INFLATION ADDS £23bn to Construction Costs

UK construction output reaches a record value of £204bn in 2022

Rising costs add £23bn to the cost of construction output when compared to pre-pandemic price levels; inflation pressures are expected to continue through the first half of 2023.

The Office for National Statistics (ONS) released data on the construction output of the United Kingdom covering all 12 months of 2022 last week. The figures show that the total construction output value reached almost £205bn, marking the first-time annual construction value has surpassed £200bn and representing a 15% rise from 2021 output values in nominal terms.

Despite forecasts at the midpoint of 2022 being closer to £186bn, the new data reveals a remarkable rise in construction output value, driven by the inflationary effects of post-Covid-19 shortages, the war in Ukraine, and the cost-of-living crisis driving up energy and material prices.

Barbour ABI analysis of real versus nominal price indices showed the value would have been closer to £181bn if prices had remained at pre-pandemic levels. This means approximately £23bn has been added to the cost of UK construction since 2019.

Barbour ABI’s AMA Research Director, Laura Pardoe explained:

“Price rises were at record levels over Summer 2022, with many goods seeing 25% annual inflation. This has now dropped closer to 15%, but some products still hover well above 20% and insulation products have recently jumped to 50%.”

Looking ahead, the UK economy is facing multiple headwinds, which could reduce the viability of many building projects.

Barbour ABI Chief Economist Tom Hall commented: “the Bank of England’s decision to increase the base rate to 4% is likely to weigh heavily on the residential sector over 2023 as mortgage holders tighten their belts. Added to this, the UK economy is widely predicted to stagnate as a best-case scenario over the short-term, which may well see other commercially sensitive sectors dependent on consumer spending also fall.

Construction product inflation and shortages are expected to ease over the second half of 2023 but will not return to the stability in the 2010’s. Contractors are working on razor-thin margins. All in all, 2023 is likely to be another bumpy year.”

Nevertheless, Barbour ABI also saw high levels of contract awards agreed throughout 2022, which reached a record high in Q1 2022. As a result, Barbour ABI is predicting high levels of activity in construction during 2023 in the infrastructure, warehousing, and health sectors.

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Accident Video that went Viral acts as a Safety Warning

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Fencing Contractor Whose Accident Went Viral Partners with LSBUD for Safety Awareness Video

Fencing contractor, Elliott, who went viral in June 2022 when his post knocker hit an underground gas pipeline on a farm in Derbyshire, has joined forces with safe digging experts LSBUD and Linewatch on a brand-new safety awareness video.

The safety campaign focuses on Elliott’s experience of striking the pipeline, it recounts the moments after the explosion and looks at what he would do differently if he had the chance to do so. The video explores the unseen dangers lurking beneath the ground, when breaking ground as part of construction, highways, utility, farming or fencing work. It also looks at the perils of digging ‘blind’ and explains some best practices people must follow to avoid damage to the environment, serious injury, or even death.

 

Elliott comments: “The video is hard-hitting. It is the first time I have discussed the incident, and it is tough to bring it back up. For a few seconds I simply thought that my time was up, and I was more than incredibly lucky to walk away with not so much as a scratch on me. After I recovered from the initial shock, my only thought was, ‘I don’t want anyone else going through this’.

“That’s why when the people at LSBUD and Linewatch approached me to talk about my accident, I jumped at the chance. If I could use this unwanted ‘fame’ as a way to make people safer then at least something good could come out of it. I want to make sure that anyone out there thinking of putting a hole in the ground, no matter if it is knocking in a fencing post, planting a tree, or taking on a major construction project, then they should always search before they start work.”

 

Richard Broome, MD at LSBUD, continues: “Often in our world of work, it is only the serious incidents that really capture the nation’s attention. Fortunately, Elliott was largely unharmed, but his video has been seen by millions of people around the world, putting the potential dangers of digging into the spotlight. Rather than shy away from the incident, Elliott wanted to spread the safe digging message, helping keep other people safe on site. It is a brave and honourable approach, and one that will benefit many projects, potentially saving many lives.”

