Contracts land, housebuilders bleed

A split week: contractors with the right specialism kept winning work, while the housebuilders kept paying for the last two years.

This week's question: if your firm announced a restructure tomorrow, what would you do first?

• Wait and see what it means for me
• Ask my manager straight where I stand
• Start quietly talking to the market
• Nothing new. I am already talking to the market

Vote on this week's question

Vote with one tap, and read my take on Friday: community.lechley.com/question

From my desk

I spent Tuesday and Wednesday at UK Construction Week at the NEC in Birmingham. It was a very interesting two days, and I met some fantastic people. I learnt a lot about procurement and what it means for the industry: how clients can improve the way they buy, and the effect that would have on the supply chain as a whole. More on that below. If we met there, thank you for your time.

The Operations Manager UK search for an international data centre contractor moved on this week. Two leaders are now in front of the client, out of more than fifty people mapped. On a role like this the hard test is not the size of the schemes someone has run, it is how many they have held at once, and that is a short list.

This week split the construction market in two. Contractors with the right specialism, water, defence, high voltage grid work, won solid new contracts: Lagan on RAF Waddington, Costain at South Kensington, Barhale for Anglian Water. At the same time Crest Nicholson and Vistry posted heavy losses, and two more subcontractors, Torsion Projects and Avtar Construction, went under. If you are inside a stressed housebuilder, do not wait for certainty that is not coming. If you are weighing a move, look at who is actually winning work, not who is making headlines for losing it. Full breakdown in this week's roundup: Contracts land, housebuilders bleed, subbies keep folding.

What makes a framework any good

The best session I sat in on at the NEC came down to one question: what makes a framework any good? The panel's answer was that a framework is an investment decision, not just a list of names. A good one has a real supply chain behind it, pricing terms that work, viability and sustainability for the firms on it, and a long-term relationship rather than a one-off transaction. It starts with proper market engagement, and it pays the supply chain fairly and consistently.

Two live examples came up. The Ministry of Justice's programme for 20,000 new prison places runs as an alliance with Kier, Laing O'Rourke and Wates, built around MMC, with predictability of cost and local employment as stated aims. The New Hospital Programme earned a notable mention too, for the work it is doing on MMC: a standard hospital design and set of components, rather than designing every hospital from scratch. And NISTA now publishes the government's infrastructure pipeline as a list anyone can download, so the supply chain can see what is coming instead of guessing. Early supply chain involvement, and not locking SMEs out, came up more than once.

The uncomfortable question was whether there are too many frameworks. The panel's answer was yes. Clients need to be more specific about what they are buying, and there was a pointed question about why not every NHS client uses the frameworks that meet the Construction Playbook and David Mosey's Gold Standard, the 24 recommendations he set out in 2022.

The panel's three takeaways:

• Clients need to be better, and so does quality.
• The pipeline has to be accurate, and every firm should be able to say why it is on a framework at all.
• A framework is only as strong as its supply chain, so start with the ones built to the Gold Standard.

For anyone in a bid, commercial or procurement role, this is where the work is heading. The people clients will compete for are the ones who can run early engagement and hold a supply chain together over years, not just win the tender.

The week in construction

• Main contract awards rose 120% on the year in August, while starts fell 28% and detailed planning approvals dropped 13%, according to CN Intelligence. Housing awards were up 77% with starts down 33%. The gap between signing and breaking ground has rarely been this wide. If those awards convert, a wave of housing and retail work reaches site in the next two to three quarters, and the teams to run it will be in short supply. Source: Lechley Community, from Construction News, 29 Sep
• The Building Safety Levy went live in England on 1 October, applying to building control applications for 10 or more homes, or 30 or more student bedspaces, submitted from that date. Social housing, care homes and hospitals are exempt, and no completion certificate is issued until it is paid. It is now a real line in every live viability appraisal, which puts cost consultants and viability QSs in the middle of the next round of negotiations with local authorities. Source: Leeds City Council, 1 Oct
• Crest Nicholson's lenders have extended its interest cover waiver to 30 November while talks on longer-term terms continue. It now expects a loss of about £10m for the year, its third profit warning since April, with weekly sales rates down to 0.35 from 0.55 a year ago. A waiver is not a collapse, but it does mean every overhead line will be examined before the lenders sign. Source: Lechley Community, from Building, 1 Oct
• Ofgem is opening grid connections to developers and large energy users who want to build their own, rather than queue behind the network companies, alongside a new publicly owned body, GB Grid. Transmission owners alone are expected to spend more than £70bn between 2026 and 2031, and connection applications have jumped from 41GW to 125GW, at least 80GW of it data centres. Anyone with HV, substation or grid connections experience has just seen their market widen. Source: Lechley Community, from Construction Enquirer, 30 Sep

Other areas of interest

Last week I asked who taught you the most in your first five years. The answers point one way: most people did not learn the job from the person they reported to. They learned it from whoever let them watch: the site manager who walked them round the job at seven in the morning, the senior QS who let them sit in on a final account meeting, the foreman who explained why the drawing was wrong. Read the result and my take at community.lechley.com/question.

That is the idea behind the Exchange: three things you could teach someone from a different generation in construction, three things you would like to learn, and half an hour on a call with someone whose answers fit yours. If the most useful lessons rarely come through the org chart, it is worth building a route for them that does not depend on luck.

What has changed on the community site

The community site changed shape this week. It now has two front doors, depending on where you are in your career.

• Setting Out is for your first ten years. The Early Careers Pathway explains how the industry actually works, then routes you into your discipline: commercial, planning, estimating and the rest, each free, with real exams and a certificate at the end.
• Critical Path is for the people running the job: who is moving, who is hiring at the top, the Mentoring Pathway, and a place to hand down what you know before it leaves the industry with you.
• Letters to government publishes the 13 letters we sent in August to Downing Street, eight departments and the local MP, as sent, with every reply. Around eighty letters have gone out across three rounds. One reply so far, from the Department for Work and Pensions.
• The home page now shows what happened in the community this week before you sign up, and a short film on what you will find there. Every pathway certificate now carries our research partner, Lancaster University Management School.

New on the community

• Every project starts with setting out (Thoughts)
• Costain's O'Grady to lead HS2 London tunnels JV (News)
• Ex-Balfour Beatty boss joins Mott MacDonald board (News)
• Lagan lands £53m RAF Waddington runway contract (News)

All of it free at community.lechley.com.

One useful thing

When you weigh a move, ask what share of the order book is actually on site, not just how big it is. August's awards were up 120% while starts fell 28%. An order book that has not broken ground is a promise, not a workload, and the answer tells you whether you are joining to deliver or joining to wait.

What I'm working on

Week five of the Operations Manager UK appointment for an international main contractor delivering data centres for hyperscale clients. The role reports to the UK Managing Director, leads Project Directors across three to five schemes nationally, and grows with a secured pipeline heading towards £300m to £400m a year. Retained exclusively with Lechley. Two leaders are with the client, and there is still room for the right person. If you have run multi-project mission-critical delivery in the UK, or you know who has, I would value the conversation.