28th July 2021
A perfect storm of Brexit, Covid-19 and now the NHS app “pingdemic” is leaving construction materials and labour in short supply. Steve McCombe, a consultant in Thrings’ Construction and Engineering team, discusses the impact on construction contracts.
The pressures on the construction industry never seem to end. Those parts of the industry that have survived Brexit and the Covid-19 pandemic are now having to deal with shortages of key products and labour which are resulting in price increases and project delays. A statement from the Construction Industry Council warned in April of construction materials shortages due to high demand nationally and globally, with plastics, cements, aggregates, steel, tiles and even screws and fixings becoming more scarce. This was been backed up more recently by a warning from consultants at EY, whose latest report on profit warnings and listed company performance warned of difficulties stemming from labour and materials availability as well as the health of the wider supply chain. The report foresees the possibility of these problems increasing in the second half of 2021.
Now, there are strong suggestions that the “pingdemic”, which sees thousands of employees isolating due to being alerted of possible Covid-19 contact via the NHS Covid app, is also now contributing to the problem.
A statement from the Construction Leadership Council’s Product Availability working group said: “These labour shortages are being exacerbated by the growing number of non-symptomatic drivers, tradespeople, merchant and manufacturing staff required to self-isolate after coming into contact with someone who tested positive for Covid-19. This will further stretch the supply chain.”
The Construction Industry Council press release issued on 23 July confirmed that industry leaders are calling for the acceleration of the 16 August rules relaxing the requirements for Covid-19 self-isolation for double-vaccinated workers.
This problem is on a global scale and has not only been widely reported by construction media outlets but also by broadsheets and members of the popular press. Frequent price rises for essential products - including timber, steel and insulation - have been reported by suppliers and contractors, and lead times have ballooned.
Tendered prices and programmes will have to reflect likely shortages, including increased lead times, the possibility that more readily available alternatives may have to be purchased, and price rises.
On a brighter note, the latest forecast from the Construction Product Association is that construction output is still buoyant with a 13.7% rise predicted this year, despite material and labour shortages being the main constraint on growth, and infrastructure and private housebuilding are expected to be the key drivers of growth.
If an existing construction contract includes an agreed completion date and a fixed price, unless it also includes provisions allowing for that date and/or the price to be altered due to problems experienced with product shortages, time and cost adjustments will not be possible.
If you would like advice on potential and/or ongoing construction contracts, including those where the time and cost implications of any materials shortage need to be considered, please contact Steve McCombe or another member of Thrings’ Construction and Engineering team.