Mace Cost Consultancy has revised its forecasts in the wake of the EU Referendum result and now expects tender prices to fall next year. Above: Mace Cost Consultancy managing director Chris Goldthorpe Six months ago, Mace Cost Consultancy was forecasting tender prices to rise 4% in 2017 and 3.5% in 2018. By April 2016 it was slightly less optimistic, predicting 3.5% growth next year and 3% for 2018. But this was based on the assumption of the UK staying in the European Union. Now that the UK has voted to leave the EU, everything has changed, even if no one is yet quite sure how. Mace now says that tender prices will fall 1% in 2017 and remain flat in 2018 because of a slowdown in the demand for construction in the medium term. Brexit might make construction cheaper for clients, therefore, but only at the expense of contractors cutting each other’s throats – and perhaps their own. In London, Mace expects the ongoing pipeline of work to lead to stable prices in 2017 with the softening of demand coming in 2018, leading to a fall of about 1%. Mace’s July 2016 Tender Cost Update UK report says: “For an industry that was already experiencing a levelling off in demand, the Brexit vote will not help construction, at least in the short to medium term. Many contractors have been expanding and recruiting over the last three years and if order books start becoming harder to fill, competition will increase for the available workload and downward pressure will be put on profit margins and tender prices. “The extent to which tender prices will be affected is very difficult to predict as there is no precedent for the current situation. We know from past recessions that if the economy slows significantly, or even shrinks as predicted by some commentators, tender prices will fall. We take the view that the UK economy is reasonably robust since the recovery from the last recession, and that there is likely to be a slowing of growth over the medium term but not one that will turn into a major recession. This slowdown will reduce construction workloads, leading to increased competition which will reduce, or even reverse tender price inflation over the forecast period.” Mace Cost Consultancy managing director Chris Goldthorpe said: “Although we have seen a handful of projects affected by the referendum result due to occupiers reviewing their risks and appraisals, the vast majority of our workload is currently unaffected and contractors and supply chain companies remain busy, particularly in London and the southeast. “Despite this, we feel that the resulting slowdown in demand will lead to tender prices softening, leading us to revise our forecasts downwards. We believe there’s a strong role for industry to promote opportunities across the country and support mobility of goods, services and labour between the regions. With support from the government and clear local engagement targets for major projects and programmes, this could help bring communities together.”   This article was published on 29 Jul 2016 (last updated on 29 Jul 2016). Source link

The University of Leeds is seeking a contractor for the development of its North East Quarter. The project, which has an estimated value of £60m to £65m, involves the creation of a new multi-disciplinary teaching and research facility for disciplines including computing, physics, astronomy and materials. The new accommodation will provide facilities for research and student education. It will include new laboratory space designed for the high-specification equipment that is required to undertake today’s research. Details in The Construction Index Contract Leads section (link opens in new tab).     This article was published on 18 Aug 2016 (last updated on 18 Aug 2016). Source link

The millionaire philanthropist founder of construction company Lakehouse has been told by the company board that he lacks the skills to make any meaningful contribution to the business any more. Above: Steve Rawlings Steve Rawlings founded Lakehouse in 1988. After former Mears chief executive Stuart Black took a minority stake in 2007, the company grew significantly on the back of acquisitions. Steve Rawlings took a back seat, giving Stuart Black day to day control. He eventually left the board in advance of the company’s 2015 stock market flotation. However, Mr Rawlings still owns 15.5% and he is unhappy with how his old company is now being run. He has joined with Slater Investments, which with 6.04% is the second biggest shareholder in Lakehouse, to try to oust the board. They have called a meeting of shareholders to vote on a resolution remove the non-executive directors. Mr Rawlings and Slater Investments want the current non-executives to be replaced by Robert Legget, the former WS Atkins finance director Ric Piper, and Mr Rawlings himself. The meeting is set to take place on 19th April 2016. The Lakehouse board has today issued a notice to shareholders urging them not to support Mr Rawlings. The board says: “Steve Rawlings’ lack of involvement in the group and track record as a director since 2012, together with his lack of experience as a director of listed companies, does not suggest that he has the necessary skill set to be able to provide a meaningful contribution to the board or the group going forward.” It adds: “Although nominally ‘Chief Executive’, Steve Rawlings did not attend a single board meeting during the three years prior to the IPO and did not have any involvement with the board decisions taken relating to the strategic direction of the group and its day-to-day operations. “The group has grown significantly and is now very different to when Steve Rawlings was actively involved in it: he has played no part in developing and executing the strategy that delivered that growth. “He has limited experience of the two main, higher margin, growth areas of the group’s business, compliance and energy services, and has had little involvement in the construction and regeneration divisions for nearly five years.” Lakehouse chairman Chris Geoghegan, who Steve Rawlings wants to vote out, told shareholders: “Your board is particularly concerned that the requisitionists [Rawlings and Slater] have not provided any information in relation to their strategic vision for the company.  Their silence on this important matter is especially concerning given they are asking to remove every single existing non-executive director and to replace them with their own candidates. “The requisitionists’ proposals would reduce the level of independence on the board, damage the company’s compliance with the UK Corporate Governance Code and result in all the non-executive directors representing only one particular group of Lakehouse shareholders in preference to other Lakehouse shareholders.”     This article was published on 24 Mar 2016 (last updated on 24 Mar 2016). Source link