Parm Bhangal, managing director, Bhangals Construction Consultants, has urged for patience and understanding as the industry tackles the building materials shortage and price inflation crisis
The continuing supply crisis has led to ever-rising costs and unavoidable delays across the construction industry.
As developers experience shortages of key materials such as bricks, bagged cement and tiles, suppliers are able to hike prices significantly.
Anyone building flats are reliant on steel and concrete, which have also seen steep price rises and supply constraints.
The lack of materials available added to the long lead times have inflated construction costs, which undoubtedly drives up the price of new build housing and all building projects.
Cost of building work up by 25%
According to new figures from the Department for Business, Energy and Industrial Strategy, the supply shortage has seen the cost of building work ramp up by almost 25% over the past 12 months, with the cost of materials going up steadily, month on month, during this period.
Unfortunately, the crisis shows no sign of slowing. If anything, the supply shortage continues to increase, rapidly and across the board for certain elements, particularly with insulation, timber and steel. We continue to see price increases for all raw materials.
For constructions consultants, it makes it very difficult to pick projects, as there is no way to ensure that the cost stays relevant for a significant period of time.
Prior to Covid, we were able to keep a viable cost plan open for at least three months – and up to six months – but now that costs are increasing daily, it is almost impossible. Within four weeks, or even less, your original estimates become out of date and irrelevant.
Experience knows that the vast majority of large building projects last much longer than just a few weeks. Therefore, building contractors are forced to increase initial quotes, as well as update pricing structures as they go, in order to ensure they are not making a loss.
Quality construction comes at a highly inflated price
This unavoidable move means the end user are also feeling the pinch. Unfortunately, good quality construction currently comes at a highly inflated price.
Some developers have become reluctant to start new projects because of the cost uncertainties surrounding the investment but for homeowners, who are keen to make cosmetic changes to their properties or start full renovations post lockdown, are still going ahead.
Those who want to make a profit are being put off considerably. But for those who are determined to make smaller home renovations, Covid restrictions have made them seriously contemplate changes and – for many – have given them unexpected cash to finance it.
A huge number of people, who were able to work from home during lockdowns but didn’t have the outlet to go out and spend money, see now as the perfect time to refurbish, renovate and build new – whatever the cost.
With cash burning a hole in their pocket and further uncertainty around the Government’s future plan for tackling Covid, it is little wonder that homeowners want to improve their living space.
There’s so much demand in the industry at the moment. Despite prices going up, business is still available, people are still going ahead. Demand continues to heavily outstrip supply.
If the steep prices started to influence people holding back, things may quieten down a little and the pull back of business could drive prices back down. But in the meantime, there’s not a great deal that you can do to tackle the problem, except for increase prices to cover cost and keep information relevant.
HGV driver shortages
Many of the challenges we face as construction professionals are down to the shortage of lorry drivers, which has caused problems across all sectors. There are around 70,000 less lorry drivers today than pre-pandemic figures. We saw a – hugely damaging – mass exodus of drivers from the UK during the Covid crisis.
The government move to introduce temporary visas for 5000 lorry drivers to work in the UK during the last quarter of this year was certainly a step in the right direction.
But, following a challenging time for all industries, in which Covid and Brexit caused unprecedented disruption to work and construction projects, we need continued support from the government to ensure a future which boasts uninterrupted work plans, quicker lead times and more affordable materials.
The introduction of incentives for HGV drivers to come back into the UK and investment in training and testing new recruits would help to safeguard development projects so that they can continue effectively.
The price of importing and the change in laws surrounding trading with Europe means the price of importing has also increased significantly.
An imported container is now four times more than the cost pre-Covid. If you’re importing supplies per container then your costs have quadrupled. And there could be more to come, with further border control regulations expected as we go into the new year.
The Covid pandemic must also take the blame for factories closing down and halts in manufacturing. Lockdowns forced many manufacturers to pause their production lines, which has meant delays in new materials becoming available.
Presently, in our industry, risk is high and unpredictable.
Be open and transparent with customers
We must continue to be open and transparent with our customers, so that they are informed and prewarned of any potential changes that could affect their project through cost or appearance.
If you don’t want to inflate prices to protect yourself against changing materials costs, make sure you cover the risk and put the correct qualifications into your customer agreements.
If there’s a price increase in the next four weeks, then they need to be aware that costs are subject to change, depending on the market. Good communication is key.
Customers should be warned that defaulting to the builder with the cheapest quote isn’t the way forward in this instance. Building contractors should emphasise the importance of choosing, skills quality and good customer service over price.
It is vital to keep the client at the heart of your decision making on their project. It saves any unnecessary issues and aggravation later down the line if you keep them involved in all that is going on, but more than that, it strengthens your working relationship and, ultimately, improves the end result. Two heads are better than one.
Parm Bhangal
Managing director
Bhangals Construction Consultants
Tel: 01604 871806
Twitter link: https://twitter.com/Bhangals
LinkedIn link: https://www.linkedin.com/company/bhangals-ltd/
