Rising wages and skills gap to overshadow materials issues

The latest market report from materials producers and builders merchants’ trade bodies reveals that average inflation for products and materials so far this year has been around 23%.

It reported that manufacturers are warning of further price increases in the second half of the year for energy intensive products such as insulation, cement, concrete and many steel products.

Some key products remain on allocation or continue to suffer extended lead times like bricks, aircrete blocks, some roof tiles.  But the Construction Leadership Council’s Product Availability working group says there are now clear signs that supply bottlenecks are starting to ease.

The CLC working group said looking ahead the cost of living crisis and structural skills gap in construction looked set to impact the industry heavily in 2023.

In the group’s latest report it said: “There is now clear evidence that skills shortages are making some SME builders reluctant to take on projects, as they don’t have the trades to complete the work.

“Recruitment, retention and related wage inflation continue to present serious concerns across UK construction and may supplant product availability issues in 2023 among the key risks facing the industry,” warns the report.

The group said there were now concerns that volatile inflation has led to the failure of relevant indices to reflect market reality.

As a result contractors were now engaging in dialogue with clients to use prime cost, provisional sums and target price-based contract mechanisms to mitigate the risks.

updated: 29/06/2022