After surging demand and with further growth anticipated, the construction industry is experiencing unprecedented challenges in increasing capacity, with shortages of labour and materials potentially leading to a negative impact on property owners and developers over the next few years, according to the latest research from Bidwells.
Building Trends, published this month by the property consultancy, underlines the increasing scale of risk for clients in terms of construction procurement and the escalating challenge to having their projects completed on-time and on-budget.
A Contractor Survey within the report confirms the rapidly changing position the industry is experiencing. Almost 100% of respondents reported an increase in development and construction activity with average new business opportunities of ten per month in the first quarter of 2014.
The sector is on the verge of an impending crisis, according to Richard Pilsworth, Partner and Head of Building Consultancy at Bidwells.
“Increasing labour costs as a result of contractors having to recruit to ensure they can deliver on their contracts and price hikes in bricks, blocks and timber will have a major effect and these cost escalations will inevitably have a direct impact on clients’ own budgets and commissions,” he said.
“Our research shows that only around 50% of projects are currently being completed on budget at the contractor procurement stage. Clients will need to be wary of contractor commitments to completing on-time and on-budget as there may well be hidden contract clauses which refer to ‘redefining because of market conditions and unforeseen circumstances,” he added.
The full report can be read at: http://www.bidwells.co.uk/eresearch/building-trends-summer-2014.
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