Material suppliers are issuing quotes that expire after 24 hours as inflation fears grip the industry amid global challenges, including COVID-19 and the war in Ukraine, a key body has warned.
The Construction Leadership Council’s (CLC) Product Availability working group said uncertainty over future prices was delaying contractors from signing up to projects.
Construction material prices rose in 11 of the 12 months of last year, according to figures published by the government, while analysts have predicted further inflationary pressure as a result of the war in Ukraine and the breakdown of the West’s relationship with Moscow.
Now the CLC working group has issued its latest update, warning that inflation is a “major concern” and supplies could be constrained in a number of areas.
“There are reports that some suppliers are only willing to hold quotes for tender prices for 24 hours,” said working group co-chairs John Newcomb and Peter Caplehorn. “The resulting uncertainty is leading some contractors to pause before entering fixed-price or long-term contracts.”
The CLC working group added that the soaring cost of power across Europe was filtering through to UK construction.
“The volatility of energy prices has begun impacting the market. Some manufacturers of energy-intensive products are now warning of surcharges linked to energy costs.”
All imports of materials could soon be affected by a global shipping crisis, the working group added.
“The war is already impacting the global shipping industry. Many countries have banned ships associated in any way to Russia. More widely, shipping lines are suspending or changing bookings because of sanctioned cargo, and congestion at ports is increasing owing to more stringent customs checks.
“In addition, Ukrainian and Russian nationals account for 15 per cent of the global shipping workforce. With president [Volodymyr] Zelensky calling for all Ukrainians to return to fight, a severe workforce shortage could soon become apparent.”
Fresh COVID-19 lockdowns in China could also have an effect on the UK market, the update added, with raw materials for paints and coatings in particular in short supply.
The group will now meet every three weeks rather than every month to respond to changing conditions arising from price inflation and the war in Ukraine.
It also issued a guidance note to steer the industry response to the economic fallout from the Ukraine crisis. This called for a “collaborative response” to “avoid the risk of damage to industry capacity and capability”.
“It may be in the interest of clients and main contractors in the current environment to work with suppliers to solve problems quickly so that issues do not spin out of control,” warned the note.
This article was posted on constructionnews.co.uk
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