The latest survey conducted by the Federation of Master Builders (FMB) has indicated that small to medium sized enterprises in the construction sector are set for a fourth year workload reductions.

Respondents of the survey indicated a third of companies expect to make further cuts to staffing levels as a result of the increase of VAT. It is claimed this could account for an estimated 7500 construction jobs.

The survey showed that the final quarter of 2010 was the 12th consecutive quarter where the net balance of workload growth showed as negative. This means that the SME construction sector has seen three consecutive years of reduced workloads. Expectations indicate that this is a trend that looks set to continue into 2011 with workloads expected to reduce again. Workloads have remained negative in all sectors with the exception of the social new build housing sector.

The FMB director-general Richard Diment warned that the construction sector has still not seen the worst of the recession. He went on to say “Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work. Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.”

“The government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector. The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone. Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen.

“The construction sector has the potential to build Britain out of recession and we know that for every £1 spent on construction output generates a total of £2.84 in total economic activity. If this could be coupled with expenditure on infrastructure projects as well as tackling the growing housing crisis the government would be building the real foundations for a sustained economic recovery.”

Source: The Construction Index (24/01/2011)

A recent report from the Institution of Civil Engineers (ICE) has warned that pressure on local authorities to keep waste out of landfill is at risk of backfiring. Ever increasing target rates for recycling is resulting in an emphasis of quantity not quality, producing a poor quality stream of recyclable material. Accordingly much of this is low-grade recycled material which holds no real economic value so ironically becomes destined for landfill anyway.

The report suggests that the waste industry needs to amend its culture to focus not only on increasing the amount of material recycled, but also on the quality and value of the material being recycled. This would then allow recycled materials to be fed back into the economy as saleable goods.

The report calls for the progression to a “circular economy” where recovered and recycled material is of a sufficient quality to be routinely reused in the economy. The ICE has suggested that the cost of making the required changes could be anywhere between £10-20bn by 2020.

BuilderScrap is of course fully aware of the need to change attitudes towards waste management, one method of ensuring that materials are not down-cycled is by ensuring that good quality new and used material are used for their intended purpose. For example construction waste, which equates to approximately 120 million tonnes includes approximately 14% of this is brand new material which has become surplus (WRAP). Furthermore, it is estimated that the same quantity again is reusable second hand material.

By recovering this material before recycling, significant savings can be made with reduced demands on energy and resources required in the recycling process, whilst also ensuring that the product has an economic value and not downgraded. Reclaiming and reusing materials is the most effective way to recover value from waste materials.

Defra has welcomed the report by the Institute of Civil Engineers (ICE) and will be utilising the report alongside their current review of waste policies in England. A spokesperson from Defra stated “It contains some interesting ideas and policy suggestions which we will look at in detail as part of our review”.

It will be interesting to see whether this review places greater importance on the areas of reuse and ensure that legislation and incentives ensure that the ideal waste hierarchy is achievable and economically viable.

Source: BBC News (13/01/2011) (http://www.bbc.co.uk/news/science-environment-12172766)

Local government leaders are claiming funding cuts for councils across the country are running much higher than the 9.9% average fall announced by Communities Secretary Eric Pickles yesterday.

Pickles said local authorities would undergo an average fall of 4.4% from all funding sources with no council seeing a decrease of more than 8.9% in 2011/12.

But the reduction in funding from central government to local authorities is higher at 9.9% next year as part of a four year plan to cut grants by 28%.

The Local Government Association believes some council’s will see a reduction in the money they receive from the Government of up to 17% in the first year.

The association also estimates total funding cuts of £6.5bn over the next 12 months which will all but decimate spending on building and highways maintenance.

Baroness Margaret Eaton, Chairman of the Local Government Association, said: “We have been clear that the level of spending reduction that council’s are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve.”

“We have to face the fact that this level of grant reduction will inevitably lead to cuts in services.”

“The Government has recognised the impact the cuts will have on those areas of the country that rely most heavily on the public sector and has provided a limited amount of new money to help those areas cope.”

“However, it still remains the case that the cuts are frontloaded rather than spread evenly across the four years. Councils now face incredibly tough choices about the services they continue to provide and those they will have to cut.”

