Boss Andy Mitchell flags worries firms will be tempted to call in the lawyers rather than work together
Contractors and clients have been told by the boss of the Construction Leadership Council to channel the can-do spirit of dealing with covid-19 rather than reach for lawyers in order to overcome the problems caused by the ongoing materials crisis and escalating cost of labour.
And following the release of this week’s latest monthly data from the CIPS, economists said firms were finding it difficult to price jobs with some set to be caught out by the hike in costs caused by materials shortages and the shortfall in labour following Brexit.
Smaller firms have been most affected to date in getting hold of key products such as timber, steel and cement because of their reduced buying power but one Tier 1 contractor, who asked not to be named, admitted: “Inflation, labour and material risks are a rapidly emerging picture. We have already created internal guidance and a framework on how best to manage the situation.”
Now the CLC’s Andy Mitchell has stepped in to remind firms they need to work together to overcome the problems and in an open letter to the industry told it to invoke the spirit it generated in the teeth of the first lockdown last spring.
He said: “In the early stages of the covid crisis, CLC and government issued advice and guidance intended to encourage and enable collaborative solutions to be found to the contractual impacts of covid-19 and thereby minimise disputes. This guidance was warmly welcomed and widely utilised.”
He added: “The construction industry is currently facing challenges on the availability and pricing volatility of labour and materials. This volatility could have a significant impact on the timeframes and delivery costs of many projects.”
Mitchell said so-called ‘fluctuations provisions’ should be used to “provide a means of collaboratively sharing the risks associated with this volatility”.
He added: “The CLC strongly urge those responsible for developing, agreeing and managing contracts, existing and new, to consider adopting these provisions in their contracts.”
In his letter, Mitchell said rapidly rising freight costs and a shortage of hauliers were also adding to the problems.
Transitioning from CE to UKCA marking, which is currently due to start at the beginning of next year despite repeated warnings the UK will not be able to test enough products meaning products will be stuck in warehouses, was another area of concern, he added.
“This volatility is likely to be something we must live with for a while to come,” he said.
“The CLC would encourage a collaborative approach to be taken to managing these risks by considering actions such as allowing longer mobilisation and lead-in periods for contracts and including up-front ordering and payment to suppliers in order to secure manufacture and delivery slots for critical material resources.”