Curtain walling K, demountable partitions K and electrical works K all reduced lead times for the second consecutive article and reported a cooling of the market. Rotary piling : was again unchanged at four weeks. Companies are busy, yet this is not reflected in the figures.
Steel frames J increased by one week to 10. Design periods are taking longer, but this was offset by a reduction in manufacturing. Companies who felt lead times were shorter than 10 weeks expected to increase their estimates in the next six months.
Ductwork J (17 weeks) companies reported lead times increasing two weeks. Some included a project mobilisation period of up to four. Good relationships with suppliers are containing pressures, increasing lead times only one week. Management shortages are expected to affect projects during 2002.
Several companies in the panellised cladding : sector are fully committed and cannot consider new enquiries until the third quarter. This mobilisation period is not included in the figures, as it does not affect all companies, so lead times remain unchanged at 41 weeks.
Curtain walling K (20 weeks) fell by two weeks. Although working drawing periods are now six weeks, suppliers require drawings to be approved in only two, half the period previously quoted.
Brickwork : remained at four weeks with the sector experiencing a shortage of good face-work bricklayers, while block-layers are readily available.
Membrane roofing : (eight weeks) and profiled metal roofing : (13 weeks) remain unchanged. Although the industry says enquiries are quiet, prices are very competitive as companies chase work. Metal windows K (19 weeks) reduced one week as workload fell. Ceilings K (14 weeks) dropped two weeks as companies reduced the manufacturing period.
Architectural metalwork : systems remain at 15 weeks. Companies expect lead times to increase slightly over the next six months as projects secured go live. The agreement of samples is taking three weeks, concurrent with the design process, which is longer than usual. Stone finishes : (17 weeks) were unchanged, although companies reported enquiries remain higher than the past six months.
Decorations K can now be obtained on site in four weeks. Enquiries have fallen, which is unusual with the approach of summer. Passenger lifts K fell three weeks to 35 as drawing production dropped. Although this lead time should reflect non-standard lifts, companies are allowing cosmetic tweaks only to simplify the drawing process. Companies remain busy with new enquiries.
Although the mechanical pipework : sector remained at 18 weeks, the build-up has changed. Procurement period dropped, as most materials are widely available, but manufacturing time increased as companies reported an increase of new projects compared with six months ago. Enquiries were also on the increase, although companies believed the 18-week period was sustainable.
Staff and labour shortages are expected to get worse.
Another consecutive drop was for electrical packages K, down another two weeks to 18 weeks. Some companies believe this will fall again as new projects and enquiries reduce.
The typical lead time for general concrete works has remained at a fairly constant nine weeks for some time now, although smaller projects are shaving a week off this.
However, contractors expect increased activity in the sector over the next 12 months to lengthen lead times. A glance at precast concrete frame lead times shows that these held steady at 14 weeks during 1999 and 2000 but increased sharply to 18 weeks in mid-2001.
This was apparently the result of bottlenecks in design and approval because there was insufficient experienced staff available to cope with the additional project volume.
Contractors had expected a further increase through 2001 that did not materialise, but slight further increases could well be seen in the latter half of 2002.
Reinforced insitu concrete contractors had busy order books in 2001 and report steady enquiry levels this year. That is not to say the market is levelling off, rather that excellent enquiry levels are being kept up. Some say enquiries are rising. One concrete contractor reported that over the past year it tendered on more than £300m of work, generating £45m of turnover – a large increase on the previous year. Another showed less optimism, saying: "Enquiries are plentiful, but we are having great difficulty turning them into live projects. Since the latter part of 2001 we have secured little work and are well short of our projections for the current year."
There was some apprehension that the events of 11 September would slow construction and force cancellation of projects. To date there is no evidence of a general downturn; many contractors report signs of a contrary effect with some developers adopting a defiant attitude and promoting taller structures.
Although the bulk of recent enquiries relates to office developments, there is significant growth in the residential sector, particularly where high land prices dictate higher densities leading to a greater proportion of apartment blocks.
Commercial office development is buoyant and contractors operating in London say enquiries show no signs of abating, with large projects proposed in Docklands and the City.
When Spotlight last looked at reinforced concrete frames in November 1999, lead time for concrete was nine weeks – the same as now. This led reinforced concrete frame contractors to cite their comparatively short lead-time as an advantage over steel frames. There boast was that they could reach the third or fourth storey of their buildings before the steel framers had even begun on site.
Now, steel frames' lead time of 14 weeks has fallen to nine, but concrete frame contractors reject the suggestion that the this leaves their product at a disadvantage. They argue that reinforced concrete frames are still preferable for many building types, such as hospitals. Technological developments have also given rise to faster construction of concrete frames, which goes some way to preserving its competitive edge over steel.
Orders and workload
The decline in UK concrete production over the past three years is at odds with the healthy order books reported by concrete frame contractors.
One major player says: "The last few years have been especially good, and our turnover has tripled over the past six years." Another contractor began 2002 with more than 50% of its projected turnover for the year secured, and by March 2002 it was close to 70%. No contractors could foresee a slowdown, particularly with interest rates remaining so low.
To remain competitive against the steel frame sector, concrete frame contractors are making even greater use of technology to speed up construction, with slip form, jump form and self-climbing systems habitually used. Ray Hull of Byrne Brothers says: "We have even been using tunnel form again on residential projects, as it offers time advantages on small unit, high-repetition developments such as hotel rooms and student accommodation."
Another contractor reported a resurgence in post-tensioned concrete frames, which is cheaper than rebar. It also mentioned a growth in smaller section construction, which often allows an extra floor to be provided within the height restrictions on tall buildings.
A recent innovation is self-compacting concrete. Although it is 50% more expensive than normal concrete, it saves on labour costs as it flows freely, removing the need for vibrators. It is ideal for columns, where there is restricted access for vibrators at the top of the pour, or for very tall structures, where self-compaction at the bottom ensures structural integrity.
An ageing workforce is causing great concern in the industry. As one contractor put it: "Most school leavers today would prefer to go into a heated office and sit in front of a computer than to work outdoors, placing concrete in the rain."
Data provided by the Construction Products Association.
Over recent months concrete tender prices have shown some disquieting increases, rising at a rate significantly above many other sectors.
Tenders are now taking into account the predicted price increases resulting from the new aggregates levy which came into force on 1 April 2002. Concrete prices have gone up sharply over the past 12 months, with a typical pump mix (C40) increasing from £60/m3 to £70-73/m3. Concrete contractors predict further rises of about 10% this year.
Rebar prices have so far tempered these increases, easing to about £210/tonne in February – lower than a year ago. However, increased world demand resulted in a £20 increase on rebar prices in March 2002 and it is generally expected that further increases in the summer will put rebar close to £250. Big projects are likely to keep demand high and check any downward forces on price.
Labour rates are also increasing substantially. Although £130 a shift was recently seen as a good rate, contractors fear the projected huge demand in the South-east may push rates up to £180-200 a shift this summer. Some contractors say they are even bringing in gangs from the Far East to meet demand.
In the light of these increases, concrete contractors sound a note of caution. One sums up: "Management contracts are reflecting these price increases, but on many traditional competitive bids, fair tenders are losing out to the single contractor prepared to buy the work at all costs, undercutting the majority 10–15%".
Tender price increases for the sector are forecast to run ahead of general inflation this year and next.