The construction industry may be awash with positive predictions for good times ahead but national property and construction consultants Wakemans has warned that rising construction costs and shortages are going to make building more expensive in the coming year.
According to Wakemans director Adrian Aston, tender prices will rise as the recovery gains momentum and those ready to build should act now and get projects on site as soon as possible.
“There is no doubt that the statistics are looking good, most of the recent surveys have raised their predictions for output growth over the next two years, despite an unexpected fall in the official measure of construction output from The Office for National Statistics in the final quarter of last year.
“Much of the growth is fuelled by the government’s investment in the housing market via the Help to Buy scheme and the continued popularity of London as a safe investment for property investors. There are concerns that we may be heading for another housing market bubble but there is a more immediate concern for those procuring building work in the current climate. As contractors get busier we will see costs start to rise and on occasions stretched tendering departments may decline to tender if they have cut back during leaner times, and no longer have the capacity to cope with the growing workload.
“When contractors are tendering they are faced with longer lead in times on supply of some key materials and there is an increasing shortage of skilled labour, both likely to contribute to a higher tender price being submitted.
“The long awaited changes to Part L of the building regulations are also likely to push up building costs when they come into force in April 2014. From this date all new non- domestic buildings will have to be 9% more efficient in terms of their carbon emissions, than under the current regulations. Projects that are already underway before April will be exempt from the new targets so it could pay to get schemes registered before this date.”
“We are also advising that care is taken to ensure that the tender documentation is as watertight and comprehensive as possible, with adequate notice given so that tenders receive the necessary attention.
”The most common reason for tenders to be returned over budget is because of lack of clarity in some areas, resulting in the contractor pushing up prices to cover risk. Reducing uncertainty and increasing accuracy will mitigate this risk and help to avoid any delays.”