“It comes at a time when councils are seeing cost pressures mounting on services such as adult social care, child protection, waste management and flood defence.”

“Councils knew the cuts were coming and did all they could to prepare. We already cut more than £1 billion from our budgets in the middle of this year. We will now pull out all the stops to minimise the impact of these cuts and build on our record of delivering new and better ways of doing things.”

This article has been sourced from construction enquirer.

Rock bottom bidding across all construction sectors has begun as desperate contractors slash their prices in a hunt for turnover.

One contractor said: “It’s ridiculous at the moment with some firms just blatantly buying work while clients go with them because all they are interested in is the lowest price.”

“It’s surprising with public sector clients because they have spent the last few years talking about valuing quality over price.”

“But it’s like that has been washed away overnight and all they see is the lowest price now budget cuts are starting to hit.”

Local authorities have already run into trouble after opting for the cheapest bid then watching their chosen contractors go bust.

Connaught and Rok undercut rivals across the country before their collapse.

And earlier this month St Alban’s council was left without a contractor for a £27m leisure centre after McNamara went under.

Rivals bidding against McNamara said the Irish firm’s bid was millions below all the others.

One contractor told the Enquirer: “We’ve gone for jobs recently and you get three or four firms in the same ballpark then someone who is more than 10% cheaper.

“Instead of that ringing alarm bells with clients, they are just going with the cheapest.

“It’s like we’ve learned nothing from the past or from what has already happened this time round with Connaught and Rok.”

BuilderScrap sourced this article  from Construction Enquirer.

According to the Federation of Master Builders cutting VAT on domestic repairs and maintenance work would bring the 1 million empty properties across the UK back into use.

If they were able to turn these currently empty properties into homes it would take a lot of pressure off the growing housing crisis which has to cope with five million people on the social housing waiting list with a further 90,000 living in temporary accommodation.

Brian Berry, Director of External Affairs at the FMB said: “Recent research commissioned by the FMB from the London School of Economics reveals that there is capacity within existing towns and cities to create all the new homes the UK needs and that reusing empty properties is one of the instruments to help fulfil this aim. “

“However, the current rate of VAT is acting as a disincentive for owners of unused properties to bring them back into use. Often it is cheaper to simply demolish and rebuild as new build is VAT exempt.”

Berry concluded: “Cutting VAT on domestic maintenance and repairs would not only mean many empty properties are brought back into use but would help boost an ailing construction industry by helping to create much needed jobs and apprenticeships for young people. Communities would also benefit too as getting rid of neglected properties would help create better local environments by helping to reduce crime and create demand for local services.”

“With house building at its lowest level since 1924 bringing empty homes back into use is a sensible way to help meet housing needs of every community around the UK and cutting VAT on domestic maintenance and repairs would make sure that this happens.”

The team here at BuilderScrap are always frustrated when hearing about buildings or construction materials not being used to their full value. Approcximatelty14% of the UK’s 120 million tonnes of construction waste generated each year is surplus brand new material, which equates to roughly 16.8 million tonnes. Currently these materials are recycled or sent to landfill without ever being used. By using this material for its intended purpose with in maintenance or empty properties environmental, social and financial benefits could be made.

At BuilderScrap we attempt to facilitate this through both our open house online exchange platform as well as our managed service pilot scheme launching December 1^st. This service seeks to identify and segregate surplus materials and redistribute these materials into charities and community project via a transition yard. This will enable charities and community projects to benefit from these materials for free or a heavily reduced cost.

If you know of any projects in the North-West that would benefit from this initiative please call is on 0844 225 300. Thanks.

This article was sourced from Construction Now.

Previous government numbers have over-estimated the growth of the construction industry according to a revision of the numbers by the office for National Statistics (ONS); they admitted the construction industry grew less than previously though in the three month to June.

Originally the ONS said construction output rose 6.8% in the second quarter from the first three months of 2010 – down from the 9.6% it estimated before.

The revision for the sector, which accounts for 6.3% of all UK output, could shave 0.2% off the second quarter GDP growth number of 1.2%.

