News
Glenigan: Fall in shelved projects offset by cancellations
25/05/2010
Glenigan’s latest figures on the value of projects that have been shelved showed an encouraging fall in postponements. There was a drop in both the value and number of projects (under the value of £100 million) being placed on hold during the three months to April compared with the previous year. While the number of projects that were postponed fell by a third, the total value of those projects compared to the same period a year earlier dropped by 54%.
Both private and public sectors saw a fall in the value of construction projects that were shelved across the majority of their component parts. The sectors with the biggest decline in delayed projects were education and industrial, as the value of such projects fell by 80% and 61% respectively compared to a year ago.
Project restart figures were also encouraging. Compared to the previous three months, there was a 48% increase in the value of projects that, having been on hold, were later restarted in the three months to April. Social housing restarts were up 71%, and education restarts rose by 69%. These are both sectors that have previously suffered from postponements and cancellations, and no doubt will again.
In the three months to April private housing was the biggest contributor of shelved projects, accounting for over a quarter of all projects being put on hold. However the sector also accounted for over a quarter of restarted schemes and 22% of total project starts and only 7% of cancelled. The most disappointing data is for the number of the frozen projects that have now been scrapped. There was a 71% jump in the value of cancellations in the three months to April against the previous three months. Large increases were seen in the value of hotel, health and office projects that were scrapped, having previously been 'on hold’.
Unlike many elements of government spending, the NHS budget has been given a high degree of protection from cutbacks. However, we are likely to see a shift in spending away from areas such as construction towards more immediate frontline spending. Despite only accounting for 3% of the value for new project starts during April, and only 8% of projects being put on hold, last month health projects contributed 27% of cancellations. Included in these cuts was the cancellation of a £60 million hospital extension in Cardiff.
This article reproduced from Glenigan subscriber newsletter - made freey available to CIMCIG members at http://www.glenigan.com/newsletter2010/may25th2010_custnews.asp
