C O N S T R U C T I O N E M P L O Y E R S F E D E R A T I O N T H E V O I C E O F T H E I N D U S T R Y
MARK SPENCE, MANAGING DIRECTOR OF THE CONSTRUCTION EMPLOYERS FEDERATION, EXAMINES THE IMPACT OF RISING COSTS ON THE INDUSTRY… Materials Crisis
Mark Spence, CEF Managing Director
W e need a new word. ‘Unprecedented’ no longer has the impact it once did and the recipients of various calls for action are growing weary of reading how this thing or that thing is unprecedented. Nevertheless, the outworkings of the current material shortages and price increases mean that construction businesses are reporting once in a generation cost increases and pressures that, if left unaddressed, threaten sustainable businesses and ultimately livelihoods. Maybe we should start to adopt the clinical nomenclature and refer to ‘waves’ of crises for the construction industry? We endured the first wave of Covid shut-downs, supply chain interruptions and introduction of ever-changing
SOPs. Last summer CEF negotiated local mechanisms with CPD to allow contractors to seek at least partial redress for the impacts of a global pandemic beyond our control. This summer we are again working with CPD to deliver a viable mechanism to cover the current circumstances which are, if anything, more threatening to business sustainability. We are now firmly in a second wave of unrelenting cost increases and fluctuating supply side issues. In my interviews with the media, I have been careful to avoid the use of language such as ‘volatile’ costs, because that suggests there may be swings in costs, whereas to date the reality is that costs are moving in only one direction, upwards. Having engaged with experts in these matters who build the BCIS indices, there is little certainty as to what the
future holds and current forecasts show the rate of increases only starting to plateau in Q1 2022. The even more worrying trend is that there does not, at this stage, appear to be a forecast of costs falling back to any sort of ‘norm’. This is a vital concern for future pipeline as all budgets previously agreed will no longer give cover to the procuring authority to commit public funds. We have urged the Dept of Finance to consider the processes for derogation of responsibility in these matters to allow pragmatic decision making and prevent a seizure in our local pipeline of public contracts. We have also urged the inclusion of inflationary mechanisms in all new contracts to provide cover for such situations now and in the future. For those engaged in commercial work, a market already decimated
16 | NI BUILDER
FOLLOW US ON:
www.northernbuilder.co.uk
Made with FlippingBook - professional solution for displaying marketing and sales documents online