Civils firms pushed to brink by fuel and metals inflation

Aaron Morby 13 years ago

Civil engineering contractors are being squeezed by sharp rises in materials and fuel costs and pressure to keep down tender prices.

According to the Civil Engineering Contractors Association annual survey of firms, hopes of a recovery in the construction industry are fading because of an increasing inflation burden.

The trade body warns jobs will be put at risk because contractors are failing to pass on basic cost base increases.

The survey of price movements across 20 key materials and commodities in the last 12 months revealed fuel prices up 10% and metal costs up by around 7%.

While labour costs remained relatively flat, most other categories recorded increases in the cost of most basic materials, rising at a faster rate than last year.

But tender prices are still slipping, as contractors fail to pass on their rising costs to customers, putting further pressure on margins.

CECA director of external affairs Alasdair Reisner warned: “Inflation has risen rapidly up the list of our members’ concerns, and these figures show why.

“We are doing all we can to help our members handle this extra burden, including arranging seminars on commodity price hedging, and lobbying clients to include suitable inflation indexing in contracts.

“But the real worry here is that while costs continue to skyrocket, the prices our members can tender are not keeping pace, squeezing margins to an unsustainable level.

“He said: “Procurement practices need to take account of current concerns over inflation, in order to offer contractors a sustainable means of recovering costs due to inflation.”

    Materials inflation in year to April

  • DERV fuel prices increased by an average of 10.4%
  • Aggregates inflation up from 2.9% in 2010 to 5.3%
  • Coated stone up from 3.8% to 7.5%
  • Cement prices up between 2.6% and 5%
  • Ready mixed concrete up by 5.7%
  • Precast up by 4.8%
  • More than 50% of firms said rebar prices rose 5.1% – 12.5%
  • Sheet piling rose on average 5.9%
  • Fabricated steelwork prices rose on average by 6.5%
  • Plastic products rose by an average of 5.1%, double the rate last year

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