Storm forces
Adding to the previously reported ‘Tsunami of work’ that UK builders are facing as activity postponed due to Covid restrictions catches up with new work, has been the recent demand generated by the storm trio of Dudley, Eunice and Franklin. Builders that were already busy and having issues sourcing materials are now under even more pressure.
We are already seeing issues when trying to source scaffolding to reach damaged roofs. Scaffolders are busy and as a result are now able to charge higher rates for their services – if an available scaffolder can be found at all. There are reports of scaffolding estimates coming in at almost twice the anticipated price in some areas and there are no indications yet that this is unusual.
This is against the background of inflation forecasts still rising despite cooling growth rates of construction output and are instead led by material and labour shortages. Annual construction material costs from the Department for Business, Energy & Industrial Strategy (BEIS) rose 22.7% to November, and the Office for National Statistics reports that construction vacancies rose by 43% between the second and third quarter of 2021. Pressure on labour costs, alongside the material price rises, puts the industry in a vulnerable position, as we reported in our January update.
Home improvement
One fact that many may underestimate is the surge in home improvement spending over the last year. It is reported that this sector has seen increases of 49% which has affected some material availability and cost. It makes sense that it is the same materials that are used in the insurance repair sector – Timber, Cement, Insulation, Plywood and Roof tiles – are those most affected and the recent storms will only add to the general lack of availability and increased costs.
Some builders are being told by merchants to add between 15-20% if they are pricing work that they are not starting for a month. As a result, we are seeing more quotes where the builders are separating the cost of materials and labour on jobs to make it clear where the increased cost is from. Some builders are even quoting labour only with an unfixed estimate for material costs.
We are increasingly unlikely to be seeing fixed price quotes and more likely to see increased and unspecified lead in times as builders seek to protect themselves from increasing material costs.
What we can do
As adjusters in the commercial claims business, we will have to consider the cost of delaying the repairs against the potential to pay more to keep a business going or to mitigate further damage following an insured event. The recent storms are a good example of this and paying a premium to get a scaffold up quickly to protect the building or paying a premium to get repairs completed quickly will have to be considered where there is a BI element.
For further information please contact Nick Turner on 07736 892148 or n.turner@woodgate-clark.co.uk
