National Construction
Category Strategy
for local government
NATIONAL
PROCUREMENT
STRATEGY
Report
Contents
Foreword3
Introduction4
Why a construction strategy for local government?
7
Industry and market structure
8
Local government construction strategy themes
12
Making it happen
14
How LGA and NAG will support delivery
16
Appendix 1: Industry structure by size of contractor
17
Appendix 2: Leading companies by sector
18
1 Construction companies
18
2 Top 20 house builders by size
19
3 Private companies by turnover
20
Foreword
As part of the National Procurement Strategy for
Local Government which was launched in July
2014 we identified that category management
helps to reduce the cost of buying goods,
works and services, reduces risk in the supply
chain, increases overall value from the supply
base and gains access to more innovation from
suppliers. The Local Government Association
(LGA) committed to exploring such an approach
in three main areas of spend, Energy, ICT and
Construction.
The Government’s Industry Strategy,
Construction 2025, launched in 2013, highlights
a set of aspirations for the UK construction
industry and forecasts that the global
construction market will grow by over 70 per
cent by 20251. It asked the LGA to set up a
construction procurement group and a strategy
to help to drive procurement efficiency and
explore options for further efficiency gains in
the procurement process for local authorities.
This strategy responds to that request, and
in particular acknowledges that construction
permeates virtually all other industries, is a major
source of employment and is a foundation of a
prosperous society.
The strategy identifies what is needed under four
themes:
• Demonstrating leadership to increase the
impact of collaboration, encouraging a more
strategic national conversation with suppliers
Local government wants to build long-term
partnerships with suppliers who we believe
can help us deliver significant local growth,
increased skills and jobs. The strategy is the
first step in addressing the need for a “strong
collaboration between industry and local
government to make sure that local people have
the skills required to deliver these projects”2
We have identified those suppliers with whom
we spend the most, and we recognise that there
is a considerable vertical supply chain in this
sector, and that we need to engage with smaller
businesses as well. We have been working with
trade bodies such as the Federation of Master
Builders, the Federation of Small Businesses and
the National Federation of Builders on identifying
key issues to be addressed and resolved.
We are grateful for their ongoing support and
challenge.
I am pleased therefore to support the
commitments made in this document, I would
encourage all councils, officers and elected
members to signal your support for it.
• Maximising savings through a better
understanding of project outcomes including
whole life costs
• Supporting local economies by facilitating
and developing sustainable local employment
and economic growth
• Modernisation by working smarter, improving
efficiencies and enabling innovation; and
Councillor Shirley Flint
Deputy Chair, LGA Improvement
and Innovation Board (2013-14)
February 2015
1
2
Global Construction 2025; Global Construction Perspectives
and Oxford Economics (July 2013)
Sarah Fenton, Strategic Partnerships Director (Midlands &
North) CITB
National Construction Category Strategy for local government
3
Introduction
Key objectives of the
local government
construction strategy
The Comprehensive Spending Review 2010
set significant austerity challenges for Local
Government equivalent to a twenty per cent
budget reduction between 2010/11 and 2014/15.
As part of their response, the Local Government
Association (LGA) and the National Advisory
Group for Local Government Procurement
(NAG) commissioned a report entitled ‘Local
Government Procurement Strategy 2012’, which
has now resulted in the production of a National
Procurement Strategy for Local Government
(NPS) that was launched in July 2014.
As part of the work underpinning the NPS, LGA
selected three priority categories for further work
on a national basis: Construction, Energy, and
ICT. A sub-group was set up to consider each
category strategy.
This Construction Category Strategy (Strategy)
is intended to support a more focused approach
to what is a key spending area for local
government and a major source for employment
across the country, highlighting where new
developments and ideas can help to support
improved procurement practices, collaboration
and strategic co-ordination of the sector’s annual
construction related expenditure.
This Strategy is aimed at council officers (in
construction, procurement and finance) and
will support elected members through linked
guidance notes.
It is intended to be a living document in that
it will be supported by the newly developed
Construction ‘page’ of the LGA’s procurement
microsite www.lg-procurement.org.uk where
4
it will provide a constant source of updated
material that will include case studies and links to
key external websites and documents which will
support members and officers in their decision
making.