This backtrack came as construction materials producers found that Government construction output figure didn’t match the sluggish behaviour of aggregates, asphalt, cement and ready mixed concrete sales.

However material sales have improved in the third quarter of 2010 compared with the same period in 2009.

Aggregates, cement and ready mixed concrete were 3%, 9% and 6% higher respectively than last year. But 2009 was a historic low point so any uplift need to be regarded as an inevitable growth rather than a sustainable growth.

The Government previously published data indicating that construction output increased by 10% in the second quarter and a further 4% in the third quarter, underpinning the stronger than expected GDP growth figures of 1.2% and 0.8% recorded in the second and third quarters.

These official figures indicate that the level of construction output in the UK is now at an all time high but the Mineral Products Association said “nothing could be further from the truth.”

MPA Executive Director, Simon van der Byl, said, “Everyone needs to take great care in interpreting construction related data for 2010 to date.”

“Firstly the figures only reflect a welcome comparative improvement and secondly the 21% cut in public investment set out in the Comprehensive Spending Review will mean substantial reductions in construction sectors such as health education and roads and will put huge pressure on local authority spending.”

“These negative pressures are likely to outweigh what will probably be a slow and uneven recovery in housing, commercial and other private sector construction over the next two years.”

“In the longer term the private sector and infrastructure projects should deliver strong construction growth, but prospects for 2011 look very depressed.”

“The possibility that many construction materials sectors and construction in total may experience a double dip recession during 2011 and beyond cannot be ruled out.”

BuilderScrap is continuing to keep your up to date as the story unfolds about the shock of Rok construction going into administration.

Now they have been forced to lay off 711 of the firm’s 3,800 staff following an initial review of the business.

The majority of the job losses, 558, were in the firm’s maintenance and improvements business. Of the rest, 82 were in the construction business, 69 in the Scottish plumbing heating and electrical business, with only two from head office.

Rok collapsed into administration on Monday with bank debts of £70m after its principle banker, HSBC, refused to extend further credit. PwC was appointed administrator. All staff have been briefed on the job cuts, with further cuts dependent upon whether buyers are found for the firms businesses.

Staff affected by the cuts will only be guaranteed payment up until today. Other staff will continue to be paid.

Mike Jervis, partner and joint administrator, PwC said the redundancies had been made in areas where there had been “little or no interest in the business from prospective purchasers” or where there was insufficient work for existing staff to carry out. He said the maintenance and improvements division would be rationalised to slim down areas where there is not enough work for employees, principally in the build division.

He said: “We have set up an employee relations helpline and every employee affected by the redundancies has had the opportunity to attend a site in person or take part in a conference call. We are working closely with employees affected by this decision to ensure they receive the support they need during this difficult time to assist with their claims for redundancy and other compensatory payments.

“On a positive note, we have had over 100 expressions of interest in the business and we are currently reducing this to a shortlist. There are still national contractors interested in all divisions, as well as parties interested in individual divisions. We are short-listing bidders on the basis of their size, level of interest in acquiring large parts of the business and their speed of reaction.

“We expect to have further updates by the end of the week.”

This article was sourced from building.co.uk

To read the other articles regarding the Rok administration click the links below;

http://blog.builderscrap.com/2010/11/industry-shook-by-rok-administration/

http://blog.builderscrap.com/2010/11/rok-competitors-pick-apart-company/

Many contractor have began targeting profitable parts of the Rok construction but the administrator has implied that it would be of better to sell the company as a whole.

More than 50 companies have expressed an interest in acquiring all or parts of collapsed contractor Rok’s business.

It is understood a number of contractors are interested in “cherry picking” Rok’s profitable businesses, encompassing its social housing, contracting and insurance response services, but sources close to Rok’s administrators said the priority was to see all parts of the business sold as a single entity.

The source said: “You achieve better rates when selling large proportions of a business to a single buyer so there is a need to prioritise securing a bigger deal. If bigger players don’t want all of the company then you look at selling off on a divisional basis or if needs be even an office basis.”

Mears has already expressed an interest in taking on Rok’s social housing division although it is understood Leadbitter and Kinetics are also in discussions with the administrator.

Insiders expect an announcement on the future of the business this week.

