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May 29, 2020

CLBIL helps services firm supporting UK’s critical infrastructure

A company vital in keeping the UK’s lights on has secured one of the earliest Coronavirus Large Business Interruption Loan Scheme (CLBILS) packages. CLBILS is one of the government measures introduced to support businesses impacted by the Covid-19 pandemic.

Rainham Industrial Services, which specialises in the installation, maintenance and decommissioning of large industrial sites including power plants, saw project work grind to a halt after the onset of lockdown restrictions in March – which is usually the start of its peak season. The business expects to see increased demand for its services post lockdown.

Rainham works with clients within the nuclear, energy from waste and power generation sectors.

Facing cashflow issues as a result of reduced income, the business turned to longstanding banking partner, Lloyds Bank, for financial support. The money will be invested to increase operational capacity once infrastructure projects begin to restart. It means the business can complete six months’ worth of projects in less than four months, after projects scheduled for April and May have had to be pushed back due to the lockdown. The majority are projects which regulation states must happen this season.

Chris Banfield, management accountant at Rainham Industrial Services, said: “A lot of our big projects are carried out in the spring and summertime when our clients, particularly those in power generation, can take major plant offline for maintenance. This work is often essential for regulatory compliance, meaning almost all projects we’re booked for must be completed this season.

“Having worked alongside Lloyds Bank for eight years, they quickly understood the issue we faced in ramping up operations after a period of reduced income. With the new finance in place, we’re in a strong position to work alongside our suppliers and subcontractors to support customers with their critical maintenance requirements during this squeezed season.”

Mathew Durrant, relationship manager at Lloyds Bank, said: “Behind the scenes, Rainham is playing a critical role in keeping the nation running by helping to maintain key infrastructure. It’s demonstrated a remarkable commitment to its customers during the crisis, with its doors open to support essential work. It’s a great example of one of the many businesses we’re helping to get the financial buffer they need for the months ahead.”

Lloyds Banking Group has so far approved 21 CLBILS applications, to the value of over £157m.

May 27, 2020

Experts to lead advanced manufacture in construction group

The West Midlands Combined Authority (WMCA) has formed an Advanced Manufacture in Construction (AMC) advisory group to support the delivery of much needed, high-quality housing at pace and scale.

AMC involves manufacturing building components in factories away from building sites and then assembling the parts more quickly and efficiently to produce quality homes.

The WMCA believes AMC can help the West Midlands bounce back more quickly from the coronavirus pandemic. The need to build more homes faster is a key priority for the region’s post-Covid-19 economic recovery plans.

Led by Mark Farmer, the government’s champion for modern methods of construction in homebuilding, the expert group consists of industry specialists from Homes England, Mace, Lendlease, the University of Wolverhampton, CITB, Walsall Housing Group, Accord, Construction Innovation Hub, UK Finance and West Midlands Combined Universities.

Mayor of the West Midlands Andy Street said: “The formation of an AMC advisory group gives us the opportunity to capitalise on the rich heritage of manufacturing and innovation in the West Midlands.

“The new approach to construction in the West Midlands will help deliver a more inclusive economy, providing high quality, sustainable and affordable homes, as well as more secure jobs.

“The use of AMC can help us to build back better as we recover from the current crisis and also help us construct the 215,000 new homes we need by 2031 to meet future demand.”

The focus on AMC will support a wider WMCA programme around modern construction, including skills training, links to local R&D specialisms and local supply chain growth.

This is in line with the WMCA’s Single Commissioning Framework, exemplified by pioneering projects such as Port Loop in Birmingham which uses off-site manufacturing to build architect designed, sustainable homes.

Cllr Mike Bird, WMCA portfolio holder for housing and land and leader of Walsall Council, said: “The opportunity here is to connect the WMCA’s focus on advanced manufacture as a driver for regional specialisation and growth and to remove the current barriers in the sector.”

Central to the adoption of advanced manufacturing is skills training partnerships with leading universities which will ensure the region remains a centre for excellence and embeds ground-breaking modular building techniques for the next generation of manufacturing experts.