This Strategy outlines a general ‘call to arms’
for local government so as to enable increased
efficiencies through collaboration and partnering
and proposes that:
Councils should:
• work smarter through improved client
knowledge and understanding of construction
procurement through collaboration
• develop behaviours that question the clarity
of project objectives, question delivery
capabilities, and challenge what has been
done previously
• wherever possible standardise design and
tender documentation and specifications to
reduce supplier risk, enable comparison and
improve tender efficiencies
• maximise construction value by focusing on
whole life cost rather than just project costs
• identify forward spend wherever possible
and use this data to inform early pre-market
engagement and supplier planning and allow
time for supplier consortia to form
• seek ways of supporting the local economy
by understanding the importance of the
construction supply chain
• work with partners (including clients and
customers) to understand the construction
skills demand and facilitate long term
construction training solutions to enable the
sustainability of supply skills and labour
National Construction Category Strategy for local government
• apply the Social Value Act 2012 through
supporting employer led procurement and
planning models that incorporate social value
jointly agreed measures3
• drive construction skills through procurement
to deliver high levels of social value to local
communities, bringing the Social Value Act to
life
• work more closely with industry to meet
the sector’s future skills needs by creating
more sustainable jobs, thereby reducing
unemployment and creating local growth
• encourage greater participation of
construction SMEs in local government
procurement.4
The LGA will:
• engage with the top tier contractors and trade
bodies representing suppliers and SMEs to
seek ways that support councils to achieve
procurement efficiencies
• support the Construction Leadership Council
providing a voice for local government
• Work with the Construction Industry Training
Board (CITB), contractors and other key
stakeholders to support a collaborative
approach to increasing the pipeline of talent
into the construction industry, supporting
a sector image campaign, increasing
opportunities for individuals to learn about
and experience construction leading to an
increase in training and the realisation of long
term career pathways
• facilitate pathways that enable more
collaboration between councils and between
councils and the wider public sector
• promote and publicise good practice through
www.lg-procurement.org.uk
• lobby at a national level for visibility on
long term funding to enable more efficient
procurement.
Building on the themes of the NPS this Strategy
also seeks to reinforce its message for councils
to commit to sharing information and good
practice in order that all in local government
can benefit from such a sector lead approach.
Construction permeates virtually all other
industries, is a major source of employment and
is a foundation of a prosperous society.
Background
The construction industry is diverse and broad
ranging from the design, costing, construction
and maintenance of assets as well as the
production of supporting plant and equipment
and includes sectors such as mining, quarrying,
supply of utility services, both domestic and
commercial buildings, and infrastructure. In
addition it supports the maintenance and end of
life disposal of such assets.
Between 1993 and 2008 there were three major
reports into the Construction Industry that sought
to instigate change and to improve the working
practices and efficiencies of the industry.
The Latham Report (1993) highlighted amongst
other factors behaviours within the supply chain
including the adversarial nature of the industry
and project dispute resolutions. One of its major
contributions was the development of a more
partnering approach between the client and
main contractor, and the main contractor and its
suppliers.
The Egan Report (1998) also highlighted
partnering as a major issue within the industry
and advocated a longer term collaborative
approach to project delivery as one way of
improving the quality and efficiency of the
industry,
The Wolstenholme Review (2008) concluded
little progress had been made against targets
set by the two preceding reports and identified
further themes as a way of driving performance
improvement.
3See http://www.citb.co.uk/employer-support/client-basedapproach/
4See http://www.fmb.org.uk/news-publications/policy-and-publicaffairs/procurement/
National Construction Category Strategy for local government
5
Finally the Government’s Industrial Strategy
developed through working with the construction
industry, Construction 2025, has set out a clear
vision of where UK construction will be in 2025
based on:
• people: An industry that is known for its
talented and diverse workforce
• smart: An industry that is efficient and
technologically advanced
• sustainable: An industry that leads the world
in low-carbon and green construction
• growth: An industry that drives growth across
the entire economy
• leadership: An industry with clear leadership
from a Construction Leadership Council.
The priorities of the Government Construction
Strategy are:
• transparency of new investment and
business opportunities through the
publication of future construction requirements
• leading transformation through digital
technology (Building Information Modelling)
which will change the competitive edge
of construction projects significantly (and
generate export opportunities
• boosting liquidity in business supply
chains with a clear commitment to fair
payment through Project Bank Accounts
• New models of procurement leading
to efficiencies trailing new models to
build an evidence base of best practice in
procurement and promote change in practice
and capability through the publication and
adoption of guidance
• sustainable savings through reform
(benchmarks) transparency of central and
local government unit costs and the use of this
data in reducing construction costs.
6
National Construction Category Strategy for local government
Why a construction
category strategy for local
government?
