Scotland cost forecast

New orders

Fresh orders for new construction work won by contractors fell in 1999 in England and Wales, according to DETR statistics, but rose 2% in Scotland. That upward trend north of the border has not continued this year. The value of Scottish new orders in the first six months of 2000 was down on 1999, with private commercial orders at a disappointingly lower level. Commercial work is generally thought to have peaked in England in 1998, and Scotland probably saw its peak for this type of work last year. The future prosperity of the industry may rely on the anticipated increase in health, education and infrastructure work heralded by the government’s Comprehensive Spending Review. The most recent review announced £400m additional capital spending for Scotland in the current financial year and £625m next year, on top of the chancellor’s 2000/01 budget figures. It is hoped that a good proportion of this extra funding will feed through into construction work.

Scotbuild 2000

Taking place at the Scottish Exhibition & Conference Centre in Glasgow from 14-16 November, Scotbuild 2000 is the first show to cater specifically for all of Scotland’s construction professionals. This year, Scotbuild will for the first time bring together building, architectural and civil engineering professionals, as Civils Scotland runs alongside the main exhibition. As well as providing a showcase for the latest products and technology in the building industry, Scotbuild also includes a comprehensive three-day seminar programme with contributions from Historic Scotland, Marley Roofing Products, Van Elle Holdings and the Institute of Wood Science. To pre-register for Scotbuild, sign up at the exhibition website, www.scotbuild.co.uk, or call the ticket hotline on 01923-690667.

Forecasts

See table 'Construction output (new work) 1999-2001' Construction Forecasting and Research, publisher of twice-yearly regional construction forecasts, has recently produced a new forecast for the Northern region, which includes Scotland. The table, right, summarises its forecasts of construction output for new work for the next two years in Scotland. In spite of the drop in new orders identified by DETR statistics for the first half of this year, CFR predicts that certain sectors of construction – such as commercial work – will be buoyant this year and that orders will pick up again in the second half. A 15% increase in commercial output at current prices is forecast for this year, matching the rise in 1999, and a further rise of 8% is predicted for next year. These rises are underscored by major projects such as the £500m mixed development at Granton, near Leith in Edinburgh, and the £100m Ocean Terminal retail and leisure scheme in Edinburgh’s Leith Docks.

Construction output

See graph 'Construction output' In Scotland, the value of construction output last year was £5.63bn, up by 5.7% compared with 1998 on current prices. This compares with an increase in Great Britain as a whole of 5.2% in absolute terms, and 0.7% in real terms after taking into account construction industry inflation. This is the highest yearly total recorded for Great Britain since 1990. The repair and maintenance sector accounted for 38% of total Scottish output but remained static in value terms. Most of the growth, in Scotland as in the rest of Great Britain, came from new work. In cash terms, all of the new work sectors showed some increase in Scotland except for public housing, which, again like Great Britain, showed a slight fall. The strongest growth in Scotland was in the private commercial sector, which last year was worth £992m, up from £866m in 1998. Between 1995 and 1999, contractors’ output did not grow as fast in Scotland as it did in England and Wales, as the chart below reflects. In value terms, output grew by 29% in England and Wales, but by only 18% in Scotland (current prices). There was considerably greater real growth in England and Wales even though construction prices there increased slightly more than they did in Scotland. In the first half of 2000, however, output in Scotland accelerated. As the chart shows, output in the first and second quarters of 2000 was 18% higher than the same periods in 1999. There was strong growth in the private commercial sector (up 32%), private housing (up 34%) and infrastructure (up 38%). Such activity levels have led to fears of labour shortages.

Tender prices

See table 'Comparative building costs for major cities' and graph 'Tender prices' The chart below plots the movement of building tender prices in Scotland over the past five years against the trend for all of Great Britain, as measured by the Building Cost Information Service. Prices in Scotland fell between mid-1995 and mid-1996, but since then prices have moved steadily upwards, closely matching the British trend. Over the year to the first quarter of 2000, BCIS figures show that tender prices rose by slightly more than 4% in Scotland, compared with a British average of just below 5%. Over the next 15 months to the second quarter of 2001, Davis Langdon & Everest forecasts price rises of about 6.5% in Scotland and just under 7% in Great Britain. Building costs in Scotland are still about 3% lower than the average for the UK (including Northern Ireland), but prices vary considerably across the country. The table opposite shows how building costs in the principal Scottish cities compare with those for major cities in England and Wales.