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City Site Workloads get rail sector rolling

FINANCE

AFTER a difficult few years, rail-related construction work appears to be on the upturn. Last week the Civil Engineering Contractors Association produced a workload survey with overall results among the best ever. Just over half of firms reported an increase in workload over the past year and order books are at their best level since January 2002.

Although the improvement is biased towards larger firms, the association says among the encouraging features are signs of a recovery in railway infrastructure work. It echoes a Construction Products Association survey earlier this year that also pointed to an upturn in rail work.

An improved environment in rail also seems to have been a factor behind the return to operating profit reported at Jarvis last week. While the firm's construction, facilities management and roads divisions are still showing losses, the group says its rail and plant arm showed a particularly healthy margin, supporting its group margin of 5.2 per cent.

Indeed the ability of the firm's rail and plant arms to deliver results has been critical to its survival. Jarvis Rail and Fastline have continued to produce solid results, and while Network Rail remains the focus for the business, it is also diversifying into new international markets.

Carillion said in March that while the outlook in the UK rail market is expected to remain challenging, planned investment by Network Rail is substantial at around £11 billion over 2006-08. Balfour Beatty recently said its rail arm had seen lower levels of activity for Network Rail but progress was good on the major rail contracts at Heathrow T5 and work on the London Underground track renewal programme continued to accelerate.

Meanwhile, prospects for the rail-related construction market may brighten following this week's news that the improving finances of Network Rail mean it will no longer rely on Government-backed loans. It is expected to raise £3 billion over the next three years.