The purpose of such a strategy in a time of
austerity is to facilitate better value solutions that
can be achieved through lower capital costs of
construction, whole life costs, and more efficient
procurement. Its intention is to support councils
deliver their strategic priorities in helping the
local economy through SMEs.
The focus of the document is to establish
guidance in key areas and act as a conduit for
sharing best practice.
It recognises the potential radical changes in
the construction industry today and supports
the leveraging of benefits for councils from the
intended outcomes of the new partnership
between industry and government.
By encouraging national and regional groups
to share knowledge, procurement and
delivery expertise and where appropriate joint
procurement projects, it intends to enable
benefits to be achieved for councils and reduce
duplicated effort.
Finally the document outlines the existing
industry landscape, and the role of particular
approaches to procurement including
frameworks.
National Construction Category Strategy for local government
7
Industry and market
structure
The industry encompasses all business activities
relating to the planning, design, construction,
operation, and maintenance of the built
environment. The sector represents a wide
variety of business types and occupations, from
construction contracting firms to professional
consultancies, and their workforces of skilled
trades through to building professionals.
The sector covers both private and public
organisations, and a wide range of business
from sole traders and micro-businesses,
through to small and medium-sized enterprises,
and up to large national and international
conglomerates.
There are four overlapping sectors:
• construction (often denoted as civil
engineering); this would include, water and
‘heavy’ engineering with the latter ranging from
the construction of dams, power generation
and nuclear plants, airports, tunnelling,
industrial, process and chemical plants,
marine, etc. Within this sector there are sub
sectors such as highways
• building; civic estate and commercial such as
office blocks, factory units, distribution centres,
etc. Specialist sectors include education,
health and facilities management.
• house building
• support services which includes architecture,
quantity surveying, and equipment renting
and leasing.
The nature of the industry
The industry employs approximately three
million people in two hundred and eighty two
thousand businesses.5 It is highly fragmented
with a relative high number of small and micro
businesses and a large proportion of selfemployed people. Traditionally it is a highly
mobile industry with a significant proportion
of workers travelling long distances to work or
live temporarily adjacent to site. There is low
rivalry between sectors and limited rivalry within
sectors, for example geographical concentration
for house builders (some builders adapt similar
strategies but concentrate in specific location
such as London only). Company strategies
have changed since the last financial crisis
and a common pattern has emerged across all
sectors of lower debt ratios, partly enforced by
stringent controls within the financial sector. More
significantly there has been a move to finance
turnover from cash reserves rather than debt,
particularly within the house building sector,
within this sector has emerged a strategy of
concentrating on returns to shareholders rather
than all out growth.
Suppliers
These include:
• construction materials
• construction equipment
• specialist contractors such as mechanical
and electrical (M&E)
5 UK Construction: An economic analysis of the sector. See the
appendices for a breakdown of the industry; Appendix 1 has
slightly differing figures..
8
National Construction Category Strategy for local government
• consultancy (design, M&E, project
management, quantity surveying and cost
management)
• developers (though these can be clients as well).
The industry has a standard terminology for
the description of its extended supply chain.
Contractors with a direct commercial relationship
with the client are termed Tier 1 contractors.
Sub-contractors and suppliers with a direct
relationship with the Tier 1 contractor are termed
Tier 2. Sub-contractors and suppliers who work
with these Tier 2 sub-contractors are termed Tier
3. Most construction work is delivered at Tier 3
or below and it is not uncommon to have 50 to
70 Tier 2 suppliers and sub-contractors.6 There
are ambitions to continue to bring about more
collaborative working arrangements endorsed by
both Latham and Egan.
Construction materials and construction
equipment has become highly concentrated
reflecting high capital needs and distribution
efficiencies whereas other suppliers are
more fragmented and smaller though rapidly
becoming more concentrated as their buyers
have grown in scale. Historically there are some
common suppliers between sectors.
Some commonality in prime resources such
as people, aggregates, cement, wood based
materials etc. exist. Labour and labour
sub-contractors are fragmented suppliers
and to some extent ‘controlled’ by labour
availability. Traditionally training is college and
apprenticeship based for the building sector,
whereas there is an inclination for a degree
base for the more engineering based sectors.
For either sector, training can take upwards of
three years before training costs can begin
to be recuperated either for the individual
or company. This can mean that in a cyclic
economy construction is one of the first sectors
to be hit in a downturn (primarily in achieving
capital savings through delayed project starts)
and the knock on impact of staff redundancies
and reduced skills training. In a rising economy
construction takes a while to respond partly
through the impact of the long training cycle. In
the down cycle people are lost to the industrial
as they retire, move into other sectors such as
manufacturing and ‘under cover’ jobs on the
upturn (e.g. builder’s merchants), concentrate on
small jobs direct with the householder, or leave
the industry and do not return.
