post-Brexit.\u201d<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

AECOM have released a report predicting that the London construction market could shrink due to cautious tendering.<\/p>\n","protected":false},"author":32,"featured_media":150014,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[997,908,947],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-150012","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-planning-construction-news","8":"tag-development","9":"tag-economy","10":"tag-london"},"acf":[],"yoast_head":"\nLondon construction market could shrink due to reduced capacity<\/title>\n<meta name=\"description\" content=\"AECOM have released a report predicting that the London construction 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