 

CLICK HERE to watch the Explosion Safety video

For more information about Linewatch visit www.linewatch.org.uk
To understand more about LSBUD, visit https://lsbud.co.uk/

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FAULTY CONSTRUCTION SIGNIFICANT IN TURKISH DISASTER

Turkish authorities are targeting contractors allegedly linked with buildings that collapsed in the powerful February 6 earthquakes as rescuers found more survivors in the rubble on Sunday, including a pregnant woman and two children, in the disaster that killed more than 33,000 people.

The death toll from the magnitude 7.8 and 7.5 quakes that struck nine hours apart in south-eastern Turkey and northern Syria rose to 33,179 and was certain to increase as search teams find more bodies.

As despair bred rage at the agonisingly slow rescues, the focus turned to assigning blame

Turkish justice minister Bekir Bozdag said 131 people were under investigation for their alleged responsibility in the construction of buildings that failed to withstand the quakes.

While the quakes were powerful, many in Turkey blame faulty construction for multiplying the devastation.

Even though Turkey has, on paper, construction codes that meet current earthquake-engineering standards, they are rarely enforced, explaining why thousands of buildings slumped on to their side or pancaked downwards on to residents.Turkish Vice President Fuat Oktay said late on Saturday that warrants have been issued for the detention of 131 people suspected to being responsible for collapsed buildings.

Turkey’s justice minister has vowed to punish anyone responsible, and prosecutors have begun gathering samples of buildings for evidence on materials used in constructions.

The quakes were powerful, but victims, experts and people across Turkey are blaming bad construction for multiplying the devastation.

On Sunday, authorities in the province of Gaziantep arrested two people who are suspected of having cut down columns to make extra room in a building that collapsed, the state-run Anadolu Agency said.

The bureaux would aim to identify contractors and others responsible for building works, gather evidence, instruct experts including architects, geologists and engineers, and check building permits and occupation permits.

A building contractor was detained by authorities at Istanbul airport on Friday before he could board a flight out of the country.

He was the contractor of a luxury 12-storey building in the historic city of Antakya, in Hatay province, the collapse of which left an untold number of dead.

The detentions could help direct public anger toward builders and contractors, deflecting attention away from local and state officials who allowed the apparently sub-standard constructions to go ahead.

Turkish President Recep Tayyip Erdogan’s government, already burdened by an economic downturn and high inflation, faces parliamentary and presidential elections in May.

Survivors, many of whom lost loved ones, have also turned their frustration and anger on authorities.

Rescue crews have been overwhelmed by the widespread damage which has affected roads and airports, making it even more difficult to race against the clock.

Mr Erdogan acknowledged earlier in the week that the initial response has been hampered by the extensive damage.

He said the worst-affected area is 310 miles (500km) in diameter and was home to 13.5 million people.

During a tour of quake-damaged cities on Saturday, he said a disaster on this scale is rare, and again referred to it as the “disaster of the century”.

Rescuers, including crews from other countries, continued to search the rubble in the hope of finding additional survivors who could yet beat increasingly long odds.

 

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Uncertain Future of Teeside Construction Giant

Teessiders employed by a North East construction giant are facing uncertainty after it was revealed the firm is in severe financial difficulties.

Firm Tolent – which has offices in Thornaby – has been involved in some of the region’s largest recent building projects, including Hadrian’s Tower in Newcastle, the Milburngate development in Durham and Riverside Sunderland, reports Chronicle Live. Current projects include The Meadows development in Yarm and the Hardwck Grange development in Sedgefield

The firm is a £200m business which employs around 450 people. But the company’s construction sites closed down on Friday and some sub-contractors have removed equipment from those locations. Calls to the the company’s head office in Team Valley were not being answered on Friday afternoon and the HQ was almost deserted.