In the previous boom cycle in the 2000s labour
costs were ‘controlled’ to a degree by migrant
labour. Wage data at the time indicated above
inflation rises, which indicates a tightness in
the labour market resulting from labour/skills
availability even with high levels of inward
migration. It could be argued that this might have
been exacerbated further without the net growth
of migrant workers. However any clamp down
on immigration by the government could result in
rapidly increasing labour costs, though company
strategies focusing more on returns rather than
volumes, as discussed above, will counteract
this.
Other suppliers are more concentrated, being
larger in relative size than the contractors. Many
of these are multinational and are becoming
global suppliers.
Payments to suppliers have been notoriously
slow and traditionally they have partly funded
contractors cash flow (90 day terms are not
uncommon for material and plant suppliers
and labour subcontractors). This means that
suppliers exert control over the industry and
are a powerful force in shaping the industry.
They have responded to previous down turns
by mothballing heavy plant/sites (e.g. cement
works, brickworks, etc.) and through takeovers to
maintain margins.
Sources of finance are vital for the industry to
support relative high levels of cash flow through
a project’s life cycle. Partly because of the cyclic
nature of the industry and poor access to capital
much equipment is hired in for short durations.
Thus access to capital can be seen difficult due
to the perceived high risks and low levels of fixed
capital assets.
6 Supply Chain Analysis into the Construction Industry –
A Report for the Construction Industrial Strategy.
National Construction Category Strategy for local government
9
Buyers
Generally there is some commonality of buyers
between industry sectors primarily from the
public sector. Infrastructure projects have
enabled some parts of the industry to ride out
the recession better than others. Examples
being highways (managed motorway and
improvements), tunnelling (London has provided
a range of projects such as Crossrail), flood
defence schemes (as a result of climate change)
and airports (Birmingham runway extension and
the new Terminal 2). In other areas there has
been a partial switch from new supermarkets to
distribution centres to support consumer buying
through the internet.
In summary the shape of the industry has
developed through the many construction
downturns. With the need for capital to fund
costs for areas such as temporary works,
site preparation, etc at the beginning of the
contract and the traditional ‘retention’ payment
held by clients at the end this has meant the
importance of cash flow above anything else. In
an expanding economy this has resulted in the
industry prior to the last financial crisis becoming
over reliant on key material suppliers and the
financial sector to support their cash flow,
(both directly in terms of corporate speculative
investment and indirectly through consumers, i.e.
mortgages and high levels of borrowing). With
the recognition that the last financial crisis was
largely driven by the housing and development
sectors, and much of the ‘bad banks’ consisting
of such assets, this has resulted in the financial
sector wanting to balance its risks over other
industry sectors. Historically government has
supported the industry turnaround through
public projects albeit not necessarily through
a recognised strategy. More recently this has
changed with less finance available, particularly
for developers, this has meant the industry has
struggled out of the latest recession. Overall it
can be suggested that the industry is now more
risk adverse, which should bring more stability to
the sector. However the industry needs evermore
firmer commitment to spend before investment in
skills will flourish.
There is evidence that the industry struggles to
present a career in construction as a positive
choice. Misconceptions of working conditions,
job security, prospects for career advancement
and the need to be mobile and often live away
from home in some sectors of the industry does
not appeal to everyone. The high number of
self-employed people in the industry is likely
to limit training opportunities focusing on ‘pay’
rather than ‘learning’ opportunities. However
skills shortage also occurs in the associated
professional occupations7 where training is more
likely to be supported. Whilst the sector working
practices benefit from a transient workforce and
are sensitive to wider economic performance
this is often based on a relatively small section
of the industry and the actual breadth of activity
and thus career choices are poorly publicised.
Accepting the changing nature of construction,
including the growing importance of Building
Information Modelling/Management (BIM) and
the move to off-site production means that
more needs to be done to reach sectors of the
community that would traditionally ignore the
industry.
Local authority spending illustrates the relative
small spend compared to construction
companies’ turnover and thus a limited sphere
of influence. A key area still remains in highways
although this is primarily maintenance rather than
new construction.
