By Paula Planelles Manzanaro Property Correspondent
Smaller projects will become the main objective for construction companies as the Olympics building boom comes to an end. Smaller companies will lose their influence and profitability due to the financial crisis, the biggest construction firms will look for smaller schemes to maintain workload. Plans under £10m reached up to 35 per cent by the largest 50 companies last year, compared with 21 per cent in 2008.
Local contractors will now have to compete with larger firms from across the UK, who will now focus on smaller projects to maintain workloads and maintain headcounts. "The Olympic boom" is now coming to an, ambitious projects have fallen by half, according to a report published in the Financial Times.
The average value of individual schemes for the biggest 50 contractors in Britain is at its lowest level since 2008. Contract values fell from £10.3m in 2010 to £8.7m in 2011, according to Glenigan, an economic research consultancy.
The deterioration of contract values is expected to continue during this year as the Olympics construction projects have nearly finished.
Allan Wilen, economics director at Glenigan, stated: “The last few years, the Olympics and other important schemes have helped boost the major contractors, but as these projects are completed and fall away there isn’t another pipeline of other projects to fill the space”. With big constructions companies focusing on small projects, local constructors are being forced to leave construction plans or even to be out of businesses. Brian Berry, director of external affairs at the Federation of Master Builders, said: “The market reality is that SMEs are getting squeezed. Larger contractors have more flexibility to go in low [on price] for smaller jobs and make it up on larger work but SMEs don’t have that option”.
In general, the construction sector faces its lowest level in the British economy since 2000 (8 per cent). However, the situation is much better in London. The capital accounted for 27 per cent of work won by the 50 top firms in 2011.
