Raw Materials Prices Continue To Rise
The cost of materials across all the construction sectors continues to rise.
The Department for Business Energy & Industrial Strategy (BEIS) has released data showing a 20% increase in costs for the previous year.
This includes a 4.5% increase in materials for last month across the board with some imported timber rising by 23% in July.
With increasing calls for sustainable building materials (notably timber) to be used, it seems costs for sustainable construction will increase.
Skilled Labour Shortages & Costs
There are also shortages of skilled labour at the moment.
Our site inspectors report many sites are seeing workers ‘migrating’ from site to site as demand outstrips supply.
The supply/demand ratio has seen an inevitable rise in skilled labour wage costs. The construction workforce is an aging one and those leaving are not being replaced quickly enough.
The CEO of the Federation of Master Builders recently stated in the following quote:
‘We’ve been experiencing a severe shortage of bricklayers and carpenters for quite some time —[and] skills shortages are now seeping into other key trades such as roofers and plumbers. Indeed, of the 15 key trades and occupations, we monitor, 40% show skills shortages’
Do these rising costs and skilled labour shortages mean more modular homes being built instead of traditional ones?
One social housing body seems to think so.
Bamford Homes plan to build hundreds of offsite homes over the next four years. This includes both small and large developments.
Will Housing Associations follow suit in Wales?
At first glance, modular homes made from sustainable materials that are constructed off site may seem like a perfect answer to rising materials costs and labour shortages.However, it seems the Modular Homes industry is not without its problems.
A recent BBC report featured the Moorland Hotel, which burned down a year ago and which was made from modular construction.
The BBC, under Freedom of Information laws, reported comments by a Senior Fire Engineer calling for more investigations to be made in the design of modular buildings.
Specifically, he mentions:
‘The areas mentioned include fire prevention plans and the safety certificates for the foam and chipboard panels used.
The cause is thought to have been electrical, but the report said it was possible wall or roof cavities aided the “rapid and unchecked” spread of the fire.’
Increased demand for sustainable buildings equates to more use of timber
Modular Homes use timber and timber products.
This seems to suggest that fire engineers need to be involved far earlier in the RIBA stage than at present.
Tax Breaks for Plant Equipment
Construction Index reports that the Civil Engineers Contractors Association is lobbying for tax breaks on plant equipment they hire but do not purchase.
This relates to the new Super Deduction Allowance (SDA) announced in the March 2021 budget.
This gives a 130% Capital Allowance for qualifying new plant purchases.
This was an incentive to eradicate old polluting equipment in favour of ‘greener machines’.
* source hallidays.co.uk
But what about the contractors who hire equipment rather than purchase?
Why should they miss out?
Surely, the criteria should include plant hire?
This would allow firms that hire to take advantage of more efficient and modern machinery with less pollution?
This is a point well made by the CECA Director Marie Claude- Hemming;
“Our members lease and hire plant as it is often the most efficient means of ensuring access to the latest machinery when and where it is needed, and hence is more efficient in project delivery. The super deduction allowance simply doesn’t reflect the practices of many civil engineering firms on the ground. In our industry, where plant and machinery is invariably highly specialised, around 70% of it is hired on a project-by-project basis.
“If the chancellor were to extend the super deduction allowance to include short-term hire and leasing, it would provide an added incentive to firms to use the newest plant and machinery, with obvious environmental benefits, as well as feeding through to efficiencies in project delivery.’
There are six other trade bodies joining the CECA in lobbying the chancellor on this.
This is a development worth noting, as it would be a tremendous boost to most UK contractors.
So to summarise, that’s our pick of the four things happening in UK construction right now.
We hope you enjoyed this quick update and we will be back with more news next month.