However this should not detract from unique
position and its ability to influence public sector
spending within local communities across
a wide arrange of new construction and
maintenance projects, including health, housing,
and education. Councils have the ability and the
networks to co-ordinate and facilitate potential
joint approaches particular in supporting the
local economy. Key in this should be training
in the skills needed to deliver the programme
of construction work in the locality and the
wider industry. Local government has a real
opportunity to make a difference to the local
economy through influencing the spend and type
of provision of construction training available.
7 UK construction: An economic analysis of the sector
10
National Construction Category Strategy for local government
MORGAN SINDALL
ATKINS
LAKEHOUSE
MATRIX SCM
VIRIDOR
AGILISYS
SITA
WATES
MOUCHEL
APOLLO PROPERTY
MEARS LIMITED
FCC
BAM
TRANSPORT
SERCO
BALFOUR BEATTY
VEOLIA
COMENSURA
WILLMOTT DIXON
RINGWAY
TOTAL
KIER
£600,000,000
£500,000,000
£400,000,000
£300,000,000
£200,000,000
£100,000,000
£0
CAPITA
LA spend analysis
Source: Local authority published £500 spend for 2013
Through local, focused and coordinated training
provision of much needed construction skills
communities can thrive through participation
in building their locality. There is also the
opportunity for local areas to “export” skills to
other areas as construction is a highly mobile
sector. For every pound spent on construction,
£2.84 is returned to the economy8.
Alongside the retail industry the construction
industry is one of the largest employers and
impacts on the economic climate of all councils.
Work done in Manchester9 has demonstrated
that by acting as a facilitator and working with
the industry this has opened up opportunities for
the training of people. This good practice has
been adopted elsewhere in the country.
8 Construction in the UK Economy: The Benefits of Investment.
UKCG 2009
9 Understanding the wider local economic, social and
environmental impact of procurement, CLES Policy Advice
January 2010
National Construction Category Strategy for local government
11
Local government
construction strategy themes
Building on the four cogs of the National
Procurement Strategy (Making Savings,
Supporting Local Economies, Leadership
and Modernisation) the strategic themes for
construction procurement have been identified as:
1. Maximising savings –
better understanding of
project outcomes including
whole life costs
• Procurement should be strategic and setting
targets not only about the transactional
costs of the design, tender and construction
process, but also about clearly understanding
what and why are the project’s ‘must haves’
and what are the ‘nice to haves’
• Transactional costs should also be considered
alongside running and end of life costs.
This should include appraising the potential
for whole-life savings that can be delivered
through designing for adaptability and ‘future
proofing’.
• Procurement process costs should be
minimised through wider adoption of existing
framework contracts where appropriate,
by reducing the amount of ‘off-contract’
spend and by increasing the uptake of
e-procurement and e-invoicing systems
• Work towards standardised tender documents
and specifications taking an approach that is
risk aware rather than risk adverse.
12
2. Supporting local
economies – facilitating
and developing sustainable
local employment through
enabling the creation of
local jobs, apprenticeships,
greater engagement with
construction SMEs, supply
chain integration, and fair
payments.
• Construction can make a significant
contribution to the local economy. councils
should consider identifying and understanding
potential local employers, their skill sets and
how they fit within the construction industry
• Be prepared to co-design with industry
facilitated training hubs that brings together
both local and national companies to
demonstrate a commitment to the longer term
planning of training potential future employees
of the industry
• Facilitate communicating opportunities
within the industry to hard to reach parts
of the community for the industry, including
opportunities for women, ex military, etc.
• Support and encourage meet the buyer events
to enable local supply chains to engage with
main contractors, win work and form consortia.
National Construction Category Strategy for local government
3. Modernisation – working
smarter through developing
the ‘intelligent client’,
improving efficiencies
through increasing
collaboration, using more
technology such as Building
Information Modelling (BIM)
and enabling innovation to
maximise value to the client.
• With increasing financial pressures and
the need to demonstrate efficiencies in
procurement councils are encouraged
to establish partnering and collaboration
arrangements with other councils and the
wider public sector as a way of both sharing
knowledge and good practice, and as a
way of saving on procurement costs and
increasing the potential of savings through
scale economies.
Demonstrating leadership
– to increase the impact of
collaboration and sharing
experiences.
• In order to pursue both community and local
economic interests, and more efficient service
delivery councils need to demonstrate both
leadership and a commitment to engage with
others who may have better resources
• There needs to be a more strategic national
conversation with Local Government’s main
suppliers and national bodies representing
micro, small businesses, the voluntary and
community sector and social enterprises
which will be supported through the National
Advisory Group.
