AMA Public Sector Construction Market report

New AMA report provides a timely review of the Public Sector (Non-Residential) Construction Market UK 2008-2012.

Public Sector (Non-Residential) Construction Market UK 2008-2012 Priced at GBP625, the report is currently available from AMA Research.

In 2007, overall public sector spending stood at GBP589bn, a rise of around 7% on the previous year., with principal areas including the education and healthcare sectors, backed by leading Government initiatives such as the Building Schools for the Future programme, Procure21 and NHS LIFT.

Levels of investment within the public sector tend to be less affected by fluctuations within the economy and current government policy indicates commitment to significant investment in areas such as education and health Since 2000, Public sector non-residential construction has registered strong growth averaging almost 20% per annum, reflecting major investment in health and education.

Recent constraints on Government spending however have seen this strong growth slow since 2005 and new work output in the public non-residential sector in 2007 rose by just over 2%, compared to the previous year, to reach GBP10.1 billion and accounted for 15% of total construction new work.

Although investment in public services and infrastructure has increased considerably in recent years, many of the Government targets have now been revised or missed altogether, with serious delays being experienced in both the Schools upgrade programme and acute healthcare sector, in particular.

Education accounts for over 50% of public sector non-housing output, though should still rise strongly in the next 5 years as the Building Schools for the Future programme recovers from the substantial delays to date.

There has also been some progress made in tackling the repair and maintenance on schools but the backlog still remains substantial at around GBP8bn and existing NHS facilities have a backlog of GBP3.7bn.

The way in which government clients fund and procure construction work varies between departments, but is usually focused on Design and Build, Prime Contracting and the Private Finance Initiative (PFI).

Departments often use one or more of the three methods across their construction programmes.

Defence Estates, for example, uses all three methods of procurement and the NHS incorporates Design and Build and Prime Contracting, PFI, NHS LIFT and the ProCure21 approach to cover the majority of health construction work.

A large proportion of the schools building programme is expected to use PFI as its method of delivery.

Many UK building contractors are now looking to the public sector to provide growth in the medium to long term and have indicated that they will continue to target contracts from the Government's ongoing health, education, rail and road plans.

Public sector output is forecast to improve slightly over the next three years with better than expected allocations announced in the 2007 CSR helping to maintain modest growth in the public sector, with output averaging 2% per annum to reach GBP11.2bn in 2012.

However while Labour's commitment to reforms in education and health continues, the subdued economic climate may threaten the current high levels of spending on education and health projects in 2008-10, and public funding may slow because of financial constraints.

AMA Research's report "Public Sector (Non-Residential) Construction Market UK 2008- 2012" is available in hard copy or electronic format for GBP625 and can be ordered online at www.amaresearch.co.uk or by calling 0871 3103450.

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