What in any "normal" year might be considered positively cheery news, that construction output is at its highest level in 20 months, looks set to be overshadowed by looming materials and labour shortages and resulting price increases.
The twin terrors of COVID and Brexit have, amongst other challenges, lead to:
- a global shortage of materials as has been commented on widely in the construction press, and recently by my colleague Sarah Elliot https://insights.wedlakebell.com/post/102gwtm/a-material-difference-brexit-covid-what-next and https://insights.wedlakebell.com/post/102gw23/perfect-storm-for-developers; and
- a shortage of skilled labour in the UK construction market https://www.constructionnews.co.uk/news/lack-of-specialist-labour-could-hit-delivery-of-major-projects-13-05-2021/
The pressure on sourcing and delivery of both materials and labour across the UK construction industry will be compounded by increased demand across the industry, and between sectors, for these resources. We have already seen the practical effects of this in terms of increased material prices blowing out project costs and delay in obtaining materials and labour doing the same for programme.
It can only be a matter of time before the legal ramifications catch-up and we see a rise in cost and delay claims on existing projects as a result. For new developments parties may try to pre-empt these issues by addressing the effects contractually which will no doubt lead to some fraught commercial negotiations about who should bear the cost and risk of delays in procuring materials and labour in the current unpredictable environment.