The prospects for the infrastructure sector are looking up, says Allan Wilen
Overall infrastructure workload has disappointed over the last four years, despite the success of schemes such as Terminal 5 and the Channel Tunnel Rail Link.
But prospects are now more positive. The sector promises to be a construction bright spot amid concerns over the impact of the credit crunch on private housing and commercial work.
The water companies are accelerating their current five-year investment programmes.
New orders for water and sewerage projects jumped by two thirds last year, which should ensure a sustained rise in related work over the next two years.
Seven Trent’s recent decision to establish a £1 billion 10-year framework agreement might mark a longer term move away from feast and famine activity.
Investment by the electricity and gas industries has helped bolster an otherwise weak infrastructure sector in recent years and is set to remain an important driver for growth.
National Grid’s upgrade of the electricity and gas transmission networks will support activity near term and a series of power station and off-shore wind farms will bolster output from 2009.
Long term, the decommissioning of nuclear plants and the Government’s plans for replacement capacity promise to further lift sector activity.
Rail is also set to remain a growth area as Network Rail presses on with the investment programme set out in last summer’s High Level Output Statement, with work on the Thameslink programme key.
Further major schemes such as the East London Line and DLR extensions will add to activity over the next two years and tram schemes in Manchester and Edinburgh are due to start shortly.
But the road sector continues to disappoint. While there was a marked rebound in new orders during 2007, the recent release by the Highways Agency of a lacklustre investment programme has dampened expectations.
Under the agency’s 2008-2009 programme only two major schemes are set to start on site during the financial year while 15 are due for completion.
Also, the agency’s proposal to substitute planned motorway widening schemes on the M1 and M25 in favour of hard-shoulder running will dent hopes of a longer term recovery.
Allan Wilen is head of business market intelligence at construction information service Emap Glenigan
To see more infrastructure news and analysis click here