This document provides an overview and analysis of the UK construction market based on surveys of over 300 construction clients. Key findings include: 1) The majority (58%) of private sector clients expect to start or restart projects this year, up from 50% last year, while public sector clients are focusing more on cost than ever before, with price becoming the most important factor in selecting contractors. 2) Payment times have improved in the public sector but remain a major problem in the private sector, with 46% taking over 30 days to pay. Retention payments are still used by 77% of both public and private clients. 3) Private sector clients are ahead of the public sector in adopting BIM and project bank

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2/executive summary 3
3/Introduction 5
3.1 Methodology
3.1.1 Surveys
3.1.2 Public/private split
3.1.3 Top client tables and factfiles
4/Market overview and key sector breakdown 7
4.1 Housing
4.1.1 Private housing
4.1.2 Public/social housing
4.2 Public sector building
4.2.1 Education
4.2.2 Health
4.2.3 Other central and local government
4.3 Private sector building
4.3.1. Office
4.3.2 Retail
4.3.3. Industrial
4.3.4 Leisure and other private sector building
4.4 Infrastructure
4.4.1 Transport
4.4.2 Energy, airports and communications
4.4.3 Water, harbours and flood defence
4.5 Repair and maintenance
4.5.1 Residential
4.5.2 Non-housing
4.6 Regional spending predictions
4.7 Further market trends
5/client sentiment survey 11
5.1 Workloads
5.2 Selection processes
5.3 Contracts
5.4 Payment
5.5 Qualities sought
5.6 Innovation
5.7 Government policy
5.8 Conclusion
1/contents
6/Top client lists 24
6.1 Top 50 public and regulated sector clients
6.2 Top 50 private sector clients
7/top 15 public and regulated sector Client Profiles 26
Basildon District Council
Birmingham City Council
Crossrail
EDF Energy
Essex County Council
Glasgow City Council
Highways Agency
Homes and Communities Agency
Hounslow Council
Kent County Council
Ministry of Defence
Network Rail
South Tyneside Metropolitan Borough Council
Sunderland City Council
Transport Scotland
8/top 15 private sector Client profiles 41
Berkeley Group
British Land
Covent Garden Market Authority
Crown Estate
Gallagher Developments
Intergen
Land Securities
Legal and General
Lend Lease
Peel Group
Sainsbury’s
SITA
St Modwen
Stanhope
Tesco
9/appendix: list of key supply chain partners
by value of project 56
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The last 12 months have seen little change
in the raft of difficult issues facing UK
construction clients. The economy has
been bouncing along the bottom, unable
to decide between recession or growth, but
with continuing funding constraints for the
private sector and cuts in public sector capital
spending, construction output fell by more
than 8% in 2012.
The findings of Building’s second Client
Intelligence white paper show that intense
difficulties remain in obtaining approval to
go ahead with major construction projects,
because of continued difficulty acquiring
development funding and the uncertain
economic outlook.
However, the findings also show the first
signs of a nascent recovery in the private
sector: more private clients are expecting to
be able to restart projects than at this time
last year – more than half of all of those
surveyed. But, with the public sector more
price-conscious than ever, the research
is clear that a significant turnaround in
workload is not an immediate prospect.
According to our research for this
white paper, which included a survey and
interviews with over 300 construction clients,
there are a huge range of issues preventing
work from starting. General macro-economic
uncertainty is the biggest problem for
private sector clients, while three-quarters
still say it is difficult or impossible to access
development finance – exactly the same
proportion as last year. The government’s
austerity programme is also blamed for
making the problem worse, with four times
as many clients saying it is worsening
confidence than improving the situation.
More than half of public and regulated
sector clients report that construction
budgets have been cut since 2010, with more
than two-fifths expecting budgets to be cut
again before the end of the parliament.
This has seen the public sector refocus
on price. On average, both public and
private clients see build quality as the most
important factor when selecting a contractor,
followed by price and financial stability – but
a far higher proportion of public sector clients
said price was the key determinant than last
year. Interestingly the same isn’t true for the
private sector, for whom the priorities have
barely changed.
Sustainability seems to have fallen
further down the pecking order, with far
less government focus on the issue than
under the previous administration. While a
contractor’s track record on sustainability
remains a low priority for both public and
private clients, the number that report using
“whole life costing” in their procurement is
sharply down on last year. Both public and
private clients say more leadership is needed
from government to justify the investment
in sustainability, with nearly two-thirds of
private clients supporting the roll-out of
display energy certificates to private sector
buildings.
The research shows that the private sector’s
distaste for using frameworks to procure
construction services has only deepened over
the past year, with the proportion saying
they had used frameworks in the last year
dropping significantly. By far the majority
of private clients predominantly procure by
inviting selected contractors to compete.
Meanwhile, the public sector’s method
of procuring, predominantly through
frameworks, has barely changed. This and
other data tends to give weight to last year’s
finding that contractors shouldn’t expect
major changes in the way public clients
procure following the implementation of
the government’s Construction Strategy.
About half this year say they have made no
2/executive summary
l The majority of private clients are
optimistic about starting or restarting
projects put on hold this year. The survey
found 58% of private clients are set to start
projects, up from 50% in 2012.
l Public sector clients are more focused on
cost than ever before: price has become the
most significant factor when choosing a
contractor for 38% of public clients, and the
use of “target price” contracts, which share
price risk, has halved.
l Payment times in the public and regulated
sectors have improved, with more than
60% paying within 30 days. However,
major payment problems remain in the
private sector, with 46% taking more
than 30 days.
l The overwhelming majority of clients still
make use of retention payments – 77% in
both the public and private sector.
l The private sector is ahead of the
public sector in the use of both BIM and
project bank accounts, with more than
twice as many private clients using project
bank accounts, and 46% using BIM,
compared to just 36% of public clients.
The research shows that the
private sector’s distaste for
using frameworks to procure
construction services has only
deepened over the past year
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change since the publication of the strategy
a year ago, and even fewer than last year say
they have a strategy for reducing costs by
15-20% over the life of the parliament, as the
Construction Strategy calls for.
Indeed, much of the forward-thinking
procurement behaviour that the Construction
Strategy calls for seems to be led by the
private, not public sector. Private sector
clients are more likely to make use of both
BIM and project bank accounts than public
sector ones. However, there are signs of
public sector progress on BIM, at least.
The survey repeats last year’s finding
that the construction industry will have to
continue to bear behaviour from clients,
both public and private, that it finds
frustrating and potentially damaging.
Private sector clients take longer to pay than
public ones, but still more than a quarter
of public clients take longer than 30 days.
Retention payments, a particular bug bear for
contractors, are used by more than three-
quarters of clients.
Overall, the survey points to clients that
are retaining a ruthless focus on cost and
efficiency when they buy construction work,
even though (in the private sector, at least)
they are more hopeful that the economy will
improve enough to allow them to restart
projects. Far too many public and private
clients – though a slightly lower proportion
than last year – still say they struggle to find
suppliers with the skills they need, despite
intense competition.
Client factfiles
The white paper includes 30 factfiles on
the biggest public and private clients,
excluding the volume housebuilders, who
tend to construct in-house. Including
interviews with the key people responsible
for buying work, these highlight their
upcoming pipeline, and who they
currently work with.
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