The source added that Rok’s profit warning in August was “pivotal” to its collapse. He said:“It meant credit got tighter for the company and led to a dip in confidence among clients. Against the backdrop of the current economic uncertainty and dips in public sector work, which accounts for 55% of group turnover, things spiralled down quickly. September’s turnover was 30% off budget.”

Rok boss Garvis Snook stunned the industry yesterday by putting the company into administration.

A stock exchange announcement said: “The board of Rok announces that it has resolved to put the Company into administration and to make an application to the Financial Services Authority to suspend the listing and trading of the Company’s Ordinary Shares on the Stock Exchange.”

“It is anticipated that the administration and suspension will become effective shortly.”

“Further announcements will be made in due course.”

This move follows weeks of rumours that the company was struggling in the maintenance sector which took a sever hit with the collapse of Connaught.

Rok was in the middle of talks with investors and banks about refinancing but said in September it was still confident of meeting market expectations for profits this year.

Shares in the company tumbled this summer when Snook revealed problems in the plumbing division which led to 80 job losses and the departure of Finance Director Ashley Martin.

The company was forced to make an apology to Martin who was absolved of blame for the plumbing problems.

Rivals began to smell blood due to the fact Rok was heading for trouble because of its structure of lots of regional offices as it traded as the “Nation’s Local Builder”.

Around £250m of the group’s £750m turnover is also in the social housing maintenance sector which is being rocked by reduced spending and has already claimed Connaught as a victim.

One rival said: “This has been coming for some time I’m afraid.

“The structure they have with lots of regional operations is a nightmare in a downturn because it just creates lots of fix costs at a time when revenue is falling.”

Latest results for Rok for the six months to August 31 show the firm made a £3m pre-tax profit on a turnover of £308m. Maintenance work accounted for £116m of turnover, social housing £84.5m and construction £116m.

Liverpool Football Club will leave a lasting legacy in China this week by sponsoring the build of a new home for a low income family in Shanghai. Liverpool Football club has partnered with Habitat for Humanity. Habitat for Humanity is an international, non-profit organisation dedicated to eliminating poverty housing and homelessness from the world.

This particular volunteer build has been organised by the Chinese arm of Habitat for Humanity, in association with the worldwide housing charity’s Liverpool affiliate, which is also building 32 low-cost homes in the city’s Toxteth district.

It is believed to be the very first time a UK Premier League football club has funded a Habitat project anywhere in the world, this ground breaking move taken by the Premier League giants will also see Merseyside Business leaders roll up their sleeves and help build the home as Liverpool celebrates in the final day of its involvement at the World Expo.

Liverpool Managing Director, Christian Purslow, said: “Liverpool Football Club are very aware of the tremendous work that Habitat for Humanity do, both in our own city and abroad, and we are extremely pleased that our support will help provide a better home for this family in Shanghai. It represents a lasting legacy of the Expo, which everyone involved can be truly proud of. ”

There will be up to 20 volunteers from the Liverpool and surrounding business community to help build the new home which is for 57-year-old Ding Amao and his 85-year-old mother Chen Gengen. Their existing house was built in 1975 with wooden beams and mud bricks are not the ideal building materials for a home to be built with and the home is now deemed unsafe. This house lacks even the most basic of necessities for the family’s use.

Travelling to Shanghai to assist with the build is Rev Dr Shannon Ledbetter, chair of Liverpool Habitat for Humanity, who said: “This is a fantastic example of two Habitat organisations on opposite sides of the globe coming together to create a long-lasting legacy. Some high profile business leaders will be at the World Expo for Liverpool Day and we are really excited about the prospect of involving them in the China build and then, hopefully, welcoming them to our own site at Kingsley Road, in Granby-Toxteth.”

The General Manager of HFH China’s Shanghai office, Eric Arndt, added: “With the support of Liverpool Football Club and our sister organisation Liverpool Habitat for Humanity, we are helping complete the job of eradicating substandard housing in Pinghu. This partnership epitomises the way Habitat for Humanity brings together people from every walk of life and from every part of the world to build homes, transform lives and develop bonds between communities.”

Source: Liverpool FC official website.