Bespoke training courses commissioned by the WMCA will also equip local people with the AMC skills needed to build the new-style homes.

Prof Mohammed Arif, AMC advisory group member and professor at University of Wolverhampton, said: “Given the housing shortage and the technology we have at our disposal, we should be looking closely at AMC.

“One major issue has been a skills shortage. Both higher education and further education providers have a significant role to play. Currently the portfolio of courses offered nationwide in areas related to AMC is small.”

The expert panel will build on the commitment of the WMCA to become a national leader in AMC.

The Accord Groups’ Modular and Innovare Systems are already being rolled out in the region and new collaborations are being set up across the public and private sector to make the adoption of AMC more cost effective.

The news follows the announcement that Urban Splash will prioritise modular building methods to deliver 10,000 homes in partnership with the WMCA over an 11-year period.

Many of these homes will use the ‘House’ modular home by Urban Splash, which lets customers specify layout based on their needs and lifestyle.

Mark Farmer, chair of the AMC advisory panel, said: “The WMCA will be prioritising not only AMC but true forms of digitally-led advanced manufacture.

“It is clear that as the country emerges from the Covid-19 crisis more resilient models of construction and supply chain management will be more important than ever, and through this project the WMCA will be very well-placed to move quickly and drive that change.”

Earlier this month the region set out its 10 priority areas for a post-Covid economic recovery plan. One of the key goals is to build more homes faster as well as re-shaping town centres.

The adoption of AMC across the region extends into the WMCA’s Covid-19 recovery plan, as factory manufacturing makes it easier to enable social distancing.

May 26, 2020

Supporting Britain’s builders through lockdown and beyond

A Glasgow-headquartered construction firm will continue to put safety first across its UK sites post-lockdown with the support of Bank of Scotland.

PVP Developments, which is currently delivering a £10m luxury apartment scheme in Yorkhill, Glasgow, is planning to re-open sites in the coming weeks after securing a £750k loan via the Coronavirus Business Interruption Loan Scheme (CBILS).

The funding, facilitated by Bank of Scotland, will provide the firm with additional financial headroom to deliver projects at reduced capacity in a move designed to protect its 45 employees, sub-contractors and suppliers.

The firm – which specialises in both residential and commercial developments and counts brands such as Morrisons and B&Q among its clients – has also committed a further £2m of its own reserves to ensure sites can operate as safely as possible over the next 18 months while managing the impact of COVID-19.

John Colhoun, managing director at PVP Developments, said: “Our employees will always be our number one priority so it’s essential they are able to operate in a safe environment when they return to work”

“The team at Bank of Scotland has been instrumental in helping us target a swift return to work and this CBILS funding will allow us to trade with confidence in the long-term while we adapt to new ways of working.”

Douglas Spowart, relationship director at Bank of Scotland, said: “The reality is that it will be difficult for contractors to maintain social distancing and complete work at the same pace as before the pandemic. John and his team have been quick to address the issue and recognised the need for additional capital to deliver on their commitments to their employees and their clients. We’re proud to be by the side of businesses choosing to put their people first in the face of the ongoing challenges presented by COVID-19.”

May 22, 2020

Anticipated drop in contract awards confirmed in April figures

The total value of construction contract awards in April 2020 was £4.4 billion based on a three-month rolling average. This is a decrease of 36.4% on March and is also 16.1% Lower than April 2019. It is also the lowest monthly value recorded since June 2018. Contract awards numbers in April decreased by 45.5% to 314, approximately 68.7% below the recent high point of 1,003 recorded for February 2020.

The latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI, highlights levels of construction contract values awarded across Great Britain.

The Infrastructure sector dominated the share of contract awards with a total of 31.2%. The two largest infrastructure contract awards were the A30 Chiverton to Carland Cross and the Bridgwater Resource Recovery facility and were also the two largest overall contracts awarded in April 2020.

Since reporting on contract awards in April, 33 of those projects have now confirmed to be on hold, at a total value of £178m.

