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Increasing UK Construction Costs and More Projects Under Construction

Quantity Surveyors and Problematic Predictions

Across the industry as a whole, time after time in recent months, there has been some speculation over the failure of Quantity Surveyors to accurately predict and price of a project at tender stage, due to the speed and scale of rising costs. This has caused an issue for clients as they have been faced with higher forecasts than the figures Quantity Surveyors have predicted. The Quantity Surveying profession in the UK has been regarded as top-class and at the forefront of professionalism for a number of years when compared to other countries, but this recent change in events has left some question marks.

What is the Cause and How do We Fix It?

As we know in the UK, the construction industry is booming, which has brought on a skills shortage, pushing up staff costs sharply, as well as materials inflation being an issue. This has resulted in a shock to some clients after initial prediction of project costs have turned out to be much lower than what the project actually costs. It is key that experienced commercial managers whose involvement in the industry stretches back to the recovery of the 1990’s in the UK, assisting more Junior Quantity Surveyors who may be making the predictions based on last year’s figures and purely formulaic calculations. The relationship factor between clients and contractors is also key, as mentioned in the below paragraph.

Relationships are Key for Clients and Contractors

It has been said that one way to prevent a shock change in project cost is for clients and contractors to engage together at an earlier stage, creating a more transparency for both parties to tackle and pre-empt any potential future unexpected changes. Clients have had to become price takers rather than price makers in the economic recovery and so a strong relationship between those and the contractors could be key in securing less variation in project cost after the tender stage.

Official Statistics

The leader of a UK Cost Management division for an international consultancy has stated that tenders have been coming back 5-10% higher than predicted, with the market expecting price rises of 4-7% in the last year, when the reality has been between 10-15%.

Skill Shortages

One cause of this costing problem has arisen through the shortage of skilled labour and skilled professionals in the Mechanical & Electrical sector, whether it be a Quantity Surveyor with this specialisation or an Engineer. Mechanical, Electrical, and Cladding professionals are hard to come by in the current market, pushing salaries of these individuals higher than you may have seen elsewhere or previously; offers create counter offers as firms seek to hold onto their staff.

An Example of Increased Project Cost

A large scale example of an increased project price is that of the Olympic stadium. The original stadium conversion contract was priced at £154m, however the main contractor since won an extra £36m for the work last year when the final costs were estimated higher, and now the project cost is predicted to have soared to around £272m. This is one of the larger examples in cost difference prediction.

Projects the Staff at Maxim Recruitment are Excited About Currently:

The following live or pending projects will hopefully have been costed at current plant, material and labour rates to avoid unexpected cost overruns:

£1bn Tidal Lagoon Swansea Bay
The marine works package (£300m) of the £1bn Tidal Lagoon Swansea Bay has been won by a major Chinese contractor who has shown considerable interest in the recent UK construction boom. The project is seen as a pioneering project that could bring the world a new energy option. The project will involve the construction of a 6 mile long lagoon wall in Swansea Bay.

HS2 Set for 2017
HS2 is set to have spades in the ground in 2017, with some discussions still being held regarding the exact route in certain areas, to minimise as much negative public effect as possible.

200 High Rise Buildings in London
There will be 200 new high rise buildings in London in the coming few years, to try an address the increasing population growth in the capital.

Thames Tideway Tunnel
Thames Tideway Tunnel or the “Super Sewer” is moving forward with companies having now been selected as preferred constructers after bidding for the major project which is split into 3 sections – East, Middle, and West sections. Each section has different contractors chosen to perform the construction works.

Northern Line Extension
The Northern line extension in London is a major scheme that has been won now by a leading UK contractor; this is an exciting project which has many similar aspects in scope to the Crossrail construction project.

How We Can Help

Maxim Recruitment can offer some of the very best UK based opportunities for Quantity Surveyors, Engineers, and Planners and construction professionals at all levels. We have specialist desks focussing on each skill set within both consultancy firms and contracting firms in locations across the UK. We are able to apply our market knowledge and ever strengthening network to find you the perfect job. Please review the latest vacancies on the Maxim website and submit an updated CV for any role you find to be of particular interest.

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Adam Cadwaladr
Maxim Recruitment
UK Office

 

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