It is believed the company has called in business advisors in a bid to help secure its survival.

The difficulties facing Tolent come at a difficult time for the construction industry, with Killingworth firm Metnor signalling last week that it was filing a notice of going into administration. A high-profile survey of the sector last week said it was declining due to rising costs and lacklustre market conditions.

Some of Tolent’s problems were revealed in its most recent accounts, in which turnover reached £197.7m but the firm recorded a £4m loss after what it described as a “perfect storm” of adverse trading conditions. The loss was partly blamed on the collapse of Newcastle company High Street Group, with whom Tolent had worked on the Hadrian’s Tower scheme. Tolent has been named as one of High Street Group’s creditors in that company’s administration document, with a bad debt of £2.1m.

In July 2021, Tolent secured a £12m finance facility to help it after a challenging year, saying it had sealed the asset-based lending facility from Independent Growth Finance (IGF) to provide the working capital and the flexibility it needed to support its business. At the start of last year the company raised a further £3.7m from existing shareholders and secured a two-year extension on its debt facilities, saying that “the group required to be refinanced in order to continue as a going concern”.

Tolent has been involved in a number of key regional developents including the construction of a new Aldi supermarket at Kingston Park, Newcastle, a £3m intensive care unit for South Tyneside and Sunderland NHS Foundation Trust. It also carried out the transformation of the NHS Nightingale Hospital in Sunderland and last year completed the sale of its land at Seaham Garden Village to a trio of developers including Karbon Homes, Taylor Wimpey and Miller Homes.

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UKGBC assembles expert team to accelerate action on commercial retrofit

The UK Green Building Council (UKGBC) has announced a team of cross-industry experts who will support its mission to accelerate commercial retrofit.

The energy required to heat, power and operate commercial buildings accounts for nearly a quarter of the built environment’s carbon footprint in the UK1. Securing a net zero built environment in line with the Paris Agreement cannot be achieved without addressing the operational emissions associated with this sector, meaning it is essential that the UK property sector accelerates the delivery of commercial retrofit programmes. 

In addition to the climate impact of commercial buildings, accelerating the pace of commercial retrofit will also be required to meet the growing demand for sustainable office space. Recent analysis from UKGBC member JLL has revealed that real estate assets with stronger sustainability credentials are increasingly attracting higher capital values and rents. Their research indicates that office buildings that are more sustainable are likely to drive greater interest from occupiers on account of the reduced operating and energy costs. Furthermore, JLL note the forthcoming tightening of Minimum Energy Efficiency Standards (MEES) means investors are likely to consider more sustainable buildings to be less risky, and that it will pay to be on the front foot and invest in the green building sector now. 

Given the scale of energy efficiency improvements required to secure a net zero built environment, and the financial value it can unlock for asset owners, UKGBC is embarking on a new project to deepen understanding of the carbon and cost effectiveness of different retrofit measures for commercial assets. It will explore how to overcome common challenges faced by industry, as well as expand on UKGBC’s recent guide ‘Delivering Net Zero: Key considerations for Commercial Retrofit’, clarifying how to set out retrofit strategies for different asset types and providing more detail on tangible measures.  

To support this project, UKGCB has mobilised a team of 30+ experts from across the industry, ranging from developers, investors to cost consultants. The new Task Group will support UKGBC in exploring common retrofit measures that offer different types of office properties a pathway to achieving net zero carbon. They will do this through assessing real world case studies in the UK, understanding where retrofit measures have been effective and where lessons have been learnt. The findings of this study are expected to be published in Summer 2023. 

UKGBC’s Head of Climate Action, Yetunde Abdul said:

“Improving the energy efficiency of our commercial buildings has the potential to deliver significant carbon savings across the built environment, and with demand for sustainable office space surging in the UK, this is an opportunity we can’t afford to waste. Collaboration across this sector is key to accelerating the pace of action towards our common climate goals. That is precisely why UKGBC has assembled a team representing the breadth of the built environment to assist us on this timely and important piece of work.”