National Construction Category Strategy for local government
13
Making it happen
A number of key action strands are
recommended which will support the
construction strategy themes and suggest what
councils need to do under each theme.
for both client and contractor. Using such an
approach across the whole of local government
construction should enable further SME
engagement.
Construction procurement processes such as
Two Stage Open Book, Cost-led Procurement
and Integrated Project Insurance are based on
tried and tested methodologies across Europe.
It will be still important to choose an appropriate
approach to achieve an effective output that
has a clear risk based methodology and with
clear business outcomes. Such new models of
procurement10 have clear objectives that clients
need to sign up to if project outcomes are to be
improved:
BIM: Building Information Modelling is a spatial
database that at the design stage enables the
building/infrastructure to be better understood in
terms of its functionality, at a construction phase
shows how the asset can be best constructed to
minimise congested locations, and records the
location and attribute of every component of that
asset.
• a clear client statement of the project’s
functional outcomes
• identified typical current costs based on
available data including benchmarking and
established a challenging cost ceiling
• encouraged high levels of supply chain
engagement, and support innovation through
appropriate relationships and behaviours with
the industry
• designed systems to reduce the commercial
risk of the project from procurement,
construction and through to commissioning.
The key strands are:
Effective Frameworks11,12: Evidence suggests
that by using defined frameworks as established
by the National Association of Construction
Frameworks (NACF) benefits can accrue not
only in terms of improved construction times and
costs, and a reduction in disputes and claims but
also across a wide range of initiatives including
an increased use of SMEs, the take up of fair
pay, apprenticeships, waste diversion from
landfill, etc.
Fair Pay: Support the industry’s commitment
to working towards thirty day payments and
zero retentions as set out in the Construction
Supply Chain Payment Charter13 and enshrine
in contracts the Fair Pay Commitments; also
promote the use of project bank accounts where
appropriate.
PAS 91: Has established a set of common
criteria that are widely applicable for the
prequalification stage of the tendering process.
Its intention is to reduce the need for multiple
and repetitive completion of unproductive
documentation, to increase a consistent
approach across clients, and reduce costs
Early Contractor Engagement: Consider early
contractor and supplier engagement to ensure
‘buildability’, value analysis and improved risk
management.
10 New Models of Construction Procurement, Cabinet Office
January 2013
13 https://www.gov.uk/government/news/government-and-industryagree-new-construction-payment-charter 22nd April 2014
14
11 Effectiveness of Frameworks, Local Government association,
September 2014
12 Exploring the Value of Investing in a Manchester Construction
Framework, CLES Policy Advice June 2011
National Construction Category Strategy for local government
Local Opportunities: Develop local engagement
by publicising as early as possible future
contracts and likely skill needs, engaging in
market consultation, and ‘meet the buyer’;
understand the local skill base and facilitate
the publication of databases signposting these
to national contractors. Employment and Skills:
Work with local skills agencies to support training
and skills development using contract clauses to
support Employment and Skills Plans.14 Link such
Skills Plans to contract turnover.
Collaboration: Seek to leverage learning by
seeking out and sharing project experience with
other LAs and public sector bodies recognising
that economies of scale can sometimes
outweigh bespoke solutions to universal
organisational needs.
Linking strands to themes
Strand
Strategic Themes
Making
savings
Local
economy
Modernisation
Leadership
Models of procurement
PAS 91
BIM
Effective Frameworks
Fair Pay
Early engagement
Local Opportunities
Employment and Skills
Collaboration
Through supporting case studies it is intended
to include best practice examples in each of
these areas and a number of milestones, with
at least one under each strand. For example
by July 2015 all councils would be expected to
have adopted, or working towards PAS 91 as the
standard PQQ for all construction.
14 The National Skills Academy for Construction: Contractor
and Developer Guidance May 2012.
National Construction Category Strategy for local government
15
How LGA and NAG will
support delivery
The key programme management outputs being
developed are:
• creation of a construction web-page to include
case studies etc (www.lg-procurement.org.uk)
• a functioning National Construction Category
Management Programme Board reporting to
NAG
• one voice engagement with Government,
regional groups, framework owners, and
others
• benefits management and progress reporting
• risk management
• implementation of the LG Representative
model, outlined in the NPS, with key
construction suppliers
• provision of an Effectiveness of Frameworks
Report
• establishing a good practice standard
(kite mark) for construction frameworks
• developing and promoting good practice in
relation to apprentices and training
• provision of guidance and advice for elected
members
• collaborating and partnering with key
organisations to enable continuous
improvement.
