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Construction activity to peak in 2011

Construction growth will peak in 2011, as the industry rushes to complete new build and infrastructure programmes before the Olympic Games open in 2012, the annual Construction Skills Network (CSN) findings has revealed.

The latest report, focusing on construction activity between 2008 and 2012 reveals that, although the Olympic build projects account for less than 0.5% of UK construction work between now and 2012, the high profile nature of the Games is driving a concentration of activity between now and 2011.

A number of unrelated projects such as the Victoria line and DLR extensions are being timed for completion in advance of 2012 to help manage the expected influx of visitors to the Capital.

This trend, combined with a natural levelling out of activity after a long period of growth, means that the industry is likely to see a year of little or no growth in 2012. However in real terms, by 2012 output across the construction industry will have risen by a third since the start of the decade.

To deliver every project between now and 2012 employment levels will need to increase by 7%, the industry will need to recruit 88,400 new workers every year and new recruits needed will be concentrated in professional and technical staff, such as civil and mechanical engineers.

"We've identified the scale of skills needs by project and region over the coming years," said Chairman of the Construction Skills Network, Sir Michael Latham. "Now it is essential that we work with employers and training providers to put in place the right practical, on-site training that will help local people get the skills they need to fill local job vacancies

"The Olympic build programme is a beacon for best practice - ConstructionSkills is investing millions of pounds over the next five years, as part of its commitment to deliver the skills and training needed for a successful Olympic build and, working with the ODA and CLM, we plan to open a National Skills Academy for Construction on every major Olympic site. This is a wonderful example of how industry can work with educationalists and Government to provide best practice training to benefit the industry and local communities far beyond 2012."

The report highlights infrastructure as the sector that will experience the most significant growth (an average of 5.8% each year) over the period of 2008 to 2012. A number of large projects are now underway or in the pipeline, including the Olympic Park infrastructure work, Thameslink expansion, a £3bn Scottish Transport Investment Programme and nearly £600M of motorway and trunk road improvements in Northern Ireland.

It also says there will be a continuing shift in construction growth from the North to South of England over the next five years, due to major projects such as Crossrail. Although this does mean that the largest number of new construction recruits will be required in London, the South East and East of England, total percentage growth in employment will be highest in Wales and Northern Ireland.

Northern Ireland's employment growth is expected to rise by 13.3%, driven by a substantial and wide reaching public investment programme. The 13.5% growth expected in Wales is due to the strength of the labour-intensive repair and maintenance (R&M) sector, particularly housing R&M, being driven by the Welsh Housing Quality Standards programme.

Public sector spending is predicted to be a key driver of growth across the UK through the 2008 to 2012 period as the Government’s Building Schools for the Future programme is forecast to grow by 3.7% per year, a boost in spending on hospitals is expected after 2009 and public housing will grow by an average 2.9% per year, driven by the need for more affordable housing and a £3bn increase in funding by the Housing Corporation.

In contrast, the private housing sector will experience some of the lowest growth in the period. Output in the sector declined in 2007 as the tighter credit regime, precipitated by financial institutions’ exposure to the sub-prime mortgage market, began to bite. A further fall is predicted for 2008, followed by a return to very modest growth in 2009 and beyond, as the housing market remains subdued. Similarly, only a small rise is likely to be seen in the commercial and industrial construction sectors.

The Construction Skills Network was established in 2005 to forecast skills demand across the construction industry. The CSN forecasting model is coordinated by ConstructionSkills, the Sector Skills Council for the construction industry.

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