 

COMMENT:

Given that lighting is estimated to contribute 6% to the global carbon footprint, it would suggest dowsing the barrage of lights that emit from commercial city buildings all night would be a sensible step.  However the Health and Safety Councils argument is that it puts ‘trip risks’ in the way of the security guards that nightly walk the passageways of such buildings. 

Seems to me we should evaluate the trip risk for the few against the ultimate and seemingly inevitable risk to so many from carbon pollution.  What do our readers think?

 

 

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ECO+ scheme will increase need to balance roof space ventilation with aesthetics

More discreet ventilation solutions will be required, according to Klober, part of the BMI Group, as improved insulation through the government’s new ECO+ scheme could increase the risk of condensation in the roof space.

In January, the government announced an additional £1 billion of funding to the ECO scheme, to incentivise installation of insulation types including loft, pitched roof, flat roof, and room-in-roof. The new ECO+ is an extension of the existing ECO scheme which requires suppliers to help low income, fuel poor and vulnerable households.

In response to this initiative technical experts at Klober are reminding the industry that better insulation means increased risk of condensation and therefore a need to address roof ventilation. This is particularly pertinent across well-insulated and newer properties where the building is still drying out.

 

Nick King, Portfolio Manager at Klober has highlighted that more people have wanted to use in-line roof vents this year, to improve the aesthetic of a property: “Prolonged condensation exposure can not only affect homeowner health but also put buildings at risk of costly repairs. As such, there is a need to be a focus on more discreet solutions which deliver on form and function.”

 

Klober reports that more people are looking to the market’s largest range of roof tile vents for more seamless solutions. In particular, the business has seen an increase in sales for thinner and smaller vents such as its Thin-Line Tile Vent.

Roofing contractors are also advised that planning in advance can help reduce the amount of vent tiles required if close attention is paid to the different technical properties such as ‘free air space’ and ‘ventilation capacity’. This is said to impact the amount required and the spacings they need to be installed at.

 

Nick adds: “Roof tile vents are a critical component in helping to address condensation issues and a category we have seen much growth in. In more recent months we have started to receive more special requests through to make them as invisible as possible. We even keep some green paint on hand as we’re often asked to replicate a weathered tile to look like moss.”

“It’s good to know that more attention is being placed on the aesthetics of the roof, but it is so important that this doesn’t come at the expense of good ventilation. This is why we invest significantly in compatibility to ensure we have all shapes, sizes, colours and textures to match tile specification. It’s for this reason that we are proud to say we have the largest range on the market.”

WEBSITE

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Supporting Access to Clean Water for All

SFA Group reconfirms its support for access to clean water for all with Planet Water Foundation

To commemorate World Water Day on 22 March, SFA, Saniflo UK’s parent company, is supporting the supply of clean drinking water to 250 school children in Vietnam, working in partnership with Planet Water Foundation. The SFA Group’s donation covers the deployment of an AquaFill water filtration system, a hygiene education programme to be delivered by Planet Water Foundation and 500 ml reusable water bottles whose packaging recalls the key educational messages of the hygiene education programme through drawings of the ten critical steps of hand washing. The project at the Hanoi primary school will start in May with the installation of the AquaFill system and will take 120 days to complete. For more than a decade, the SFA Group has supported World Water Day, World Plumbing Day and World Toilet Day with numerous humanitarian projects to promote access to clean drinking water for all, partnering with Planet Water Foundation since 2021.

The AquaFill system works by gravity – so no external supply is needed – and with three-stage water filtration using hollow fibre ultra-filtration and activated carbon technology. The process ensures the removal of pathogens, including fungi, bacteria, parasitic worms, viruses and other protozoa. The process filters 1,000 litres of water per hour from a municipal non-potable water supply, equivalent to the daily drinking water needs of 1,800 people. Unfortunately, many schools in urban and peri-urban centres in Southeast Asia have a municipal water supply that is unsafe to drink, forcing schoolchildren to drink unsafe water or spend considerable sums on bottled water. The hygiene education programme will also benefit the parents and relatives of the 250 children, who will be encouraged to share their new knowledge on healthy hygiene.

