“This could be the first indication of a market slowdown, which will help bring costs down, but we wait to see how further pressure of both wage and energy rises manifests itself in the construction sectors.
“In 46 years of business we’ve seen these trends many times before and we remain in a strong and stable position to weather this storm.”
“The group is focused on mitigating issues around pricing strategies and meeting the current unprecedented inflationary pressures as successfully as possible. We aim to ensure that we do not take on any undue risk and continue to carefully consider and evaluate the deliverability of every new project.”
Michael Conlon, chairman of Conlon Construction, which has its HQ in South Ribble, says a “myriad of challenges” have played a part in rising costs. He cites the war in Europe, which led to sanctions cutting off timber supplies from Russia, energy hikes sparking increases in the price of cement, plaster, bricks, tiles and steel, and the cost- of-living crisis.
Michael says: “Clients have often budgeted years in advance, but costs are now higher, forcing delays and, in some cases, the cancellation of projects.
Jeremy Hartley
Jeremy Hartley, managing director of the Eric Wright Group, another major Lancashire construction and development business, says the impact of rising costs and inflation is making it more difficult to get developments out of the ground.
He says: “Viability is constantly being challenged and this is particularly the case in the commercial property sector. Rising costs are combining with increased interest rates and reduced market investor confidence.
“We’re working collaboratively with clients and subcontractors to ensure there is a degree of future-proofing on every project and to factor in an allowance wherever possible. We operate an ‘open book’ policy with our clients to give full visibility and as much cost certainty as we can.”
He adds: “On projects that are in the early stages, or which have not yet begun, we are liaising with our clients to provide them with the opportunity to make early commitments and avoid more significant price hikes wherever possible.
“On live projects we continue to work with our supply chain partners to ensure that procurement and commitments are made at the earliest possible stage taking steps like storing materials on site in some instances, well in advance of the date that they are actually required.
“The cost of finance is showing signs of levelling off or even reducing in the medium term although it’s hard to see it reducing to previous levels given the political turmoil of 2022.”
Jeremy says there has been some settling down on general pricing since last year but believes the issue will continue to impact throughout 2023 and adds: “We are not yet on the home straight.”
He says: “We are being increasingly careful with how capital is used to maintain our financial resilience in uncertain times. New business cases are being more thoroughly tested from all angles before embarking on ventures.
“As a sector we need to drive on. Many professionals, even some in senior roles, will not have encountered double digit inflation before. It is important to stress, therefore, that time is not on a client’s side if they choose to delay.
“Time spent attempting to find savings may perversely have the opposite effect precisely because of the impact of high inflation.”
Housebuilding has also been affected. Joel Winders, commercial director at Lancashire developer Kingswood Homes, says: “We anticipate price rises to continue throughout 2023 albeit at a slower pace than previous years, but this coupled with a predicted levelling off in house price growth in 2023, presents a tough challenge for the industry.
“We are predicting a decrease in housing numbers for our next financial year in the region of 20 per cent when compared against our current forecast. We are well placed and resilient to any potential changes in the market given our strong land bank and funding partnership with Homes England.”
David Robinson is managing partner at Preston headquartered architecture, design and masterplanning practice FWP. Project and cost management are among its disciplines, and he sees the industry is likely heading into “calmer waters” towards the end of 2023.
David says industry data indicates that construction inflation, moving forward, should be well below the RPI inflation level. He says: “That would suggest there is a calming as some raw materials are stabilising in cost.
“The last year or so has been quite volatile as contractors have had to contend with an unpredictable situation in terms of fixing material or subcontractor prices. The pressure has been on, when it comes to starting projects and whether to go now or have another look at the financial viability.”
He adds: “Striving to achieve cost certainly is a key issue in all the projects that FWP is involved in.”
LANCASHIREBUSINESSVIEW.CO.UK
Steve Brennan CEO
@Bespoke_HQ bespokedigitalagency
DOES YOUR WEBSITE WORK FOR YOU LIKE
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Even the best matched prospect won’t engage unless we offer genuine value without any risk. For example a free book, white paper or interactive tool will all engage visitors. A good lead magnet pulls in leads on its own 24/7.
3 - Laser targeted visitors
In the 2020s we can use targeted ads that are only seen by our exact ideal customers. We can surround them with campaigns for weeks. Why would we put a website live in the 2020s without doing this? And why would we invest in old fashioned SEO and simply hope that our ideal customer happens to find us that way?
Does your website work this way? Does it work for you like an automated salesperson?
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