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UK's top 50 contractors lose market share to specialist firms

The overall market share of the UK’s top 50 contractors fell to 52 per cent last year from 64 per cent in 2012, new research has revealed.

Research by construction intelligence unit Glenigan and Construction News data service CNinsight found that the UK’s top 50 contractors faced increased competition from specialist contractors at both ends of the market last year for projects worth more than £100m and those worth up to £10m.

The Major contractors competitive review 2014 found that the total value of work won by the top 50 contractors fell by 22 per cent in 2013 to £25.3bn, compared with £32.6bn of work in 2012.

This was in a market where overall the number of contracts awarded increased by 8 per cent compared with the previous year, but the total value of those contracts fell by 6 per cent to £48.1bn.

At the top end of the market, there was a 15 per cent decline in the value of £100m-plus projects in 2013. The overall value of £100m-plus schemes was £19.1bn, with a 2 per cent rise in the number of such schemes.

Excluding civil projects, the leading 50 contractors collectively won £4.6bn-worth of work on building projects valued at more than £100m in 2013, up 12 per cent on the £4bn recorded in 2012.

However, the top 50 lost overall market share in the same band of projects to non-top 50 firms, which secured £3.8bn of work on such schemes – a 141 per cent increase compared with 2012.

Glenigan economics director Allan Wilén said the largest main contractors were increasingly having to compete with specialists such as Siemens in the offshore energy sector and Westfield, which will act as the main contractor on its £1bn joint venture with Hammerson in Croydon, in the retail sector.

The number of projects worth between £50m and £100m declined by 6 per cent and their value fell by 7 per cent in 2013 compared with 2012.

However, at the smaller end of the market, the number of projects worth up to £10m increased by 9 per cent and there was a 6 per cent increase in the overall value of those projects to £14bn.

Mr Wilén said: “Where the top 50 firms have been able to maintain or increase market share is in those areas in which they are already dominant: building projects in the £20m to £100m value bands.

He added that the increase in smaller-value projects was “an early sign of confidence coming through” but that it wasn’t occuring with the big schemes yet.

“As economic growth gathers momentum, improved investor confidence should support the realisation of the higher-value schemes for which the top 50 contractors have historically been dominant players,” he said.

“However, while the tide may now be turning in their favour, the analysis of recent contract awards indicates that competition for such work will be strong, both between top 50 firms and from other contractors.”

Glenigan is forecasting the strongest growth in an improving market over the next two years to be in sectors such as industrial and commercial buildings, which should provide boost to top 50 contractors’ workload in particular, Mr Wilén said.

For more

Download the full Major contractors competitive review 2014 report.

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