‘Team UK’ construction consortia set up to bid for overseas contracts

Led by the Department for International Trade (DIT), Infrastructure Exports: UK (IE: UK) will bring together 17 leading UK construction firms and consultants which, individually, have worked on large-scale global projects including Crossrail and the 2020 Dubai World Expo. IE: UK board members will meet three times a year to choose the projects they wish to bid for as a single business, with government support.

Wates Group chair James Wates, who will co-chair IE: UK with international trade minister Greg Hands, described the new initiative as “a timely, fresh and strategic approach”.

“The UK has a wealth of expertise in developing major infrastructure projects,” he said.

“This is a great opportunity for business to work together, alongside the government, to target overseas projects, as many countries around the world plan to develop their physical infrastructure to support their own economic growth,” he said.

Global infrastructure expert Graham Robinson of Pinsent Masons, the law firm behind Out-Law.com, said that the initiative “could not have come at a better time” for the UK industry; given the potential for the ongoing uncertainty around the UK’s future trade deal with the EU to impact on investor confidence.

“Britain has got what is widely regarded as the best engineering, construction management, architectural design, cost management and creative infrastructure legal skills globally to offer infrastructure planning, design, construction and operations in new export markets for Britain,” he said. 

IE: UK board members include representatives from infrastructure firms Carillion, Bam Nuttall and Mace Group, Crossrail chair Sir Terry Morgan and Sir John Armitt, deputy chair of the National Infrastructure Commission. The board’s job will be to select international projects suitable for Team UK bids and then identify the companies with the necessary expertise to form joint ventures and bid for those projects.

The DIT and board member British Expertise International will provide support to the group by providing a link to their overseas networks. In particular, local DIT staff in 53 overseas countries will identify potential projects in their markets and feed these back to the board. IE: UK will also work closely with the UK’s export credit finance agency, UK Export Finance (UKEF), which provides finance and export insurance to UK firms seeking to export goods and services where there are benefits to the UK.

UKEF’s credit risk appetite was doubled to £5 billion by the government at the last Autumn Statement. It has already provided hundreds of millions worth of financing to support UK firms seeking to secure major contracts overseas, including $285 million worth of support for Carillion’s contracts to deliver the first two phases of Dubai’s World Trade Centre. It has also brokered a number of recent infrastructure deals in Africa.

Global annual construction investment is expected to grow by 85% to $15.5 trillion by 2030, according to the DIT; which also cited research showing that large infrastructure projects tend to award their bigger contracts to consortia rather than individual companies.

“Our latest estimates, based on detailed research and modelling, for global infrastructure and construction output are higher, at $16.7 trillion in 2014 prices by 2030, which represents growth of some 60% over today’s $10.4 trillion market globally,” said Graham Robinson of Pinsent Masons, who was one of the authors of the Global Construction 2030 report. “Either way, growth globally is huge.”

“Of this $6.3 trillion growth in annual infrastructure and construction output, there is a significant difference between developed countries and emerging markets. For developed countries such as Western Europe, UK, North America, Australia, Japan and others, growth will only be 30% to 2030, equivalent to an additional $1.4 trillion of annual output. This might sound a lot, but strip out the US and Australia, which represents 50% of this total, and growth does not look good,” he said.

“Emerging markets, on the other hand, represent significantly higher growth prospects, and are projected to grow by 85% from today through to 2030, or an additional $4.9 trillion of growth in annual infrastructure and construction output by 2030. Emerging Asia is where most of the growth is, with markets such as India, China and ASEAN countries shooting forward at a significantly higher pace of growth. India will become the world’s fastest growing large infrastructure and construction market over the period to 2030, outstripping China,” he said.

“Despite lowering oil revenues, sub-Saharan Africa and countries in the MENA region will also grow to represent a $1.3 trillion market by 2030, with sub-Saharan Africa doubling in size by 2030,” he said.