Rising orders and a worsening labour shortage are driving up building prices according to the latest tender price forecast from Davis Langdon & Everest.
Electricians and plumbers are in short supply across the country, with increased labour rates continuing to push up prices in most regions. The latest tender price forecast from Davis Langdon & Everest (DLE) shows building prices rising by 3% in the fourth quarter of 2000.

Workload surveys by the Construction Confederation and the Federation of Master Builders identified a rise in new enquiries, and the continuing optimism in the market, coupled with higher labour and materials costs, explains the rise in tender prices.

The Construction Confederation's survey showed that, for many trades, the percentage of firms experiencing difficulty in securing labour was higher than at any time since the late 1980s boom. Electricians are in short supply, with 59% of firms nationally finding them hard to secure. Plumbers (65%) are also scarce, with bricklayers in shortest supply (77%).

Labour will continue to be a problem for some time to come. The Construction Industry Training Board recently concluded that the industry needs to attract 370 000 recruits over the next five years. Of these, 64 000 are needed each year just to replace leaving workers.

Labour rates are already set for substantial rises over the next two years, materials prices are no longer being restrained by cheaper imports and the supply chain is seeking better returns, says DLE.

DLE also attributes rising prices to contractors' success in moving towards higher margin work secured via negotiation or partnering. Merger activity has also had the effect of reducing competition in some areas. With the volume of work currently available, contractors are able to turn down projects that they perceive as risky. Clients with awkward projects are finding that the associated risk bears a much higher premium.

Source

Electrical and Mechanical Contractor