Brexit, Brexit, Brexit
Location, location, location will be the real challenge for the Construction industry as a whole in 2018. Whilst none of us have any idea of the ultimate impact of Brexit, the uncertainty created has already impacted us in 2017.
Obviously we have seen prices rise due to the exchange rate, although commodity prices (steel and copper) have not seen the price changes some thought were likely back at election time in 2016. As 64% of construction materials are imported from the EU, this is not insignificant and can have a drastic effect on margins, especially as they remain very tight.
In 2018, this uncertainty will continue, so keep a close eye on prices and consider carefully any longer term jobs where the impact could be greater. Try to negotiate fixed prices on all quotations, or make suitable allowances for potential further price rises when adjudicating tenders.
Another challenge we face is the labour market. As we are all aware, we have a severe skills shortage in the industry, both in the terms of estimators and operatives. This will not ease in the short term and Brexit will aggravate this. The uncertain future of EU workers in the UK has reduced the availability of workers from the EU and will have an even bigger impact when we leave the free trade area, as it seems likely (8% of construction workers are from the EU source RICS ). Regardless of your personal views about foreign labour, this gives us all a problem. We do not have enough British skilled operatives and training new workers will take years even when apprenticeships are available.
This is a big risk in terms of being able to resource jobs, and in terms of the cost of doing so. Have a very good look at your local labour market and make sure your tender adjudications take skill level (the corresponding hours needed to install will be impacted by this), cost and availability into account.
Sadly, the construction industry tends to feel economic uncertainty first, and perhaps more than some other industries. The slow-down and contraction in the industry noted by the Markit/CIPS Construction Report back in October will probably continue through 2018. As projects are put on hold, the competition will increase for quite a while.
So whether you are pro or against Brexit, it will definitely offer us some challenges in 2018, on top of those we experience day to day in the deadline-driven environment of estimating. Luckily we can factor these risks into our estimates, but it makes it a prudent time to review your products/prices and supplier deals, review the labour/skills you have available and make sure they are all reflected in your estimating database and ready for adjudication as necessary.
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