Major project delivery could be “impossible” if delivery pipelines across multiple sectors surge at once, according to analysis by consultants at RSM.
In a pre-Budget forecast, RSM’s head of construction Kelly Boorman (pictured) identified the risk if the government pushes ahead with plans to boost infrastructure work across multiple major industries at the same time.
She warned that plans to deliver major advances in the housing, defence and energy sectors could tie up the workforce, risking progress on major project delivery.
“As the government aims to accelerate housing demand, with new incentives to address grid capabilities, an increased pipeline in 2028 and 2029 across all sectors could place significant constraints on the supply chain and workforce,” Boorman said.
“This will make delivery of major projects impossible should they be mobilised alongside one another.”
She called for “more clarity” on how funds will be awarded to infrastructure across all sectors, to ensure there is a constant supply of work but still enough workers to complete the jobs.
Defence has taken centre stage in recent months, as prime minister Andy Burnham in September committed to delivering the £298bn Defence Investment Plan (DIP) in full. Boorman said she does not expect the government to pull back from that commitment in the Autumn Budget, which will be delivered on 28 October.
That focus on defence work is set to drive the construction sector forward in 2027, Boorman said.
Burnham’s commitment to the defence industry will “drive demand for essential infrastructure, requiring significant construction expertise to deliver advanced manufacturing plants, warehousing, and logistics and security infrastructure”, Boorman said.
It will also “aid sentiment” in the construction industry moving forward, she added.
Former chancellor Rachel Reeves announced the DIP in July, alongside plans to shelve up to £700m-worth of road projects to help fund it. Projects at risk included the £297m A46 bypass and the A38 Derby Junctions.
Reports this week suggested the government could also slash funding to the Boiler Upgrade Scheme in a bid to find more cash for defence.
Boorman also addressed sector concerns surrounding the gulf between major contract awards and the start of work onsite.
“The volume and the fragmentation of the supply chain and the pass-through of some of that inflation cost, [means] the pricing doesn’t necessarily match that extra build cost” once the site work gets underway, she said.
“Speeding up the process so that enabling awards and mobilisation are closer together […] would be something that is very much needed to help those thin margins,” she said. If those gaps remain, government departments should reprice the work to keep it relevant, she added.
Boorman also warned that insolvencies are set to increase again in the coming months and leading into 2027, as high prices and inflation continue to bite.
“I think there is a lot of tension within that supply chain,” she said.
Monthly administrations did fall in September, though analysts warned rising energy, fuel and supply-chain costs were making it harder to price new work and predict affordability.
The construction sector has been the hardest hit by insolvencies, making up 17 per cent in the latest rolling year average, and Boorman warned she expects that will “continue to be the case”.