Clients having to accept cost of jobs are going up by as much as 20%, says Bam boss

The boss of Bam’s construction business has said some jobs are costing up to 20% more than previously budgeted because of ongoing materials and labour cost rises.

Executive director James Wimpenny admitted jobs were typically going up by between 10% and 20% on out of date budgets “that were put together two or three years ago”.

He said some jobs had stalled as a result of the hikes while others were seeing clients, especially those in the public sector, dip into funds earmarked for other jobs.

“Generally [clients] are accepting [of the rises] but it takes a bit of accepting,” he said. “Most clients tend to eventually accept the reality of life.”

He also poured cold water on some claims that main contractors were profiteering from the situation by hiking their prices to unrealistic levels. “Absolutely not,” he said. Last week Mace construction boss, Gareth Lewis, also rubbished suggestions Tier Ones were trying to cash in on the problems.

Bam has strongholds in several parts of the country, including London, Birmingham and Manchester, and Wimpenny added: “We are seeing work in all parts of the country. I still think there is that pent-up demand to getting things done. We’re not seeing a slowdown in opportunities.”

But he warned labour costs were now topping worries caused by material price hikes. “Materials is calming down a bit but the big thing is labour. We’ve got full employment and, like lots of other industries, we need people.”

Wimpenny was speaking as the firm, which is hoping to start work on a £25m leisure centre in Deal, Kent, later this year and has won a £30m secondary school in Brent, north London, said revenue last year rose 16% to £919m with pre-tax profit up 49% to £20.4m.

The firm said a problem job for Sheffield University was now behind it and is set to finish by the end of the year.

Meanwhile, Bam’s sister firm, civils specialist Bam Nuttall, saw turnover top £1bn for the first time, rising 27% to just under £1.1bn. Booming infrastructure work, such as its jobs on HS2, helped pre-tax profit more than double to £26.2m.