Commenting on the figures, Tom Hall, chief economist at Barbour ABI and AMA Research said, “We expected a large fall in contract awards for April, however we are seeing increasing on-site activity as large of projects re-open. The Infrastructure Sector has been the less impacted than other sectors, leading to hopes of an Infrastructure-led recovery towards the end of the year. We will continue to monitor closely the impact the current situation will have on the future pipeline of contract awards. Nonetheless we expect to see a continued decline in contract awards in the short term.”

Download the full report here: http://ubm.io/2FRLrwm

May 14, 2020

A positive step for house builders and home buyers

United Trust Bank responds to the Government relaxing Covid-19 rules surrounding house moves and the news that some surveyors are preparing to recommence in-person valuations and inspections.

Noel Meredith, executive director of United Trust Bank, commented:

“The government’s relaxation of rules surrounding home moving activity and surveyors recommencing in-person valuations is welcome news and a positive step for house builders and home buyers. The lockdown effectively put the housing market into a state of suspended animation and although construction work has continued on many sites, sales activity has not. House builders, big and small, will be keen to progress their existing sales and attract new buyers and this small relaxation of restrictions by the government should increase public confidence to go out and find a new home if sensible social distancing and safety measures are observed.

“The near two month interruption to many construction projects will put some house builders’ and developers’ cash flow under additional pressure and throughout the Covid-19 crisis we have been working closely with our customers to ensure that we support them through any such challenges.

“UTB have developed and adopted innovative ways to ensure we can continue to support both existing and new clients during this period and are pleased to have approved and completed on proposals to fund new developments brought to us during the lockdown.

“We have also been happy to offer several new customers new sales period funding facilities giving them additional breathing space to achieve and complete sales or avoid exceeding their repayment terms with previous lenders.

“Although uncertainty remains over the longer term impacts of the pandemic on the UK economy and residential housing market, we remain steadfast in our support of SME housebuilders knowing that despite Covid-19, the UK must continue to tackle its growing housing shortage for many years to come. UTB will be standing side by side with SME house builders as we face this and any other challenge placed in our way.”

May 14, 2020

Opening of housing market welcome

RICS UK Residential Market Survey, April 2020

With the market having been effectively closed for business, 80% of the April RICS UK Residential survey’s contributors saw both buyers and sellers pulling out of transactions, resulting in the newly agreed sales balance for April falling to -92%, down from -68% in March.

In April, the survey sought views on the potential support measure of a stamp duty holiday from government as sales restart. The majority of respondents (62%) believed that a stamp duty holiday would help the market recover post-pandemic, by lifting sales and leaving prices relatively unchanged. On average, respondents anticipate sales would rebound to their previous levels in around nine months.

In April, unsurprisingly, a net balance of -93% of respondents reported a decline in new buyer enquiries over the course of the month, dipping further from a net balance of -76% in March. New instructions also continued to fall, with -96% of contributors reporting a drop rather than rise in new properties being listed for sale. This is the weakest net balance reading since the inception of this series in April 1999.

As far as prices are concerned, following a run of three successive months of positive readings, the RICS headline house price balance fell into negative territory with a net balance of -21% of respondents noting a decline in prices. 35% of the survey participants believe that when the market reopens, prices could be left up to 4% lower, while more than 40% take the view that prices could in fact fall by more than 4%.

Feedback suggests that a recovery in prices could take a little while longer than sales levels, with respondents suggesting, on average, prices will recover in eleven months.

In the lettings market, rents are expected to fall across the UK in the coming three months, but stabilise at the twelve month horizon. At the five year horizon, rental growth projections stand at around 2.5% per annum, in comparison with prices rising by around 2%.

Simon Rubinsohn, RICS chief economist commented: “Not surprisingly, the latest survey shows that housing activity indicators collapsed in April reflecting the impact of the lockdown. Looking further out, there is a little more optimism but the numbers still suggest that it will be a struggle to get confidence back to where it was as recently as February. Moreover, whether this can be realised will largely depend on how the pandemic pans out and what this means for the macroeconomic environment.

