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17 May, 21 / post / News
Materials Costs (Covid & Brexit)

If you follow John on Linkedin a few weeks back he highlighted that the CLC had noted that there were ongoing construction materials shortages and cost increases due to a number of factors.

What’s new?

Since then we have spoken to various or the contractors on our projects and within our professional network to get an idea of what we are facing. All of them were struggling with concrete and cement supplies, looking deeper at this cemnet reported  “UK distributor, NYEs Building Suppliers, contacted all customers to warn that “there are now issues with cement from all manufacturers. We are working hard every day to maintain supply for our customers but it is tough and will only get worse before we see it get better.”  &” As a result, the building supplier is imposing allocations on all its customers, limiting orders to 30 bags per day for trade customers and five bags per day for retail.”

And a price increase of 19.8% for rebar compared to last year!

Full story :https://www.cemnet.com/News/story/170748/uk-hit-by-cement-shortages.html

Meanwhile RICSs posted on 13th May a piece on the overall market which also did not board well for the industry: https://www.rics.org/uk/products/data-products/insights/the-possible-impacts-of-materials-shortages-in-the-uk/

They have commented that there is a 7.2% annual increase overall to date but when you drill down into the charts they have produced key items are:

  • Aggregates +16%
  • Timber +22%
  • Reinforcing steel +18%
  • Metal sections +14%
  • Sheet Piling +16%

Last week the Construction Enquirer noted that:

“British Steel stops taking orders in face of extreme demand”

Full story: https://www.constructionenquirer.com/2021/05/11/british-steel-stops-taking-orders-in-face-of-extreme-demand/

That’s pretty much unprecedented! and will have a big impact on all proposed portal framed projects going forward.

How does this affect what we do?

Well in various ways:

If construction costs go up, then clients put projects on hold. If projects go on hold we have less work it’s as simple as that. Not what we as a business want and not what a government that’s struggling to keep the economy going wants.

If contractors can’t get certain materials or costs go up, we are often asked to go back to the drawing board to look at different materials and see what we can come up with, which inevitably costs us in unexpected time and money which clients are not willing to pay an uplift for.

Where will it end?

I think there certain must be a tipping point where its to expensive to build and house prices are to expensive to buy at which point the market will stall, we as a nation have not been building enough properties for about 25years and this pent up demand keeps the prices high.

Currently as well as materials going up and the demand for housing, in the market there is uncertainty due to Covid, Mortgage lenders are being tough on new clients and not lending as much as previously, no bad thing but again I can see this leading to another reason why the housing market will stall.

So as we are aware Covid is the biggest problem to hit our planet in modern times and we need to get through it an past it. No one person has the magic bullet to stop it, it’s a large number of factors relying on a large number of people working together globally. At the moment it does feel a bit like survival of the fittest, I’m not sure if the vaccine rollout is fast enough, but as ever it’s about politics rather than humanity.

Sorry that escalated quickly, the general upshot is we feel construction projects will be at a 20% premium over the next few months and contractors will be renegotiating existing contracts.

And that’s without us talking about the current construction industry skills shortage.

#construction #design #architecture #materials #costs #building

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About the author
john smith
Architectural Technologist, Building Services Engineer Director at Cityzen & Lecturer at Brighton University https://www.linkedin.com/in/johnsmithcityzen/
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