Building Costs and Delays – Charles Holt (Lincoln) 

Anyone involved in building anything these days is either having supply problems, or they are extremely lucky.  Price rises of materials are perhaps providing the biggest problem, as they are coming with little warning, and seem to be of random amounts.  As an example, concrete was quoted to a client of mine in the early summer at £93 per m3, whereas he was quoted £130 per m3 at the end of July.  It is anyone’s guess as to what the price will be when you read this piece.

Luckily, we decided to lock into the lower price and buy all the concrete we needed to finish the job six weeks ago, for delivery over this summer.

For those who have already started on projects without agreed (i.e., contracted) prices, they have to decide whether to carry on and pay the extra for materials, or to pause.  Usually it is best to carry on, for a whole host of reasons, but of course every case is different.

This is causing further headaches with lenders, who may well have built a loan arrangement around an agreed build budget, which is now facing up to 30% over-runs.  Again, every case is different, but an understanding bank manager is clearly a huge asset in this scenario….

Of course, material supply is the other big issue.  In the case of my client above, because we have locked into a comparatively low price for the concrete, the supply is between a dribble and steady.  Unsurprisingly, as the concrete company can sell all they produce at 30-40% more than the price we have contracted, it is coming in very slowly.  There is no point in shouting at or threatening suppliers – this will guarantee an even slower flow.

For those that haven’t started their builds yet, other decisions are being debated.  Do you delay until it has all ‘settled down’ (whatever that may look like…)?  Do you shelve it altogether?  Can part of the project be cheapened, or cut back?  Or do you bite the bullet and get on with it?

Suffice to say, none of these options is easy.  A steady hand on the tiller coupled with sound assistance from an understanding consultant can be hugely helpful in making what will hopefully prove to be the right decision in the long term.  For help with project managing in these uncertain times, contact Charles at charlesholt@fcgagric.com or your local FCG Office.