Post Brexit skills shortages to push up tender prices by 4%

Grant Prior 12 months ago
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Tender prices are set to rise by 4% in 2022 as post-Brexit skills shortages bite across construction.

The latest forecasts from Arcadis predict rises after a period of industry “treading water” while politicians dither over Brexit.

The consultancy has held its short term inflation forecast at just 2-3% to 2021 as clients take a ‘wait-and-see’ approach to the current political turmoil.

Delays are adding competitive pressure to the market but the trend is highly sector specific.

Markets such as data centres are particularly busy, while others including offices, industrial and schools are on a downward curve.

Arcadis said there is enough competition to put a partial brake on input cost inflation in the short to medium term.

But tighter labour markets from 2022-23 means costs are predicted to rise by 1% per annum, reaching 4% by 2022.

Earnings growth for construction employees has averaged 4.2% over the past year, up from 2.1% in 2017.

Simon Rawlinson, Head of Strategic Research and Insight at Arcadis, said: “UK construction has a long-established skills and training problem.

“With skilled EU labour making up 8-10% of the workforce, specialist contractors and employers have been shielded from the necessity of developing and maintaining the skills of their workforce.

“However, with the prospect of post-Brexit restrictions on migration, we’re now facing a real crisis in terms of future labour capacity.

“The supply chain will need to look at other options for increasing productivity.

“Off-site manufacturing currently delivers around 8% of industry output, but with the introduction of a government mandate, this could increase significantly.

“Adopting new technologies to improve processes will help to eliminate waste and duplication, while a renewed focus on training and re-training – particularly with the introduction of T-levels in 2020 – will further help to support a much-needed flow of talent.”

 

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