16
National Construction Category Strategy for local government
Appendix 1: Industry structure
by size of private contractor
Size of firm
(by number
employed)
Number of
firms
Number of
firms (% of
total)
Employment
(1,000s)
Employment
(% of total)
Output (£m) Output (%
of total)
0
40,681
16.2%
40.7
3.4%
1
92,635
36.9%
92.6
7.8%
£8,889
7.3%
2-3
66,054
26.3%
152.2
12.8%
£11,920
9.8%
4-7
29,014
11.6%
145.8
12.2%
£9,091
7.5%
8-13
11,425
4.6%
112.9
9.5%
£8,941
7.3%
14-24
5,985
2.4%
105.7
8.9%
£11,693
9.6%
25-34
1,757
0.7%
50.8
4.3%
£5,495
4.5%
35-59
1,756
0.7%
77.2
6.5%
£8,566
7.0%
60-79
523
0.2%
35.8
3.0%
£4,890
4.0%
80-114
406
0.2%
38.1
3.2%
£5,648
4.6%
115-299
481
0.2%
84.7
7.1%
£11,159
9.2%
300-599
136
0.1%
56.0
4.7%
£9,779
8.0%
600-1,199
51
0.02%
41.8
3.5%
£4,861
4.0%
1,200 and
over
60
0.02%
158.2
13.3%
£20,763
17%
All firms
250,964
1,192.46
£121,696
Source: Construction Statistics – No. 15, 2014 Edition (figs for Q3 2013); Tables 2.9, 3.1, 3.3
National Construction Category Strategy for local government
17
18
2
4
1
7
10
11
13
6
8
59
16
3
98
26
9
30
20
18
15
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
4,402.80 5,051.20 179.5
National Construction Category Strategy for local government
Source: www.theconstructionindex (11/714)
Costain
Mace
Bouygues & Subsidiaries
Willmott Dixon Skanska
Vinci UK
Enterprise
Amey UK
Wates
ISG
Keller
Galliford Try Laing O’Rourke
BAM Construction/Nuttall
Morgan Sindall
Mitie
Interserve
1,093.60 90
1,052.10 8.9
43.4
934.5
950.5
986.3
874.3
26.1
22.8
1,017.80 1,037.80 20.9
1,034
1,092.30 1,117
1,106.70 1,112.70 15.3
1,125.40 1,086.90 -44.6
1,146
1,193.60 1,033.90 25.7
1,281.50 1,195.60 3
1,317.50 1,154.30 43.5
1,504.10 1,284.20 63.1
1,622.40 1,746.30 27.4
1,647.30 1,754.60 32
2,047.10 2,226.60 34.2
2,120.50 2,002.50 58.8
2,369.60 2,319.60 182.9
Kier Group (Inc. May Gurney) 2,725.80 2,694.40 82.3
Carillion 75
2
11,035
10,896
5
1
Balfour Beatty
Latest
Previous Latest
turnover turnover pre(£m)
(£m)
tax
profit
(£m)
Rank by Rank by Company
turnover profit
Construction companies
23.9
20.5
37.2
12.9
44.9
19.8
-135.2
84.3
40.1
9
21.9
41.7
28.6
25.6
40
94.5
67.1
91.3
142.8
246
2.8
2.4
2.1
0.9
4
1.4
-4
7.9
2.2
0.2
3.3
4.2
1.7
1.9
1.7
2.8
7.7
3
4.1
0.7
2.4
2.3
3.6
1.2
4
1.8
-12.4
7.7
3.9
0.8
1.9
3.3
1.6
1.5
1.8
4.7
2.9
3.4
2.8
2.2
19
20
17
16
12
13
15
14
18
10
11
9
8
7
6
5
4
3
2
1
17
22
12
27
7
24
100
5
10
32
20
9
15
16
11
3
6
4
2
1
Previous Latest Previous 2012
2012
pre-tax
margin margin
rank by rank by
profit
(%)
(%)
turnover profit
(£m)
Appendix 2: Leading
companies by sector
National Construction Category Strategy for local government
19
McCarthy & Stone
Countryside Properties
Avant Homes
(formerly Gladedale)
Galliard
Cala
Miller Homes
Stewart Milne
Fairview
Telford Homes
Kier Homes
11
12
13
14
15
16
17
18
19
20
Previous
turnover
Change
13.70%
£140m
£142.4m
£205.1m
£211.1m
£216.9m
£240.8m
£248.1m
£300m
£307.6m
£310.8m
£378.4m
£525.7m
£556m
£604.8m
£639.6m