Saniflo UK Managing Director, Tim Pestell, says: “We’re delighted to contribute once again to a very worthwhile project. We don’t know how fortunate we are in the UK to have constant access to plentiful, clean drinking water. We hope the school children of Hanoi and their extended families will benefit greatly from the project and thrive with the new AquaFill filtration system and hygiene education programme.”

 

CLICK HERE FOR THE SANIFLO WEBSITE

 

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COUNTERING THE BREXIT-DRIVEN SKILLS DEFICIT

Builders call for relaxation of immigration laws to counter Brexit-driven skills deficit

Almost half the Federation of Master Builders membership is in favour of relaxing immigration laws to counter a skills deficit in the industry.

Labour supply was badly impacted by Brexit which saw many highly-skilled European builders return to the continent.

The latest State of Trade Survey from the FMB reveals that 48% of members are in favour of the Government introducing plans to attract more skilled labour from abroad to help address the chronic skills gap in construction – 21% opposed changing immigration rules, and 27% neither supported nor opposed them.

With the Construction Industry Training Board (CITB) reporting the need for 53,000 additional workers a year to meet construction demand, the FMB is calling for all options to be considered to get Britain building.

The FMB survey data also stressed support for any immigration measures to be underpinned by investment in UK-based skills training.

The survey also reveals a fall in workload and employment and a significant drop in enquiries for future work. Small house builders have been particularly badly hit, with a dramatic decline in workloads and enquiries.

As cost-of-living pressures continue to bite, this new data foreshadows a tricky economic climate in 2023 that the Government has an opportunity to address at the Spring Budget, said the FMB.

Brian Berry, FMB chief executive, said: “The growing skills gap in the construction sector is a ticking time bomb that the Government can’t afford to ignore.

“Whether that’s looking again at targeted immigration measures, supported by half of builders in the latest FMB State of Trade Survey, or using the Spring Budget to bring forward a comprehensive skills strategy to roadmap how we fill the gaps and train at scale, it’s time to act.”

He added: “This quarter’s FMB State of Trade data shows some potentially worrying signs for every part of the construction sector with workloads and enquiries down significantly.

“Ambitious plans are needed to get small, local builders motoring. A first step is the need to unblock the planning system to get more homes built.

“There is also an urgent need to invest in greening our homes, with a long term plan towards retrofitting the existing housing stock. This move would give construction businesses the certainty they need to invest.”

Source: The Business Desk

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Inflation Destroying Construction Confidence

Gleeds’ winter market report has revealed that nearly nine in ten construction professionals are concerned about rising inflation sapping confidence in the market and threatening future schemes. 87% of respondents to the international property and construction consultancy’s most recent survey said that inflation was having an impact on the viability of projects, with just under 70% believing that the current challenges are impacting growth of the construction industry.

 

Contractors rated a lack of investor confidence and materials and labour cost escalation as the greatest threats to the industry. As a result, 67% of those quizzed expressed concern that ongoing economic pressure will also negatively impact the industry’s drive toward net zero, while 60% were worried that it will influence the pursuit of greater diversity in the built environment.

 

More positively, the report did reveal an improvement in the availability of products and materials, with 76% noting a settling of long-term supply issues. Over half of those questioned also found that materials prices over the same period were beginning to flatten, compared to just 32% in Q3. Labour availability continues to be a problem however, with 65% experiencing issues and a massive 88% reporting increases to worker’s rates.

