Consultant Davis Langdon predicts bid costs rises of 20% because of inflated salaries and lack of contractors
Costs consultant Davis Langdon has warned that the rebuilding of New Orleans in the wake of Hurricane Katrina could be seriously undermined by a lack of skilled construction workers.
In the first detailed study of the disaster’s impact on the construction market, which Davis Langdon is making available to those involved in the reconstruction work, the firm’s American research department has predicted rebuilding will be hit by shortfalls in labour. Davis Langdon says this could lead to bid cost rises of up to 20%.
Alistair Collins, chief executive of Davis Langdon’s global board, said that the report highlighted the need for a methodical approach to reconstruction. He said: “We will offer what we can to the recovery, and at this stage we are well placed to offer strategic and balanced advice. This reconstruction cannot be instantaneous; there is the need for measured and steady progress.”
The report, seen by Building, said there was likely to be a “critical shortage” of workers in the region. It said: “Finding enough skilled workers willing to come to the area to participate in reconstruction efforts will be made more difficult by the fact that the areas hardest hit by the hurricane historically pay less than the surrounding regions.”
Davis Langdon predicted the rise in costs, caused by workers’ ability to command increased wages, would be compounded by a lack of contractors and the premiums they will expect for absorbing the risk associated with the work.
Davis Langdon predicted that as a result of the hurricane, construction costs in the residential sector will increase 10-15%, and that nationally construction costs will rise 5-10% over the next two years. Steel prices could rise 20%.
The problem will be compounded by the fact that the areas hit historically pay less
Davis Langdon report
The report comes as British diplomats based in the USA began talks with UK construction representatives to help them pitch for work.
The British Consulate-General of Atlanta, which covers the New Orleans region, is talking to the British Consultants and Construction Bureau to assess opportunities for UK firms to be involved in reconstruction work.
The bodies anticipate that more UK companies will become involved as the work progresses, and may offer to help UK firms without strong links to the region.
Nigel Peters, BCCB’s director of Europe and the Americas, said: “The British consulate, which covers trade and investment in the affected region, feels that given the enormity of the disaster there may be opportunities for more UK firms to participate in the recovery and rebuilding than would usually be expected in the USA.”
Initially the BCCB is liaising with the British consulate to determine which firms are already active in the region or have plans to enter in the near future. The organisation will then consider ways of working with the consulate to offer assistance to these firms if necessary, and also help smaller firms that have trade links with the USA but lack a permanent presence in the region to become involved in the recovery.