construction costs of building projects – top 7 predictions
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CONSTRUCTION COSTS OF BUILDING PROJECTS
TOP 7 PREDICTIONSPrepare your construction business and its projects for the year ahead with an incisive
look at the trends that will directly impact on your planning and construction costs
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Despite concerns about the overall economy and a poor start to the year,
UK CONSTRUCTION OUTPUT IS STILL
FORECAST TO GROW BY 3.6% IN 2016.
THE COST OF CREDITWhile the big players are enjoying a return to pre-recession levels of profit and relatively easy access to funding, small-
to-medium builders continue to experience difficulties raising financing, a problem that will affect the cost of credit.
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The cause? Strict loan-to-value limits.
SMALLER BUILDERS HAVE YET TO CATCH UP AS THEY STRUGGLE TO SECURE THE
FUNDING THEY NEED.Conrad Ford, Chief Executive, Funding Options.
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SKILLS SHORTAGES REMAINThe sector is blighted by a skills shortage and the situation is not expected
to improve in 2016. This has already had a knock-on effect on wages:
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THE AMOUNT WAGES HAVE RISEN GLOBALLY ON AVERAGE IN 2015 DUE TO THE SKILLS SHORTAGE.
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6%
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2%THE AVERAGE UK WAGE RISE.
MATERIAL PRICES GOING UP2015 saw encouraging news for the price of materials
with overall drops over the course of the year.
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The outlook for 2016 is not so positive:
4.6%: THE AMOUNT OVERALL MATERIAL PRICES WILL RISE
BY IN THE YEAR TO Q3 2016.
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THE PRICE OF STEELSteel prices have dropped significantly in recent months due to
low-cost imported steel from China, a trend set to continue in 2016.
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OTHER MATERIAL PRICE RISES
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SAND, GRAVEL, CEMENT AND TIMBERhave risen in price over the past five years overall and these
critical construction costs are expected to rise further in 2016.
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THE COST OF NONCOMPLIANCE
The amount of updated or new regulations affecting the construction industry will continue to climb in 2016, creating
concerns about remaining up to date and compliant.
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New sentencing guidelines will hand down harsher sentences for those found guilty of corporate manslaughter/health and safety offences:
UP TO £20 MILLION:THE AMOUNT A COMPANY WITH
A TURNOVER OF MORE THAN £50 MILLION WILL BE FINED FOR
CORPORATE MANSLAUGHTER CHARGES.
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UP TO £10 MILLION:THE AMOUNT A COMPANY WITH
A TURNOVER OF MORE THAN £50 MILLION WILL BE FINED FOR HEALTH
AND SAFETY BREACHES.
THE BLIGHT OF LATE PAYMENT
97% of small contractors feel unfairly treated.
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ONLY 5%SAY THAT ALL WORK IS
PAID FOR WITHIN 30 DAYS.
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TAKEAWAYS:
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Expect growth in the industry despite
turbulent financial climes and increasing
construction costs.
Develop strategies now to deal with the skills
shortage issue and the rising price of
construction materials.
Roll out technological solutions to stay on top
of your operations to ensure compliance and efficiency across your
entire business.
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