This quarter's analysis of materials costs and labour rates focuses on prices for doors and windows across the UK and the effect of National Insurance changes on wages.
Hot rates: windows, doors and stairs

This edition examines prices of windows, doors and stairs in different regions of the UK.

The rates are associated with building projects up to £2m. The rates relate to Standard Method of Measurement of Building Works items and are representative of schemes with straightforward access. They are averages from successful competitively bid tenders received over the past three months. Rates can vary considerably within regions and between projects.

Materials prices

Although building materials in general have shown little change in price over the past year, a few changes have been identified.

Metal prices have continued to fall. Copper prices have fallen a further 7.6% since December, although aluminium prices have shown signs of steadying, falling only 2.2% in the past three months. Lead and zinc prices have risen over the past three months, but prices are still 6.5% and 2.9% lower than a year ago, respectively.

Building costs and tender prices

DL&E reported on the latest tender price and building and M&E cost trends in Tender price forecast (23 April).

Price adjustment formulae for construction contracts

Price adjustment formulae indices enable the calculation of increased costs on fluctuating or variation-of-price contracts. They also provide useful guidance on cost changes in trades and industry sectors. Indices are published monthly by the Stationery Office in Price Adjustment Formulae for Construction Contracts: Monthly Bulletin of Indices.

The indices give useful guidance on the differential movement of work sections in Spon's Price Books.

Over the past nine months, 22 of the 60 work categories have shown small increases in costs, and 25 have shown reductions. The categories displaying the largest changes since last July are shown right.

New DETR indices

The DETR has introduced a new series of resource cost indices – for building (housing and non-housing), road construction, infrastructure and maintenance (housing and non-housing). The indices are based on indices compiled for the Price Adjustment Formulae for Construction Contracts. They are published in Quarterly Building Price & Cost Indices, published by Construction Research Communications for the Building Research Establishment.

Labour rates Wage agreements

On 22 January 1999, the Building and Allied Trades Joint Industrial Council agreed new wage rates to apply from 14 June 1999.

The agreement brings wage rates for operatives employed by the generally small builder members of the Federation of Master Builders into line with wages paid by the Construction Industry Joint Council. It means an increase of 12% in basic rates for craftsmen, bringing the hourly rate to £6.05. The general operative's rate rises 9.6% to £5 an hour. Additional rates of pay for skill and for discomfort have risen by similar percentages.

This agreement will remain in force until 11 June 2000.

National Insurance changes

In the March 1998 budget, reforms to the National Insurance system were announced and came into effect on 6 April 1999.

For employers, NI contributions are no longer payable on earnings below the earnings threshold, which is £83 a week. The employer's 3%, 5%, 7% and 10% payment rates have been replaced by a single rate of 12.2% (for contracted-out contributions).

These measures mean the employer's NI contribution has fallen for employees earning £210-460 a week (80% of construction operatives). For those earning more than £460 (and in some cases those earning less than £210), the contribution increases. Last year, only 10% of construction operatives earned more than £460 a week. The average industry pay was £310 a week (Office of National Statistics New Earnings Survey 1998). Before April, an employer's NI contribution for this amount would have been £31; after 6 April, this contribution dropped to £27.69 a week.

For a general operative on basic pay, which is £164.97 a week, the employer's NI contribution is down from £16.50 to £10 a week.

Under firm price or "limited fluctuations" contracts, such as clause 38 of JCT80, changes to NI contributions should be allowed by or paid to the contractor.

Daywork rates

Contract base rates for dayworks have, in many cases, reduced as a result of the National Insurance changes. Standard hourly base rates for dayworks, calculated in accordance with the various definitions of prime costs of daywork, published by the RICS and the appropriate contractors' body**, are listed for key personnel before and after 6 April 1999.

The rates represent only the most basic requirement. The definitions provide for contractors to tender percentage adjustments to the prime cost figures to cover incidental costs, overheads and profit. The figure for these items will depend on location, labour and plant availability, size of company, market conditions and so on. The table below provides an indication of recent average percentages in successful tenders.

A build-up of the hourly rate for craftsmen after 6 April is shown.