Instability in the supply chain and rising costs have blighted the construction industry since 2021. Their supply chain, may, however, offer main contractors an answer, according to Sean Robinson, Estimating Manager, Acorn Aluminium.
Rising cost of construction materials
According to the latest government figures the cost of fabricated structural steel has risen by more than 40 per cent year on year. The Department for Business, Energy and Industrial Strategy, said concrete reinforcing bars jumped by 44 per cent, while particle board increased in cost by almost 45 per cent.
The impact of material price increases on UK construction
Rising material as well as rapidly increasing labour costs have led to a lack lustre performance by the sector this year. According to the latest figures from the S&P Global Purchasing Managers’ Index (PMI), the construction sector dropped to 52.6 in June from 56.4 in May – the weakest expansion since September 2021.
“It’s really difficult for main contractors”, says Sean Robinson, Estimating Manager, Acorn Aluminium. “They’re winning the work but by the time they’re breaking ground, those costs have increased dramatically.
“We’re talking to customers who have picked up say a £40million job and by the time they get to deliver it the costs have risen to £44million. That puts them in the unenviable position of having to go back to the client with a cost increase and they then have to maybe start looking for new or additional investors. It’s very difficult for main contractors right now.
“Steel is the one that’s really hitting them hard at the moment. Steel prices are so volatile so at the minute you’re only able to fix prices for 10-days.”
Have prices for architectural aluminium increased?
Sean says the position for aluminium is marginally more favourable. Prices for aluminium are up on average by around 25% year-on-year but the market has been less volatile, making it easier to predict when increases are coming.
“For example, we’ve been able to look at time frames for project delivery and predict when price increases have been coming down the line and putting in place vesting agreements, so we purchase and hold the product guaranteeing prices for our customers.
“Not every customer is going to want or be able to do that so we have to take a stab at what we think prices are going to be after contract and build in a fixed price lump sum.
“We’re fairly good at doing that now but the key thing is not to make that figure uncompetitive while still protecting the contractor from under-pricing the bid.
“The most important thing is to be proactive. We’ve seen that over the last two-years.”
How value engineering can support main contractors in delivering better value for customers
With more than four-decades expertise in the design, manufacture and installation of aluminium curtain walling, facades, commercial glazing systems and aluminium windows and doors, Acorn Aluminium works with leading architectural aluminium systems companies.
“Main contractors by definition aren’t specialists in architectural aluminium – it’s why they work with us” Sean continues.
“They rely heavily on the information they get from us. The more we can give them, the more we can support them, then the more likely is that they’ll deliver the winning bid.
“We can support the contractor base most effectively the earlier we get in. that’s ideally before the designs are dictated at Stage Four.
“If we can get in at Stage Three before all the details are agreed there’s often an opportunity to tailor the specification to deliver better value. 90% of the time there will be an opportunity to deliver a cost saving without compromising on performance.
“Now in a climate of increasing costs climate of got costs that’s very important. It supports our bid on their bid, and ultimately delivers better value to the customer.”
We work in partnership with our clients to engineer in value into project delivery and can support the design process in addition to manufacture of curtain walling, facades and aluminium windows and doors.
This also extends to installation, including placement of our non-working supervisors on site to manage delivery. This means that they aren’t on the tools and are there instead to coordinate with other trades and site managers to ensure smooth and cost-effective deliver.
You can read more here.
“The best thing about estimating is securing the job”, says Sean. “You do all this work up front – it could be three-months, five-months, six-months from the quotation period. You might have gone through infinite revisions, re-pricing the job. There’s a massive amount of upfront work.
“Then you bring that job in for the contractor and it’s a real buzz. The whole reason that we’re here, is to help the contractor win business”, Sean concludes.