A skills shortage is pushing costs up so high that contractors are turning down work from high risk projects…
A new poll of UK contractors has revealed significant skills shortages within the sector, which is pushing up the cost of construction.
The poll, carried out by infrastructure and support services group Aecom, revealed the problem is so bad that contractors are turning down work considered to be high risk.
The shortage of skilled workers in the sector is not a new problem. However, a lack of concrete specialists, bricklayers, and carpenters has pushed prices 10 per cent higher in London when compared to last year.
Aecom’s director Brian Smith said: “The industry is taking a far more strategic approach, targeting schemes that will deliver planned margins.
“Risk appetite among contractors is low, with a desire for certainty meaning that projects may be taken on a smaller margin if the return is guaranteed.”
One area expected to suffer is housing. Some parts of the industry have already revealed they will reduce their business in the residential market due to fears house prices in London are starting to falter.
This will be a massive blow for the government. Housebuilding formed a major part of the Spending Review last month, during which the Chancellor pledged to accelerate the amount of building taking place. However, the sector said it is already seeing slow production in areas where house prices are not increasing enough to offset the cost of bricklayers, carpenters, joiners, plasterers, and site managers.
In fact, in the three months to the end of September the National House Building Council (NHBC) reported the number of new homes registered had fallen by two per cent compared to the previous year.
Difficulties are also being experienced by some of the big developers. Housebuilding firm Barratt said it had seen a decline in the number of developments built this year (49) compared to this stage last year (80), while Bovis, Balfour Beatty, Morgan Sindall, and ISG warned profit margins would suffer due to planning delays and the cost of labour due.
The skills situation looks unlikely to improve despite the government’s best efforts to attract talent to the sector. Over the past two years the number of construction qualification awarded has fallen by 10,000. The Construction Products Association said 42 per cent of contractors have experienced recruitment difficulties in the past few months.