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Future of Construction special report 2017

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RACONTEUR.NET FUTURE OF CONSTRUCTION 03 13 / 06 / 2017 /future-construction-2017 Although this publication is funded through advertising and sponsorship, all editorial is without bias and sponsored features are clearly labelled. For an upcoming schedule, partnership inquiries or feedback, please call +44 (0)20 3877 3800 or e-mail info@raconteur.net Raconteur is a leading publisher of special-interest content and research. Its publications and articles cover a wide range of topics, including business, fi nance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in The Times and The Sunday Times as well as online at raconteur.net The information contained in this publication has been obtained from sources the Proprietors believe to be correct. However, no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the Publisher. © Raconteur Media RACONTEUR DANNY BUCKLAND Award-winning health journalist, he writes for national newspapers and magazines, and blogs on health innovation and technology. NICK EASEN Award-winning freelance journalist and broadcaster, he produces for BBC World News and writes on business, economics, science, technology, construction and travel. JIM McCLELLAND Sustainable futurist, his specialisms include built environment, corporate social responsibility and ecosystem services. JOHN OSBORNE Freelance industrial journalist, he has written extensively on construction, engineering and maintenance. CONTRIBUTORS PUBLISHING MANAGER Jack Pepperell DIGITAL CONTENT MANAGER Jessica McGreal DESIGN Samuele Motta Grant Chapman Kellie Jerrard PRODUCTION EDITOR Benjamin Chiou MANAGING EDITOR Peter Archer DISTRIBUTED IN FUTURE OF CONSTRUCTION @raconteur /raconteur.net @raconteur_london A vast army of talented en- gineers and other con- struction professionals are working f lat out to complete massive projects in the UK, including Crossrail and the Thames Tideway Tunnel. Will Brexit affect investment in these construction projects, as well as the cost and availability of materi- als and labour? "The infrastructure projects in which we invest should experience limited fallout from Brexit," accord- ing to Giles Frost, chief executive at International Public Partnership, the FTSE 250 infrastructure fund which is a member of the Bazalgette Consortium investing in and deliv- ering the Thames Tideway scheme. "In the 11 months since the referen- dum, we haven't seen any slowdown in investors wanting to invest in UK infrastructure projects." Mr Frost, who is also chief execu- tive of Amber Infrastructure, adds: "Infrastructure investment is low risk and uncorrelated to the wid- er equity markets. The day after the referendum, the share price of International Public Partnerships increased while the broader FTSE went down because of the immedi- ate uncertainty. Brexit has had no negative impact on investment in infrastructure." However, fear and scepticism sur- round Brexit. "Uncertainty is never good for business," he says. "Brexit has caused unnecessary confusion and navel gazing. It is an extra com- plexity that nobody predicted, but thanks to the long-term nature of our horizons, infrastructure invest- ment is well positioned to weather this uncertainty." But a major concern is the cost of hiring the tunnel boring machines used on major projects. David O'Reilly, vice president of KBR, for- merly Kellogg Brown & Root, says plant costs could soar, but expects fi nancing of the machinery to have been managed by buying euros at forward rates, thereby minimising the eff ect of detrimental fl uctua- tions in the exchange rate. Mr O'Reilly, who is project direc- tor of the Qatar Expressway Pro- gramme, urges UK construction professionals to look beyond Eu- rope. "For UK businesses, the world is your oyster. We have considerable skills. These skills have no associa- tion with Brexit. There is an appetite for UK professionals. That is why KBR has been trading successfully for the last 30 to 40 years," he says. The U K is a world leader in con- str uction and civil engineering, but labour costs are another ma- jor concern. "U K constr uction is becoming increasingly depend- ent on skilled labour, as well as unskilled labour, from overseas," says Mr Frost. It is possible labour costs will go up if the U K is less able to access labour from over- seas, he says, a lso expressing con- cern that immigration controls might be introduced which could prevent or deter workers norma l- ly resident outside the U K from coming here. Gra ha me Ca r ter, ma na g ing di- rector of Matchtech, a leading eng ineer ing recr uit ment a gency, says: " To deliver project s sim ila r to t he sca le of Hig h Speed 2 a nd T ha mes T ideway, some coun- t r ies, including Duba i a nd Qata r, implement a v isa system. Com- pa nies t hat w in cont ract s a re a l- located a set number of v isa s to g ua ra ntee enoug h ta lent to com- plete t he project successf u lly." Although there is a considerable amount of optimism about willing- ness to invest in large infrastructure projects and confi dence in the UK's construction workforce, many peo- ple are still worried. Andrew Goldman, group mar- keting and technology director at Rydon Group, a construction, devel- opment, maintenance and manage- ment group, explains: "The UK con- struction sector shrank after the UK voted to leave the EU, but has shown some recovery subsequently." Also, he is concerned about the supply of labour. "There are simply not enough British workers to meet the demands of the construction industry and Brexit threatens to di- minish EU resources further," says Mr Goldman. According to London Assembly fi gures in February 2017, 25 per cent of construction workers in the capital were from the Europe- an Union. The cost of materials is anoth- er worry. He says: "Sixty four per cent of the building materials used in the UK are imported from the EU. The EU is also the largest market for the construction mate- rials we export, purchasing 63 per cent. Brexit will potentially lead to heav y duties or limits on quanti- ties of materials." In mid-May, the Brexit Infrastruc- ture Group of the Institution of Civ- il Engineers sent an open letter to leaders of the political parties, out- lining the risks faced by the infra- structure sector ahead of the gener- al election and Brexit negotiations. It said the government must clar- ify the UK's future relationship with the European Investment Bank following departure from the EU. "The Brexit Infrastructure Group has offered a three-part strategy to ensure Brexit does not disrupt the delivery of the planned pipeline of major infrastructure projects, which underpins gov- ernment's current efforts to drive up UK productivity. This planned pipeline will require £500 billion of private investment over the next ten years," the group said. But the Royal Institute of Char- tered Surveyors (RICS) warns of dif- fi cult times ahead. RICS says the UK construction industry is "already facing skills shortages, jeopardising a predicted £500-billion project pipeline" and adds that "8 per cent of the UK's construction workforce comes from the EU". "Post-Brexit, should the UK lose access to the single market, 176,500 jobs could be under threat," RICS warns, adding that "30 per cent of construction professionals sur- veyed revealed that hiring non-UK workers was important to the suc- cess of their businesses". Will Brexit shake UK construction? Jeff J Mitchell/Getty Images 64% of the building materials used in the UK are imported from the EU JOHN OSBORNE 63% of the construction materials exported from the UK go to the EU 8% of the UK's construction workforce come from the EU Opinion is divided on whether Brexit will undermine mega construction projects in the UK, with some experts warning of troubled times ahead OVERVIEW Construction of the new £1.4-billion, 1.7-mile bridge over the Firth of Forth, South Queensferry PUBLISHED IN ASSOCIATION WITH

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