How to deal with the shortage of building materials

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Parm Bhangal, Managing Director, Bhangals Construction Consultantscalled for patience and understanding as the industry tackles building material shortages and price inflation crisis

The ongoing supply crisis has led to ever-increasing costs and inevitable delays in the construction industry.

As developers experience shortages of key materials such as bricks, bagged cement and tiles, suppliers are able to raise prices dramatically.

Anyone building apartments depends on steel and concrete, which have also seen steep price increases and supply constraints.

The lack of available materials added to the long delivery times have inflated construction costs, which has undoubtedly driven up the price of new homes and all construction projects.

Cost of works up 25%

Supply shortages have seen the cost of construction work rise by almost 25% in the past 12 months, according to new figures from the Department for Business, Energy and Industrial Strategy, as the cost of materials rises regularly, month after month, during this period.

Unfortunately, the crisis shows no signs of abating. On the contrary, the shortage of supply continues to increase, rapidly and in a generalized way for certain elements, in particular insulation, wood and steel. We continue to see price increases for all commodities.

For construction consultants, it is very difficult to choose projects, because there is no way to ensure that the cost remains relevant for a significant period of time.

Before Covid, we could keep a viable cost plan open for at least three months – and up to six months – but now that costs are increasing daily, that’s almost impossible. Within four weeks or less, your initial estimates become outdated and irrelevant.

Experience shows that the vast majority of large construction projects last much longer than a few weeks. As a result, construction contractors are forced to increase initial quotes, as well as update price structures over time, to ensure they don’t incur a loss.

Quality construction comes at a very inflated price

This unavoidable movement means that the end user also feels the pinch. Unfortunately, a good quality construction currently has a very inflated price.

Some developers have become reluctant to start new projects due to the cost uncertainties surrounding the investment, but for owners, who want to make cosmetic changes to their properties or start full post-lockdown renovations, are still pushing ahead .

Those who want to make a profit are considerably put off. But for those determined to make small home renovations, the Covid restrictions have got them seriously considering changes and – for many – given them unexpected cash to fund them.

Many people, who were able to work from home during the lockdowns but couldn’t afford to get out and spend the money, now see the perfect time to renovate, renovate and build new ones – whatever in either the price.

With cash burning a hole in their pocket and further uncertainty over the government’s future plan to tackle Covid, it’s no wonder homeowners are keen to upgrade their living space.

There is so much demand in the industry right now. Despite rising prices, business is still available, people keep moving forward. Demand continues to greatly exceed supply.

If the high prices start to sway people who are holding back, things might calm down a bit and the downturn in business might drive prices down. But in the meantime, there’s not much you can do to fix the problem other than raise prices to cover the costs and keep the information relevant.

Shortage of truck drivers

Many of the challenges we face as construction professionals are due to the shortage of truck drivers, which has caused problems across all industries. There are about 70,000 fewer truck drivers today than before the pandemic. We have seen a massive – hugely damaging – exodus of drivers from the UK during the Covid crisis.

The government’s decision to introduce temporary visas for 5,000 lorry drivers to work in the UK in the last quarter of this year was certainly a step in the right direction.

But, after a difficult period for all industries, during which Covid and Brexit have caused unprecedented disruption to works and construction projects, we need the Government’s continued support to ensure a future that boasts of plans uninterrupted work, shorter lead times and more affordable materials.

Introducing incentives for HGV drivers to return to the UK and investing in training and testing new hires would help safeguard development projects so they can continue effectively.

The price of importing and changing laws surrounding trade with Europe mean that the price of importing has also increased significantly.

An imported container now costs four times the pre-Covid cost. If you import supplies by container, your costs have quadrupled. And there could be more to come, with new border control regulations expected as the new year dawns.

The Covid pandemic must also be responsible for factory closures and manufacturing stoppages. The lockdowns have forced many manufacturers to suspend production lines, leading to delays in the availability of new materials.

Currently, in our industry, risk is high and unpredictable.

Be open and transparent with customers

We must continue to be open and transparent with our clients, so that they are informed and notified of any potential changes that could affect their project by cost or appearance.

If you don’t want to inflate prices to protect against changing material costs, be sure to hedge the risk and put the appropriate qualifications in your customer agreements.

If there is a price increase over the next four weeks, they should be aware that costs are subject to change, depending on the market. Good communication is essential.

Customers should be warned that defaulting to the builder with the lowest quote is not the way to go in this case. Construction contractors should emphasize the importance of choice, quality of skill and good customer service rather than price.

It is essential to keep the customer at the heart of your decision-making on his project. It avoids unnecessary problems and later aggravations if you keep them involved in whatever 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

General manager

Bhangals Construction Consultants

Tel: 01604 871806

[email protected]

www.bhangals.co.uk

Twitter link: https://twitter.com/Bhangals

LinkedIn link: https://www.linkedin.com/company/bhangals-ltd/

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