Contractors placing costs above climate, says new report
The latest Market Report from cost consultants Gleeds, has identified that contractors are placing costs above climate as materials shortages threaten ‘build back better’ campaign, and that only one in seven clients are prioritising net zero construction.
With COP26 now well underway Gleeds’ latest Market Report, Weathering the Storm, has revealed fears that continued materials and labour shortages will prevent the UK’s construction industry from meeting its green targets. Three quarters of those quizzed felt that ongoing issues would have a detrimental impact on the sector’s ability to build more sustainably, with only 15% saying that their clients see creating net zero construction as a priority.
With 83% of contractors reporting that delivery problems have affected programmes, confidence in a swift return to normal remains low. Almost a third of respondents predict that materials shortages will continue well into the second half of 2022, with availability and cost of sustainable products invariably influencing specifications. Indeed, 64% of contractors claimed that considering alternative specifications would be key to keeping projects on track.
It is clear that current market conditions are creating conflicts between the need to transition to lower-carbon products and the overall financial viability of developments. For example, in a recent LinkedIn poll from Gleeds, 47% agreed that the red diesel subsidy for off-highway construction machinery should be ended as planned in April 2022. However, 40% of respondents are now of the opinion that the end of the subsidy should be postponed due to the level of commercial pressures contractors are facing. So, finishing the job on time and to budget is over-riding concerns about saving the planet.
Commenting on the findings, Graham Harle, chief executive of Gleeds, said, “With shortages of materials and labour showing no signs of abating, it is inevitable that those in the built environment will have to make some difficult decisions around cost vs climate in the coming months. While cost remains king for over 50% of clients according to our survey, carbon is rapidly catching up and I am hopeful that a balance can be struck which will enable the industry to meet the targets set out in the CO2nstruct Zero Performance Framework.” He went on to add.
“To succeed, it will be vital that more consideration is given to future-proofing building stock and to ensuring that the talent pool required to deliver increasingly ambitious schemes has not run dry.”
Materials issues are being compounded by the ongoing labour crisis, demonstrated by the fact that over 80% of contractors questioned had experienced issues in the three months to October – almost double the figure from Gleeds’ summer survey, and a significant increase on the 17.5% reported in the spring. As demand for skilled labour continues to outstrip supply rates are also on the rise, with 93% of contractors observing wage increases in their region over the same period.
