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'Profiteering' in Construction | BUILDING MAGAZINE

‘Profiteering’ in Construction

Reassuring clients that any increases only reflect spiralling costs which at the present time are affecting the whole of the construction industry, the Construction Industry Collective Voice (CICV) say these rises in project costs reflect current global times rather than ‘profiteering’.

Many customers are concerned at increasing costs of construction work, according to CICV but they reiterted that this is due to global events which have resulted in a rise in fuel costs together with the shortage of raw materials and labour.

Ian Mcllwee chief executive of CICV member organisation the Finishes-Interiors Sector (FIS) said: “Construction professionals have been forced to accept these ongoing rises, as the rare combination of events of the war in Ukraine, energy price increases and the backlash from Covid 19 now reflect in price increases especially for materials and they have no option but to pass these increased costs on to customers. It is however, not profiteering but a necessity in order that businesses can survive”.

CICV’s Post-Brexit Trade sub-group have discussed the increase in the cost of raw materials, energy, labour and transport, which are being faced by construction businesses of all sizes in Scotland, with focus on the inflationary pressures caused by these external factors, on SMEs..

Mr Mcllwee went on to say that this is an exceptionally challenging time for all of the construction supply chain with the rising costs. The important thing now is that we all work together. Too often in construction we have contracted down all risks but we are now in a position where fixed prices could undermine resilience of contractors and suppliers and we need to work together and consider how these changes can be distributed and any risks shared in order to protect the viability and quality of a project.

Policy manager at CICV member organisation the Construction Plant-hire Association (CPA), Chris Cassley said: “The removal of red diesel for construction plant, as part of the governments environmental stategy, has had an effect on the currenrt financial impact on industry. This together with the rise in energy and material prices, supply chain pressure and higher inflation figures has resulted in a tipping-balance for suppliers and customers and has often resulted in necessary price increases”.

Strategy director of Safedem and a member of the Construction Scotland industry Leadership Group which represents SMEs and the supply chain, Andrew Richards, gave a further warning. He said; “The knock on effects which have been caused by global events look as if they will continue at least for the forseeable future so customers should consider these rises and fluctuations in construction costs as part of the ‘new normal’ and mustn’t expect prices to fall any time soon. Construction companies are concerned regarding the uncertainty of the marketplace and only pass on increased costs out of necessity”.