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  • Writer's pictureGraham Rawlings

Whats Happening with Material Costs?

Are they, by some miracle, falling? In short, the answer is no.

Construction Material Prices Soar

In a world where we have seen nothing but the cost of, well... everything increasing, does a slight rise, or a plateau to the cost of construction materials feel more acceptable than the larger ones we've seen recently?

In order for us to move forward it's essential that we take a step back and look into just how the prices got to where they are. Because there are a fair few of us out here that simply don't have any answers as to the questions asked around why the cost of something is, on average, 24% higher than it was pre-2021, sure we can pass anything off as a Brexit repercussion but do we know the truth?

The Price Of Materials

Steel Frame

There isn't just one culprit to these issues, a combination of the war in Ukraine, energy prices and price inflammation are widely blamed, and the fact of the matter is that Inflation in the UK is still rising and has done at the fastest rate we've seen in 30 years. Fuel, energy and food have now seen us break the 10% increase and are expected to hit 18% by 2023.

In June, the Construction Leadership Council (CLC) stated that the construction industry is likely to see a persistent inflation rise for the rest of the year albeit at a lower level, and will notably affect SME Builders among others.

Volt Meter

The cost of energy increasing exponentially, hitting £5.55 per therm in August this year has put pressure on construction firms as they are energy-intensive industries such as concrete, steel and cement passing which are all now paying ridiculously high costs and need to cover these with material sales.

From the outset industry groups have warned that Russia's invasion of Ukraine will significantly disrupt supply chains and lead to price hikes.

The shortage of materials such as timber, plaster and steel since the start of 2021 has led to major supply chain issues for those working on self build or renovation projects. But product availability has improved across most categories in 2022.

Some better news has been that the cost of materials, whilst still rising is actually starting to slow which is a positive sign, ok the price is still going up but not as fast and we need to take the small wins where we can I guess.

What will happen once the government announce new budgets and strategies is unknown. We can only remain reactive and limit the damage by recycling materials where possible, it is vital that firms take a strategic procurement management approach and adopt open risk-sharing with contractors. They should combine relationship-based supply-chain management, quantitative risk analysis and what we term an elevated level of ‘value engineering’ to help reduce risks, and provide better predictability of outcome.


Crisis Ahead

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