Signs of recovery for underlying health projects

There are encouraging signs that underlying health projects are staging a recovery.

While problems remain with the government’s new hospital programme, health projects at an underlying level (schemes valued below £100 million) showed signs of significant growth in the second quarter of the year.

Glenigan’s construction industry research reveals that the value of underlying projects starts surged by 50% in the three months to June compared to the first quarter of this year.

Healthy starts

Health projects starting on site in the second quarter of this year include a £14.5 million MRI imaging centre at Milton Keynes Hospital (Project ID: 20472058). Glenigan’s market research shows that Morgan Sindall is carrying out this work.

Elsewhere, Premier Modular has just begun work on a £19.8 million extension - known as The Barn - to Maidstone Hospital (Project ID: 22224198).

At the opposite end of the country, Graham Construction is now working on the £32 million second phase of an extension to West Cumberland Hospital (pictured) for North Cumbria University Hospital NHS Trust (Project ID: 20315559).

Regional spread

The rise in project starts in the second quarter was spread across the UK with most regions experiencing an increase.

Glenigan’s economics director Allan Wilén explains: “In Yorkshire & the Humber, for example, the value of project starts doubled against the previous year to £69 million, which accounts for 9% of the total value of project starts in the health sector.

“London also accounted for the same share and the value of work starting on site in the capital grew by 54% compared with 2022 levels to £65 million.”

Work starting on site in Yorkshire included a £14 million daycare theatre unit at St Luke's Hospital in Bradford (Project ID: 23098797), while in London Graham Construction has begun work on a £41 million extension to the School of Public Health at Imperial College (Project ID: 17449495)

Pipeline boost

Work earlier in the pipeline is also improving and the underlying value of detailed planning approvals increased by 37% in Q2 2023 compared to the same stage a year ago. The total value of underlying work given approval was £981 million, which was also 12% higher than the first quarter of this year.

Health schemes at an underlying level securing planning approval in the second quarter of this year include a £15 million Community Diagnostics Centre in Newmarket for West Suffolk Hospital NHS Trust (Project ID: 23056340).

Plans for a £10.9 million adult acute inpatient mental health unit on the site of the former Norton Lea Hospital in Boston also have detailed planning approval (Project ID: 23088860).

Contractor boost?

A recent National Audit Office report has warned about ‘bunching up’ of projects in the second phase of the government’s hospital building programme into 2025, which could overload contractors.

With an increase in the number of underlying schemes securing approval according to Glenigan’s industry research, more work could now filter earlier into the procurement pipeline to avoid a logjam and provide a timely boost for contractors.