Healthy outlook for new work from the hospital building programme

Latest News Mon, Dec 4, 2023 7:05 AM

With the Government keen to see faster progress on its hospital building programme ahead of a general election, health-related construction stands out as one of the most promising sectors for new work in 2024.

New construction activity in the sector slowed this year as strikes and growing waiting lists diverted NHS management time and resources, delaying the start of project starts.

But after a relaunch of the £20 billion Hospital 2.0 Building Programme earlier this year involving 45 projects (including five with RAAC problems), there are signs of growing momentum in the sector which will translate into new contracts.

Project approvals in the sector have risen by 14% in the first nine months of this year compared to last year. The new Glenigan Construction Forecast 2024-25 predicts that the value of underlying project starts (under £100 million) in the sector will rise by 11% in 2024 with a further 2% pencilled in for 2025.

The South East looks set to be one of the busiest regions for new health-related construction next year with underlying project approvals on course to be worth almost £1.1 billion this year, up from around £875 million in 2022.

One significant source of new health work in the region, which is currently tendering, is the £200 million hospitals framework for Mid and South Essex NHS Trust Consultancy Framework, which is set to be run from next March. The framework, based in Basildon, involves new, refurbishment and extension work and will run for 49 months (Project ID: 23180705)

The East of England is also likely to see a marked upturn in health construction. According to the new Glenigan Construction Forecast 2024-25, the value of underlying health project approvals in the region is on course to surge from around £300 million last year to close to £700 million in 2023.

One major project in the region where tenders have been returned and work is due to start early in the new year is a £65 million hospital extension in Bedford for the local NHS foundation trust. Work on the scheme, which involves the construction of a new enhanced services centre plus infrastructure work, is set to run for 30 months (Project ID: 22381875).

Elsewhere in the region, tenders have been returned and work is due to start next summer on the £220 million Cambridge Cancer Research Hospital. Laing O’Rourke is the construction manager on the scheme at the city’s Addenbrookes Hospital, which is set to run for 30 months (Project ID: 21561465).

Moving north, the new work pipeline for health construction activity is also looking stronger in Yorkshire & and Humberside. The value of underlying health approvals in the region is likely to approach £500 million this year, up from around £300 million in 2023, according to the new Glenigan Construction Forecast.

A £27 million extension/refurbishment to Chapel Allerton Hospital (pictured) for Leeds Teaching Hospital NHS Trust is amongst the schemes due to get underway next year. Kier Construction North & Scotland is the main contractor on the project where detailed plans have been submitted and work is set to start in the spring and run for 10 months (Project ID: 22318904).

Beyond next year, health-related construction activity should benefit from the emphasis both main political parties are putting on NHS investment ahead of the general election.

According to the latest Glenigan Construction Forecast, a 3.8% annual real-term growth in NHS capital funding is expected to support an increase in starts from 2024 as the current front-line service delivery crisis eases.

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