Soaring material costs, shipping delays, shortages of skills and materials, a lack of lorry drivers and high demand for building – these are just some of the factors contributing to what’s being referred to as the “perfect storm” for the UK construction industry.
Soaring construction costs are reducing wafer-thin margins
According to statistics published on 1 September 2021 by the Department for Business, Energy & Industrial Strategy (Monthly Statistics of Building Materials and Components), the price of construction materials for ‘all work’ increased by 4.5% from June 2021 to July 2021 – and by 20.1% in the 12 months to July 2021.
These building material price hikes are showing no signs of slowing down. They are causing big problems for UK construction companies and contractors, many of whom are already operating with wafer-thin margins. But inflationary pressures are just part of the story, of course.
An economically challenging construction scenario
Construction is in high demand right now, but some building materials are in short supply. The resulting delivery delays are causing significant disruption to construction schedules across the UK, on both large and small projects.
It’s a complex, economically challenging construction scenario caused by a combination of issues, including temporary factory shutdowns during Covid-19; shortages of some products – the FT cites imports like copper and steel, as well as some UK-made products like bagged cement; shortages of some raw materials; shipping delays; and a lack of lorry drivers in the aftermath of Brexit.
Factor in the well-publicised labour shortages within the UK construction industry and it’s clear that tough times are on their way…
Construction software can help companies ride out the storm
With no obvious signs of improvement on the horizon, construction and contracting businesses across the UK are busy battening down the hatches, minimising costs and preparing to ride out the storm. Yet there is help available.
Chris Winson, from construction software specialist RedSky, said: “At times like these, it’s vital for construction companies and contractors to have complete visibility on costs – invoices received as well as committed costs that are in the pipeline. Without it, they’re walking through the storm blindfolded.
“In this tough economic situation, to increase their chances of survival, companies should be identifying and eradicating inefficiencies, optimising their procurement processes and driving out unnecessary costs across the business. It’s a daunting task, but a modern construction software solution can make it a whole lot easier.”
RedSky’s smarter construction software can make a difference
RedSky’s award-winning enterprise resource planning (ERP) system makes real-time actions visible across Finance, Commercial, Operational and site teams, enabling construction companies and contractors to control change, reduce risk and manage costs more efficiently.
By integrating procurement activity, RedSky enables companies to improve the quality and visibility of their cost data, negotiate better prices, weed out poor suppliers and incentivise star performers. Supply chain management activities can be optimised, allowing companies to identify potential issues at an early stage and take remedial action to prevent delays and disruption on site.
To find out more about how RedSky’s smarter construction software can help your business improve margins and scale, call us on 020 3002 8600 or email us hello@redskyit.com
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