Member Article

Midlands civil engineering firms coming under increasing cost pressures

Civil engineering firms in the Midlands are coming under increasing pressure when it comes to costs, according to a leading business group.

The Midlands branch of Civil Engineering Contractors Association (CECA) represents everyone from the biggest civil engineering and construction firms in the region through to smaller, niche contractors.

It says its members are reporting dramatic rises in fuel and material costs, as well as extended lead times for materials that can lead to hold-ups.

Its feedback from members backs up research that was recently carried out by the Construction Industry Training Board (CITB) that showed that 51 per cent of firms said that rising prices and materials was the biggest challenge facing the industry. It was only the second time since the CITB survey began in 2005 that this was raised as the number one issue.

CECA is now working with the Construction Leadership Council to inform Government of the impact that the Ukraine situation and inflation is having on industry. It will look to identify the hotspots of issues including material price rises and certain material shortages.

Lorraine Gregory, Director of CECA Midlands, said: “I have been in post for just a matter of weeks and have been travelling across the region meeting civil engineering contractors of all sizes.

“These are the companies that are at the heart of construction projects across the region – whether its new roads, railways, infrastructure, homes or other buildings. They are, therefore, key to economic growth and to our very way of life.

“Nearly all of them have said the same thing – that costs are spiralling and that its taking longer and longer to be able to get hold of materials.

“It’s vitally important that these cost rises can be brought under control because it is simply unsustainable for them to keep on rising at the rate they are going up by. “By definition, civil engineers are excellent at finding solutions to problems – it’s something they do every day – and through our network at CECA we are all working together to help one another overcome these issues.”

Jonathan Cummins is the purchasing manager at McCann, which has offices across the country, including Birmingham and its headquarters in Nottingham, employing more than 350 people.

He said communication through the supply chain is key to help mitigate the issues. Jonathan said: “Lead times for some materials are running at double what they were just over six months ago. It’s now around 18 weeks.

“You have to manage this through the supply chain and maintain strong levels of communication to ensure it doesn’t cause delays to projects.

“Prices have rocketed – plastic is up by 25 per cent, steel is up by 40 per cent and aluminium is up by 25 per cent. It then becomes a balancing act of what you can pass on to the customer and what you can’t. This adds to the pressure of sustaining a profit margin.

“In some cases, project prices might be agreed for 18 to 24 months and it means short-term cost increases haven’t been factored in.

“Communication is key and organisations such as CECA Midlands ensure that the industry is talking and that, as contractors, we all understand one another’s pressures.”

This was posted in Bdaily's Members' News section by Matt Joyce .