“Critically, to ensure the housing market can begin to operate in a more functional way and that developers have the confidence to continue building in these very difficult circumstances, further specific interventions from Government, following on from the announcement of flexible site working hours, and support to smaller developers announced yesterday, are likely to be necessary.”

Hew Edgar, head of UK government relations, adds: “RICS last month called on the UK government to explore confidence-boosting measures for the residential market as it reopens, and the data suggests that our proposal for a stamp duty holiday would be a successful change that would boost transactional activity, helping people move home.

“There are, of course, other options available to government as they reopen the market, notwithstanding stamp duty options such as reducing or removing stamp duty for downsizers that would kickstart market fluidity, and we look forward to continuing conversations as the market starts to move again.”

May 7, 2020

Subcontractors are facing mounting pressures as sites begin to reopen

Subcontractors are entering the most challenging period of the COVID-19 outbreak according to Jim Davis, managing director for construction finance at Bibby Financial Services. With cash reserves all but used up, the resumption of major construction projects will pose a significant threat to the financial viability of many sub-contractors.

He explains: “The next 4-6-weeks will be the most challenging time for sub-contractors. Many businesses in the sector have already used up their working capital so, as contractors start to call their subcontractors back to work, the funds to pay for salaries and materials are simply not there.

“The temptation will be to go after as much work as possible as opportunities begin to open up but sub-contractors must plan prudently. If the return to work isn’t managed carefully and gradually, we could see a wave of business failures.”

In a recent survey, BFS found that businesses in the construction sector were struggling most with the conditions imposed by the coronavirus pandemic. 87% of the industry’s SMEs have had to adjust the way they operate, with over half (55%) temporarily shutting their operations. Additionally, 79% had seen a decline in their order books.

Nearly a quarter (22%) of SMEs in the construction sector are facing a delay in receiving payment and are running out of working capital – this is exacerbated by a rise in bad debt, with 36% of construction SMEs having to write off an average of £43,000 since the end of January. This is compared to the national average of just 25% of SMEs writing off £35,000. However, Bibby Financial Services expects payment delays to get substantially worse for some SMEs as subcontractors work out how to manage contracts written before COVID-19 changed the way sites are run.

Jim Davis, continued: “As subcontractors get back to work, they are entering unchartered territory. New health and safety policies will need to be agreed and lines of responsibility for PPE drawn. Social distancing rules will significantly reduce productivity, making many contract timelines and deliverables unachievable. All of these issues will add to arguments and delays when it comes to paying invoices, delays that no subcontractor can afford right now.”

“I cannot stress enough how important communication with main contractors and lenders is going to be as we enter this new stage. Talk to your contractors, let them know if there are going to be delays in receiving supplies or in completing projects, agree who is paying for PPE equipment before it is bought, discuss how to adapt timelines to keep your people safe.

“The construction SMEs who survive the next few weeks will be those which maintain the best communication with contractors. There is cause for optimism as we return to site, but we, as a sector, together, have to get this right.”

May 4, 2020

L and G Modular Homes achieves planning consent as factory reopens

Legal & General Modular Homes announces that it has gained planning consent to deliver 154 homes, using modular construction, at an eight acre site on Portholme Road, Selby in North Yorkshire.

From its factory in Sherburn-in-Elmet in Yorkshire, Legal & General Modular Homes has ambitions to build its annual housing delivery to 3,000 modular homes a year in 2024, bringing rapid and disruptive change to the construction industry. It is designing and manufacturing homes in an innovative way in order to transform the way homes are built in the UK. The delivery pipeline continues to grow, with 350 homes added to the pipeline so far this year.

Selby is the first scheme, where Legal & General Modular Homes will deliver a full development proposition from buying land, developing the product, achieving planning consent through to delivery. With a standardised approach to manufacturing, quality, efficiency, and productivity is driven up, and costs are driven down. Modular construction offers an impactful solution to the UK housing crisis, supporting UK jobs and helping to meet government’s objective to build more Affordable carbon-friendly housing. The Selby development will provide up to 130 jobs across the supply chain, and will see Legal & General Modular Homes recruit a further 50 employees to support the scheme.

