The construction sector is booming with new housing developments going up around the country, substantial home improvements fuelled by working from home, city dwellers seeking larger properties out of the major cities and a host of capital projects (e.g., HS2) underwritten by government funding.
Whilst current estimates are that another 217,000 workers are needed in the industry to meet demand over the next few years – a more pressing issue is the reducing availability of building materials which is driving huge inflationary cost increases.
Timber, steel, cement, electrical components and a host of other items are becoming scarce simply because these raw materials, nearly wholly imported, are being sold to the North American market. Many governments are pledging significant investment to kick-start their post-Covid economies, with the USA hoovering up many of these materials.
As many contracts are awarded on a fixed price basis this is going to lead to reduced margins and project delays which could in turn result in claims for liquidated damages.
Huge increases in container shipping costs and delays at ports as we adjust to the more time-consuming flow of goods brought about by Brexit – only complicates the issue.
In May 2021 the Bellwether IHS Markit/CIPS UK Construction PMI Total Activity Index registered above the 50 no-change value for the fourth consecutive month and signalled the strongest rate of output growth for just under seven years.