A new report released by Southern Construction Framework has found that inflationary pressures (25%), securing workload (21.8%), and the skills shortage (15.3%) are the top challenges for subcontractors over the next 12 months
This is followed by race to the bottom challenges (11.3%), industry insolvencies (6.5%), getting work to the site (4.8%), The Building Safety Act (4%), decarbonisation (3.2%), legislation changes (3.2%), political uncertainty (3.2%) and securing tender feedback (1.6%).
The news comes as the ONS found that monthly construction output decreased in volume by 1.9% in February 2024.
Affordability pressures on projects still frequent
The report found that tender workload increased by an average of 3.2% in Q1, with the highest increases including M&E (9.5%), dry lining (6.7%), steelwork (5.4%), and concrete frame (4.9%), indicating that pipelines are still relatively strong.
While there was an increase in tender workload, affordability pressures on projects persist.
Many schemes remain vulnerable to outdated budget setting and high interest rates, highlighting the need for immediate action.
Build cost continued to rise in Q1 with an average increase of 2.3%
The trades with the largest increase include dry lining (4.7%), M&E (4.6%), brickwork (2.6%), and carpentry and joinery (2.4%).
SCF’s data shows the rate of increase in 23/24 slowed when compared with 21/22, indicating that prices are stabilising.
Despite this, building costs were still 5% greater in Q1 than at the same time last year, highlighting persistent inflationary pressures.
Project progression found to be a major challenge for subcontractors
Over a quarter (25%) of subcontractors view their biggest challenge over the next 12 months to be the certainty of projects progressing from preconstruction to onsite, as a result of ongoing programme delays and project cancellations due to rising costs.
Employment issues were also cited as a key problem for 20% of subcontractors.
Although construction output has decreased annually, high tender workloads have likely led to the requirement for bigger preconstruction teams in order to respond to enquiries.
Adrienne Turner, Framework Manager at SCF, said: “While challenges are likely to persist throughout 2024 as interest rates remain high, it is vital that clients utilise early engagement with their Main Contractor to ensure design solutions incorporate current market pressures before detailed design.”
