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Based on Turner & Townsend’s latest UK Market Intelligence Report, the construction industry needs to be prepared for continued price pressures in the coming days.
In the last year, the cost of cladding increased by 5.2%, and the material costs are expected to increase further.
The upsurge in demand for materials after the Grenfell Tower fire coupled with Brexit’s effect has already led to an increase in material prices. This trend is expected to continue with the introduction of the new building safety regulations in the new Fire Safety Act and Building Safety Bill.
The report emphasizes that the construction sector should plan to deal with the rising costs along with critical challenges around material sourcing, skills, design management, and build processes.
It points out that a few of the supply chain issues are anticipated to go away in the next few months as the situation improves following Covid and Brexit-related disruptions.
The report also lists some of the demand and supply-related factors that have caused the rise in costs since last year. The existing inflationary pressure is mainly due to the rising materials costs and the increasing demand within the industry.
At present, the inflated costs and the stiffening supply chain are due to reduced manufacturing capacity, freight delays, Brexit legislation, and disintegrated global supply chains.
As per Turner & Townsend, infrastructure tender prices are expected to go up, and the industry will need to keep a check on the increasing costs.
The construction sector needs to establish close collaboration and in-depth knowledge of the global and local supply chains to adjust to the dynamic scenario. Companies need to be decisive and communicate with suppliers and contractors at every stage of the project.