Major contractors going cool on road maintenance market

Grant Prior 4 months ago
Share

Major contractors are cooling on the road maintenance market as Highways England changes the way it manages contracts.

The Enquirer understands that a number of Tier 1 contractors are looking to work-out existing maintenance deals but not bid any new work as they focus purely on capital projects.

The move comes as Highways England continues to take more decisions in-house under its asset delivery model.

Highways England staff are taking a growing number of decisions over maintenance spending and are looking to engage more directly with Tier 2 and 3 contractors further down the supply chain.

Big name firms fear further erosion of maintenance margins and are looking to focus their resources elsewhere.

One industry source said: “Big players see their margins being eroded here and are focusing on more profitable new infrastructure projects.

“I’m sure you’ll see some big names pulling out of the market in the near future.

“And Highways England won’t just be able to start talking to the Tier 2s and 3s like they do to the Tier 1s at the moment.

“The real construction world just isn’t like that.”

The first area contract under the asset delivery model was awarded by Highways England in 2016.

Maintenance deals across the country are currently operated by Amey, Ringway, Kier and Costain Jacobs with the remaining six areas due to be introduced on a rolling programme until 2022.

Another industry source said: “Maintenance is definitely seen as a tough area to make a decent return.

“We have all seen how the world is changing for major contractors and their business model will be to focus on higher return sectors.

“Highways England will have to realise that contractors – whatever level in the supply chain – need to make a sustainable margin going forward.”

Latest news

Two workers killed on John F Hunt demolition site

Victims worked for demolition specialist and Nationwide Platforms
2 days ago

Galliford Try signs two major road deals worth £435m

Biggest contracts so far by Highways Agency Regional Delivery Partnerships framework
2 days ago

Yorkshire Water reveals winners of £1bn civils deal

18 contractors win places on AMP7 programme: Full list
3 days ago

Plan for Salford’s tallest skyscraper

Hong Kong developer unveils residential tower plan for Greengate area
2 days ago

London developer commits to zero carbon buildings by 2030

Great Portland Estates aims for zero carbon offices in 10 years
2 days ago

United Living hails record results

Social housing contractor eyes build to rent sector
3 days ago

Balfour Beatty starts tunnelling at Hinkley Point

Firm starts first of three underground tunnels for cooling water
3 days ago

Director sentenced after worker impaled on spike

Court hears how defective lorry loader crane caused horror injury
2 days ago

Kier plunges to £245m loss

Kier chief Andrew Davies says core business is in good shape as recovery plan advances
3 days ago

Construction Manager of the Year crowned

CIOB to review awards after all 80 finalists this year were men
4 days ago

Lovell signs deal to build 4,000 West Midlands homes

Lovell Partnerships to build homes on brown field land over next eight years
4 days ago

Engineer killed working on Waterloo Station travelator

Fatal accident during maintenance work at underground station
4 days ago

Chain fails during crane lift on Robertson hotel site

Lifting operations suspended at site by contractor
4 days ago

Caddick lands £10.7m first phase of Cheshire business park

Developer Chancerygate awards its largest ever contract
4 days ago

HS2 presses ahead with £3.5bn phase 2a bidders day

October bidders day for design and delivery partner and seven civils packages on West Midlands to Crewe route
4 days ago

Public inquiry into hospital construction problems

Patient concerns lead to probe into two Multiplex hospital jobs
4 days ago

BAM wins £20m Leeds business school block

Work will start in November on six-storey block for Leeds University
4 days ago

McLaughlin & Harvey lands Liverpool2 phase 2

£20m contract to expand deep water container terminal
4 days ago

Potash mine cash crisis forces construction slowdown

Developer has six months of cash left for construction
5 days ago

Investment bank to build 13-storey tech tower in Glasgow

Construction to start next year on new 270,000 sq ft building for JPMorgan Chase
5 days ago

Boost your online presence – join the Enquirer Directory

Site for suppliers and buyers showcases products, services and latest stories
1 year ago

Third contractor to finish jinxed school job

Local contractor Feltham Construction to complete Newbury school project
5 days ago

Aberdeen hospital project cost review as price soars

Graham final tender price reported to be 20% above original cost estimate
5 days ago

Sisk confirmed for £70m York Central civils

Firm will work up designs for a bridge, spine road and National Rail Museum rail link
5 days ago

Aldi plans new supermarket every week

840-store network to be expanded to 1,200 by 2025
5 days ago

Morrison to build £63m innovation hub in Kilmarnock

HALO to be build business centre on former home of Johnnie Walker whisky
6 days ago

Shapps halts woodland clearance during HS2 review

Transport secretary says woodland removal must wait for Oakervee review outcome
6 days ago

£800m Fawley oil refinery expansion to start this year

Ultra-low sulphur diesel plant will employ 800 during construction
6 days ago

Watkin Jones gets go-ahead for Leicester waterside scheme

Mixed student and rental flats scheme at Bath Lane approved
6 days ago

Balfour and Vinci JV signs £1bn HS2 station deal

Contract awarded while procurement challenge continues
5 days ago

Contractor services