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Piling: Some grounds for optimism

Brownfield development, rail and metro systems should help a leaner and meaner piling industry to achieve slow growth during 2013.

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Rising to the challenge: Margins are likely to remain tight for the near future

While many piling contractors are expected to report a slight rise in revenues for 2012, margins are still very tight and likely to remain so for the near future. However, an increase in demand in the last few months of the year with bookings already in place for the early part of 2013 means that the industry may see some small growth in the next 12 months.

“We are seeing more schemes where future expansion is built into the initial work ”

John Patch, Bullivant

According to Bullivant technical director John Patch, the industry has picked up in the last few months of 2012 and he believes that this level of activity will continue into 2013. “The average time from enquiry to a contract being placed is two to three months so it is hard to see beyond April,” he says. “It is important to look at what the main contractors have on their order books to get a clear picture.

“Anecdotally the piling industry is in a better position now than it was at this time last year - at the end of 2011 the industry was in a morass but now we are better informed. Housebuilders are starting to think more long term. Network Rail has spending plans in progress and the energy market is opening up. The prospects are becoming more transparent.”

Nonetheless, Patch says that it is hard to measure the impact that the Olympics had on workloads as he reports that it was quiet over the summer but he believes that the increase seen in recent months is at a sustainable level.

“I’m expecting the piling industry to grow slowly in 2013 but mainly due to the focus on brownfield development, rail and metro systems,” he says.

“Crossrail has also had an impact in 2012 and we must be aware that much of the ground engineering work will be nearing completion towards the end of next year, which will have an impact on whether this slow growth can be sustained into 2014.”

Patch believes that nuclear work and ramping up of work for HS2 could help take up the slack. “There may be a gap between these major projects and we need to analyse resources carefully,” he says. “The Thames Tideway will be good for the industry but this still has a number of planning hurdles to pass.”

Patch is calling on government to gain a better understanding of resource management in the different construction sectors and not to view construction as one industry. “Gaps in workload have different impacts on the skills in different sectors,” he says. “I have concerns over the depth of understanding in government about construction.

“What I am not certain of is that they are aware that the bulk of research and development in construction is done by subcontractors and specialist subcontractors. So if there is a gap between major projects, many leave the industry and this impacts on the sectors’ ability to innovate. Is government really as acutely aware of the issues we have as they should be?”

Whatever, the future holds in terms of projects, Patch says that the industry is now meaner and leaner than it was before the recession hit and many companies are now the right size for growth. “Major companies like May Gurney and Carillion have moved out of the piling market,” he says. “There may be some more thinning out to come but most companies are now in good shape.

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Lining things up: Future expansion is being thought about more often, as developers focus on current affordability

“I think it will be 2015 before we see margins improve but we need growth in 2014 in order to deliver this. Then we will have a strong industry.”

Although major projects will shape the future of the industry, Patch expects there to be changes in terms of techniques. He believes that the focus of the industry is changing and that much of the growth in the ground engineering market in the next few years will come from ground improvement work rather than from piling, as redevelopment of brownfield sites increases. “John Prescott set the target of 60% of new development on brownfield sites but some areas are achieving more than this,” he says. “Most of these sites need some form of ground improvement to make them viable for development.”

Nonetheless, Patch believes that there is still some way to go with optimising the techniques and equipment used. “More control is needed, we are still seeing ill-designed and badly thought out ground improvement schemes,” he says.

“The ground engineering industry as a whole needs to be more open about problems from a non-litigious point of view. We are missing out on opportunities to learn from our mistakes - we can’t talk about failures in the housing sector while they are still in their warranty period so we have to wait 12 years before there is full understanding about the problem.”

“I think it will be 2015 before we see margins improve but we need growth in 2014 in order to deliver this ”

John Patch, Bullivant

Another change that Patch expects to see from next year is a greater focus on the contribution that foundations can play in improving sustainability. He believes that this concept will gain attention when a large number of piles installed at the Olympic Park are removed to make way for the redevelopment of the site.

Bullivant says that his company will be closely involved in this when it removes driven steel tubular piles from the shooting venue at Woolwich Arsenal and the McDonalds restaurant at the main Stratford site. “The steel we used was already on its second use as the steel tubes came from the North Sea oil industry,” he explains. “Once the piles are removed there is the possibility that they will be used for another piling contract.”

According to Patch, the end of life when it comes to piling is rarely thought about and those designs which are a long way from seeing the results due to the lifespan of the buildings they support. Patch believes that the removal of piles used for temporary structures at the Olympic Park will help to highlight the possibilities to a wider audience.

Nonetheless, Patch says there is a growing emphasis on the shorter lifespans of buildings and this is having an influence on the foundations market. “This is being seen more acutely in the retail market,” he says. “Tesco frequently builds a new store to meet current needs but uses designs that allow for easy expansion within as short a period as two years once the customer base and demand is established. Adaptability is key.

“This is also starting to be seen in the road and rail industries too. We are seeing more schemes where future expansion is built into the initial work, such as a bridge abutment built to carry a dual carriageway but only a single carriageway deck is constructed.

“There is a real focus on what is affordable now and what may be affordable in the future, so rather than spend £5M now many developers are looking to spend £3M now and then £3M in two years’ time.”

While the prospects for the piling and ground engineering industry for the coming year are reliant on the wider construction industry, it is clear that the sector has a range of solutions and capacity to meet whatever development demands come its way.

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Digging deep: Most brownfield sites need some form of ground improvement to make them viable for development

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