Covid-19 continues to impact on contracts and tender opportunities

Research by Builders’ Conference has confirmed that the construction sector continued its recovery in July 2020 as the economy began to open up. However, the number of contract awards is down by nearly one third and forward tender opportunities are 49% below the pre-Covid period. 

The latest information from Builders’ Conference reinforces the impact of coronavirus on contracts and tender opportunities. Pre-coronavirus between July 2019 and March 2020, the number of contracts awarded each month averaged 587. In July 2020, there were 430 contracts awarded, which was a slight improvement on the 415 contracts awarded in June, but 27% below the average and 30% less than in July 2019.

The value of contracts awarded in July increased by 50% to £5.4 billion, compared to £3.6 billion in June, which was primarily driven by two large mixed-use development contracts with a combined value of £1.7 billion. Even with these two contracts, the value in July is still 13% lower than the monthly average of £6.2 billion between July 2019 and March 2020. Excluding these two contracts, almost half of all the contracts awarded were housing projects (180 projects with a combined value of £1.7 billion). There were then 38 office projects worth £554 million and 23 health and welfare projects with a total value of £333 million.

There was a modest increase of 15% in the number of tender opportunities, up from 303 in June to in 349 in July. However, this is still 49% below the monthly average of 682 projects available for tender between July 2019 and March 2020 and 60% lower than July 2019. There were 162 tender opportunities available until the end of October 2020.

This morning the Bank of England reported that expects the economy to shrink by 9.5 percent in 2020 – the biggest annual decline in a century. However, the latest predicted contraction is far less sharp than the 14% the Bank forecast in the Spring.