Amid the Covid-19 lockdown, construction sites across the UK have closed, putting housing targets in jeopardy and exacerbating the shortage of homes in the UK. Legal & General and its housing businesses have continued to pay 100% of employees’ wages during lockdown and have not applied for any financial support from the government. With its controlled factory environment and having re-aligned production with additional measures to accommodate strict social distancing, last week operatives were able to return safely to the 550,000 sq ft modular manufacturing facility to continue this ground-breaking work. Design and digital engineering specialists there have been able to work remotely throughout the lockdown period and 75 employees have now returned to the factory as part of the gradual phasing back of its 250 staff.

The Modular manufacturing sector offers multi-skilled employment opportunities and homes that can be delivered in a matter of weeks. Legal & General’s factory in Yorkshire brings a variety of highly skilled jobs to the area, including across design, finance, engineering, procurement, construction and production. The north of England has the potential to pull the construction industry into the 21st century, and become a world-leader in the creation of modern, high-quality homes. Once the industry matures it could be worth an estimated £40bn to this country.

The Portholme Road scheme in Selby includes up to 30% affordable housing and will showcase how innovation in the industry can bring a step change to UK residential development, whilst delivering a sought after place to live for a wide range of buyers. It will be developed on the site of the former Selby civic centre, bringing back into good use a site which has remained vacant for seven years. The masterplan at the site in Selby incorporates a mix of contemporary terraced houses and low-rise apartments, with great access to public transport and direct connections to Leeds and York.

Legal & General Modular Homes will deliver 76 one and two bedroom apartments, alongside 78 two and three bedroom houses, catering for buyers across the housing ladder. All homes have been designed to achieve EPC Standard A, currently only achieved by circa 1% of new homes.

Rosie Toogood, CEO of Legal & General Modular Homes said; “Using modular construction, Legal & General will be able to deliver high quality homes at a much faster rate than through traditional construction. In a post Covid-19 crisis environment, the speed of delivery will be more important than ever before.

“Our journey to revolutionise the UK’s construction industry is well underway, and planning consent at Portholme Road, Selby is testament to this. This scheme, along with our proposals at Bonnington Walk in Bristol, will showcase the benefits of modular construction. Achieving planning permission for this Selby scheme is a fantastic milestone for the business, and a major achievement for the team, particularly set against the current backdrop.”

Alongside developing its product capabilities, Legal & General has focused on recruitment and up skilling its workforce through the launch of its Modular Academy in collaboration with Selby College. This has developed in-house resources to deliver a full modular development capability from buying land to construction, all the way through to delivery.

Across its housing businesses and future cities business, Legal & General continues to invest and progress planning for future developments, providing much needed economic stimulus. Including Selby, during the last three weeks of lockdown Legal & General has achieved planning approvals for around 650 new homes across five schemes. Preparing Legal & General’s housing businesses for post-covid resumption of activity across all types of tenure, consents include planning permission for a 270-home later living community at its former surrey Campus office which will create around 175 construction jobs per annum and up to 80 new permanent jobs once complete.

April 30, 2020

WMCA funds new training to help local people maintain the country’s infrastructure

Local people are learning specialist skills for essential work to maintain the country’s infrastructure, thanks to new training funded by the West Midlands Combined Authority (WMCA).

Working in partnership with City of Wolverhampton College and employment agency Randstad, the WMCA is funding a bespoke training course on operating specialist on-site machinery.

As part of its region-wide response to the Covid-19 shutdown, the WMCA is equipping local people with the skills needed to gain jobs in sectors like infrastructure and construction that are considered to be key in driving the region’s economic recovery and future growth when the lockdown is lifted. Many of these sectors are recruiting new workers right now.

Learners on the WMCA-funded course

The course is funded through the WMCA’s Construction Gateway programme, which offers unemployed people free construction training and a guaranteed job interview at the end of the course.
Over the past month, 48 learners have already signed up to join the course, which is aimed at those who have previous experience in construction.