 

Speaking about the findings of the report, Gleeds CEO Graham Harle said, “It’s heartening to see that the squeeze on materials is beginning to ease and that collaboration across the supply chain has continued, however the fact that sustainability and diversity targets may be suffering as a result of continued economic pressures is a concern. Threats to viability are worrying, but opportunities do remain for some sectors and a considerable proportion of respondents were of the view that a slow down in the industry may actually go some way to stabilising the industry after a turbulent couple of years. Only time will tell.“

 

Asked about the impact of the chancellor’s Autumn Statement, only 3% of respondents said that it had been worse than expected with regards to the construction industry. Despite rumours that the government was re-evaluating and planning to cut major projects to tackle the deficit, pledges included more than £600 billion of capital spending over the next five years for schemes including HS2, Northern Powerhouse Rail, East-West Rail, and the New Hospitals Programme. However, significant pressures remain for departmental capital spending, which will be “maintained in cash terms until 2027/28”, meaning the squeezing of budgets.

 

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£6m to Accelerate Decarbonisation

Funding of £6 million has been awarded to 20 research projects to accelerate decarbonisation of industry

  • Funding for these 20 projects across 14 UK research institutions will support the UK’s green growth and net zero ambitions by 2050
  • The Industrial Decarbonisation Research and Innovation Centre’s (IDRIC) whole systems approach is supporting industrial decarbonisation in Scotland, Northwest England, Teesside, Solent, Black Country, Humber, and South Wales

IDRIC, part of the UKRI Industrial Decarbonisation Challenge (IDC), has awarded close to £6 million to support the reduction of carbon emissions in the UK’s largest industrial clusters. Decarbonising these clusters is a key step towards reaching the UK’s net zero emissions target, a priority that has recently been reinforced by the government-commissioned Net Zero Review.

Industry plays a vital role in society, contributing to 9% of the UK’s GDP. It produces the vital materials and products that are fundamental to our day-to-day lives but contributes around 25% of global greenhouse gas emissions, and thereby, to climate change.

IDRIC recently launched a call for a second wave of new industrial decarbonisation research projects, offering stakeholders the opportunity to respond to emerging innovation and research needs and complementing its existing programme of projects.

The £6 million funding will go towards 20 projects covering a wide range of technological, environmental, economic, skills and social aspects of decarbonisation.

Pressing priorities that are addressed include: low carbon technologies (carbon capture, usage and storage; hydrogen; greenhouse gas removal); systems and scale up; policy frameworks; workforce skills development; and equality, diversity and inclusion.

The successful bids demonstrated how they would employ active dialogue and collaboration with key industrial stakeholders to ensure that outcomes and impact remain closely tied to industry needs. A full list of successful bids is listed below.

The funding extends IDRIC’s current research programme of 40 projects which is accelerating research and innovation through a whole system approach. IDRIC collaborates with over 200 partners and stakeholders including academic institutions, industry, community representatives and policy makers to address urgent innovation needs – realising goals with impact as well as sharing and integrating knowledge across disciplines and sectors.

Bryony Livesey, Challenge Director, Industrial Decarbonisation Challenge, UKRI, said: 

“The announcement of this funding continues to build upon IDRIC’s whole system approach to decarbonising industry, enabling the UK to remain at the forefront of a global low-carbon future. These successful Wave 2 projects will build evidence on a range of areas from economics and emissions to skilled jobs and wider net zero policy, supporting UK’s green growth and net zero ambitions.”

Professor Mercedes Maroto-Valer, Champion and Director IDRIC said: 

“We were delighted by the quality and volume of applications received in response to our funding call and as a result we have awarded funding to projects that address a wide range of pressing research priorities.

“IDRIC’s programme has demonstrated that we have the tools to transform industry and make it an engine of green growth. Our Wave 2 funding accompanied by the continued support of industry and academia will further enhance innovative decarbonisation solutions at pace and scale in the industrial heartlands, where it matters most.

“We are excited about the imminent announcement of our call for Flexible Funding and Secondment programmes. These further exciting opportunities will offer the chance to stakeholders to respond to emerging research needs, as well as encouraging skills development and knowledge transfer in the industrial decarbonisation sector.”

 

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