£149.1m
£124.4m
£117.4m
£268.1m
£220.9m
£253.7m
£205.3m
£252.2m
£291.4m
£257.7m
£373.6m
£408m
£425.5m
£478.9m
£636.7m
-6.10%
14.50%
74.70%
-21.30%
-1.80%
-5.10%
20.80%
19%
5.60%
20.60%
1.30%
28.80%
30.70%
26.30%
0.50%
£1110.7m £1004.2m 10.60%
£1372.6m £1041.1m 31.80%
£2085.9m £1721.4m 21.20%
£2295.5m £2019m
£2606.2m £2323.4m 12.20%
Latest
turnover
Source: Construction News 20/5/14
Bloor
10
Linden Homes
6
Crest Nicholson
Bellway
5
9
Berkeley
4
Bovis
Persimmon
3
8
Taylor Wimpey
2
Redrow
Barratt
1
7
Company
Rank
Top 20 house builders by size 2013
Previous Pre-tax
pre- tax profit
profit
change
£215.4m 50%
-£7.1m
£9m
£13.9m
-£5.7m
-£0.7m
£12.6m
£18.7m
-£4.4m
£3.1m
£8m
£29.5m
£86.8m
£78.8m
£70m
£47.7m
-£8.9m
£3.1m
£7.4m
£0.5m
-£17.2m
£12.4m
£18.2m
-£20.6m
-£1.7m
£2.8m
£24.5m
£62.1m
£533m
£43m
£32.9m
7.80%
16.50%
14.20%
11.60%
7.50%
12.70%
19.70%
15.50%
11.70%
7.40%
Pre-tax
profit
margin
6.80%
-2.70%
-0.30%
5.20%
7.50%
-1.50%
1%
-
-5%
190.30% 6.30%
87.80%
-
-
1.60%
2.70%
-
-
185.70% 2.60%
20.40%
39.80%
47.80%
62.80%
45%
£140.9m £105.3m 33.80%
£270.7m £214.8m 26%
£323m
£268.4m £181.8m 47.60%
£192.3m £110.7m 73.70%
Latest
pre- tax
profit
-6%
2.50%
6.30%
0.20%
-7.80%
4.90%
8.90%
-8.20%
-0.60%
1.10%
6.60%
15.20%
12.50%
9%
5.20%
10.50%
20.60%
12.50%
9%
4.80%
3989
2260
1900
2500
4712
10016
4570
23495
-
-
16388
14638
14162
11300
32991
25684
74407
70628
57654
4180
1969
2700
3500
4430
9600
-
6400
19376
-
-
16959
13776
12356
10500
31136
26021
68200
65409
54209
30/06/2013
31/03/2013
31/12/2012
30/06/2013
31/12/2012
30/06/2013
31/12/2013
31/12/2012
30/09/2013
31/08/2013
30/06/2013
31/10/2013
31/12/2013
30/06/2013
30/06/2013
31/07/2013
30/04/2013
31/12/2013
31/12/2013
30/06/2013
Previous Current
Previous Last
pre- tax landbank landbank accounts
profit
margin
20
National Construction Category Strategy for local government
Name
Laing O’Rourke
JCB
Mott MacDonald
Mace
Arup
Willmott Dixon
Keepmoat
Sir Robert McAlpine
Wates
Bloor Investments
The Miller Group
Shepherd Group
Bowmaker & Kirkland
Position
9
17
38
41
51
53
62
66
67
80
81
84
94
Con
Building
Housebuilder
Builder & M
Con
Con
Housing Re
Con
Consultancy
CPM
Consultancy
CEM
Eng &Con
Sector
8/13
6/13
12/13
6/13
12/13
10/13
3/13
12/13
3/13
12/13
12/13
12/13
3/13
Year end
660
748
755
760
852
862
886
1,023
1,031
1,181
1,215
2,680
3,228
t/o £ million
32
33
11
62
17
17
51
15
77
35
72
313
131
Profit £m
1,351
3,228
1,306
2,711
2,074
2,054
3,171
3,070
10,828
3,716
13,990
8,547
15,351
Staff number
Private companies (position is relative to all UK private companies)
Notes
National Construction Category Strategy for local government
21
Local Government Association
Local Government House
Smith Square
London SW1P 3HZ
Telephone 020 7664 3000
Fax 020 7664 3030
Email [email protected]
www.local.gov.uk
© Local Government Association, January 2015
For a copy in Braille, larger print or audio,
please contact us on 020 7664 3000.
We consider requests on an individual basis.
L15-12