Mayor of the West Midlands Andy Street said: “When our region recovers from the Covid-19 shutdown, the construction sector and infrastructure projects will be crucial in driving the economy.

“I am therefore very pleased that we are gearing up for this by expanding our Construction Gateway training now.

“The aim of this new training course is that by learning how to use specialist equipment, local people will gain long-term employment and carry out essential work across the region, which will play a major part in our economic recovery from the Coronavirus pandemic.”

Having worked as a general labourer in the rail industry previously, 26-year-old Tom Clark seized the opportunity to learn new skills and improve his employment prospects by signing up for the course.

Tom, from Sutton Coldfield, said: “I’d heard lads I know talk about the training and I knew that if I developed industry-specific specialist skills, I’d be more employable and I’d also be able to earn more.

“I’ve just started working shifts, which is great, as in the current climate, without these new skills it’s likely I wouldn’t have found employment. I know that as I gain more experience and skills my confidence will grow even more.

“I’ve really enjoyed the course and, while some parts have been challenging, the trainers have been really supportive and helped me to progress.

Malcolm Cowgill, principal at City of Wolverhampton College, said: “We are delighted that City of Wolverhampton College has been able to continue training in the current conditions, helping to ensure that rail workers are upskilled and as a result able to gain valuable work on key infrastructure projects.”

David Carns, rail director for Randstad Construction, Property and Engineering Recruitment, said: “This is a great example of how we are working in partnership with the WMCA and City of Wolverhampton College to increase employment opportunities in critical work across the country’s infrastructure sector.”

Cllr Ian Brookfield, WMCA portfolio holder for economic growth and leader of City of Wolverhampton Council, said: “It’s fantastic to see new training taking place here in Wolverhampton, helping local people to find jobs in sectors that are looking for workers right now.”

Cllr George Duggins, WMCA portfolio holder for productivity and skills and leader of Coventry City Council, added: “Although the Covid-19 shutdown has had an immediate impact on the construction sector, there are new jobs that urgently need to be filled in other sectors, including infrastructure.

“We are working with training providers across the region to help employers recruit the workforce they need in these challenging times.”

To sign up for construction training, contact the National Careers Service West Midlands on 0121 296 5550, or you can find out more information about the National Careers Service via https://nationalcareersservice.direct.gov.uk/ or by calling 0800 100 900.

April 28, 2020

CBILS support for civil engineering contractor saves jobs

An SME civil engineering firm that has worked on projects at St Paul’s Cathedral and The Oval cricket ground has safeguarded jobs amid widespread construction site closures after receiving a time critical loan from Lloyds Bank.

Foran Construction, which offers groundwork services for commercial and civil engineering projects across the South East, is based in Brentford, Middlesex and was established nine years ago.

The £8m turnover business recently completed work at Battersea Exchange, where it completed hard landscaping as part of a multimillion-pound development of luxury housing.

However, after the coronavirus pandemic hit and a UK lockdown was announced, many of the projects the contractor was working on halted and sites closed, causing major cashflow issues.

Turning to his banking partner of four years, Lloyds Bank, managing director Paul Lavelle secured a six-figure loan through the Coronavirus Business Interruption Loan Scheme (CBILS) – which was arranged fee-free and turned around in just four days – to pay wages for his team of 20 and cover the cost of demobilising Foran Construction’s site-based workforce.

He said: “We’re a healthy business with a good pipeline of work, but coronavirus has had a big impact on our short-term cashflow position. Not only will this new funding allow me to pay the team’s wages while we deal with this incredibly difficult situation, but it means we can mobilise again really quickly once the worst of the pandemic is over.

“The team at Lloyds Bank has provided round the clock help. Their support has helped to secure my business’ future.”

Brendon Shanahan, relationship director at Lloyds Bank, said: “I know Foran Construction well and we were able to secure their funding with speed after Paul’s initial enquiry. We’re working hard to help successful firms like this one navigate the unprecedented disruption caused by COVID-19.”

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