Lead times for some items could rise by up to four weeks in the next year, prompting fears the two crises facing the industry are far from over.
Brickwork and carpentry will be the worst-impacted parts of the sector, while steelwork could face lead times increasing by four weeks within the next year, according to research by Southern Construction Framework (SCF). General building costs are expected to increase by 6 per cent by the second quarter of next year, following a 16 per cent jump over the past year.
The report covering the second quarter of 2021 is based on data gathered from; Bam Construct; Galliford Try; ISG; Kier; Mace; Midas; Morgan Sindall; Sir Robert McAlpine; Wates; Willmott Dixon, all of which work with the SCF.
Demand is expected to keep rising, with an expected 7 per cent increase in tender workload in the next year, as pandemic-linked restrictions continue to ease and the construction industry continues to open up. In the last year the sector saw its tender workload go up by an average of 11 per cent. The areas seeing greatest demand were M&E, Dry Lining and Groundworks.
Mineral Products Association (MPA) chief executive Nigel Jackson said lead times could be influenced by a range of factors, including some which are out of the industry’s control including surges in demand. “That said, lead times do vary widely depending on materials and location but there’s likely to be greater reliability and certainty with UK-sourced products like aggregates, cement and concrete compared to imported materials,” he said. “If the current pent-up demand continues to outstrip normal supply capacity then longer lead times may endure until the end of the year.”
Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said he hoped “that some of the challenges will alleviate over the coming months as some of the underlying issues are resolved”.
Building costs are also expected to continue rising, after a year where they went up by 16 per cent in comparison to the second quarter of 2020. In the next year, the supply chain expects building costs to go up by a further 6 per cent.
SCF operations lead Adam Sanford said: “The picture changes on a daily basis, with our contractors’ supply chains consistently reporting volatile market conditions throughout Q2.” He said a more collaborative approach to pricing and detailing a project was crucial as work does continue to ramp up and the industry faces heightened shortages and difficulties.
“It means that there are constant discussions around delivery costs as market factors impact a project and all parties in the project work together to solve a problem,” he added.
The construction industry has been struggling with material and labour shortages since last year, with vital materials including steel and cement hit particularly hard. Upticks in sector activity and, more recently, losing staff to self isolation after they came into contact with covid-positive people, have further exacerbated the problems.
Experts at EY warned last month that the shortages are hiking prices up and could dent firms’ profits this year,