Materials shortages threatening pace of rebound

Aaron Morby 4 years ago
Share

Fears are growing that materials shortages could derail the strong construction rebound.

Residential activity leads ways as all sectors of construction swing back into growth
Residential activity leads ways as all sectors of construction swing back into growth

According to an industry poll of construction surveyors, the recovery strengthened in the first three months of the year lead by strong house building activity.

Respondents to the latest RICS survey reported workloads rising, with confidence growing, in the face of greater tender enquiries and firms planning to increase hiring activity over the rest of the year.

But the majority (57%) also red-flagged materials shortages as their main obstacle to building back better.

Financial constraints and a shortage of labour also continue to be issues that are holding back projects, although financial constraints have eased since this time last year, when 70% of respondents said it was their biggest challenge, compared to 45% now.

The survey also revealed predictions of a post-Covid cut-throat period of below-cost bidding failed to materialise with tenders now reported to be coming in within 5% of costs.

The greater level of confidence is also reflected in profit margins which returned to positive territory for the first time in over two years (Q4 2019).

Simon Rubinsohn, RICS chief economist, said: “The rebound in workloads over the past quarter allied to the positive expectations for the next twelve months paints a positive picture regarding a broader recovery in the economy.

“But what is particularly encouraging is the suggestion not just the construction and infrastructure sector will start hiring once again but also that the compression in profit margins may just be beginning to turn around.

“While it will take more than one quarter to signal the emergence of a sustainable trend in profitability, the indications are that the industry has adjusted relatively well to Covid related work practices with most respondents to the survey suggesting only a small hit to productivity.

“Alongside this, the fact that over 80% of respondents are not seeing  evidence of tenders coming in below bids is another positive signal regarding how the sector has weathered this storm.”

2021 RICS Q1 construction survey


26% more respondents report rising workloads at the all sector level (+2% Q4 2020).

39% more respondents saw a rise in private residential workloads

Infrastructure workloads also picked up further with 34% more respondents reporting a rise.

Social housing and public works also increased over the quarter, as did private industrial and commercial but to a lesser extent.

Latest news

13-year-old becomes UK’s youngest qualified digger driver

Grandson of Gallagher Group chairman sets industry record
3 hours ago

Cubby reborn in £12m Svella-backed takeover

£50m revenue target set as 14 firms combine under new Cubby Group banner
18 hours ago

North East NHS trusts plot £3bn health estate overhaul

Market engagement begins for major construction push across four trusts
18 hours ago

HG goes green on cranes in £1.2m switch to battery power

Diesel-free crane drive cuts fuel bills by 94%
19 hours ago

Developer fined £165,000 for fire safety failings

Firm ignored fire safety orders on apartment job in Preston
19 hours ago

Bidding to start for £1.8bn North West framework

Contractors invited to bid for latest Procure Partnerships deal
19 hours ago

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
1 day ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
2 days ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
2 days ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
2 days ago

80 energy projects unlocked as Ofgem backs grid expansion

£24bn energy networks deal gets green light from regulator
3 days ago

How to see your stories on the Enquirer

Join our Suppliers and Buyers directory to get your news published
2 days ago

Henley lands Midland Mill revamp on Leeds tower scheme

Restoration of 18th-century mill kicks off on South Bank regeneration project
2 days ago

New boss at Eric Wright Civil Engineering

Gavin Hulme takes top job as Diane Bourne moves to group role
2 days ago

Pinewood submits £1bn data centre plan

Studio giant adds green and learning spaces to tech hub blueprint
3 days ago

Record results after TClarke goes private

Britain's biggest M&E contractor flourishes after de-listing
3 days ago

Dalkia lands £200m nuclear maintenance deal

1,000 nuclear FM staff to join M&E contractor
3 days ago

Construction comeback to outpace wider economy

Arcadis forecast fueled by spending review optimism
4 days ago

First steel goes up on giant car battery site

Severfield gets to work on McAlpine Somerset site
4 days ago

Permasteelisa wins cladding deal on Bovis city tower

Facade specialist lands package at 60 Gracechurch Street
3 days ago

Fox buys recycled asphalt specialist Fisher

Acquisition adds major recycled asphalt capacity in north west
3 days ago

Major Building Safety Regulator shake-up to end tower delays

HSE stripped of control and top fire chiefs brought in to fast-track stalled schemes
4 days ago

Hinkley trio sign Sizewell civils deal

Balfour,Bouygues and Laing O'Rourke form Civil Works Alliance for new power station
4 days ago

£3.9bn data centre plan for Ravenscraig steelworks

Green energy to power massive new steel to silicon AI campus
4 days ago

Breakthrough on HS2’s second longest tunnel

8.4 mile Northolt to Old Oak Common drive completes
4 days ago

Neilcott on fast-track to debt-free employee ownership

£22.5m loan nearly paid down after big profit year
4 days ago

TfL kicks off race for £700m Tube station upgrade

South Kensington and Elephant & Castle top the pipeline list
4 days ago

Corbyn Plant Hire fleet goes under the hammer

Kit to be sold off by sister firm to collapsed groundworks contractor
4 days ago

Government wields procurement stick on late payment

New rules would block slow payers from bidding on big public jobs
7 days ago

Hercules buys power line labour firm for £15.7m

Labour supply specialist snaps up Advantage NRG to tap booming electricity upgrade market
7 days ago