22 December, 2020

Amongst its many other impacts on our economy Covid-19 is now responsible for slowing the flow of building materials reaching the UK from overseas.  Shortages are being reported all along domestic supply chains and there is concern that the situation could become much worse during the intense few months that will follow the end of the Brexit transition period on 31 December when importers, UK businesses and port authorities have to adjust to new rules, and grapple with unfamiliar paperwork. 

A Guardian report revealed that some freight vessels were considering skipping scheduled stops at the Felixstowe container port because of the delays they might face.  Since the port is also struggling to handle the regular seasonal increase of goods arriving for Christmas, the pressure is understandable without the overlay of lockdowns and the adoption of Covid-safe working practices. It’s not a direct comparison but recent research on construction sites suggests a loss of up 30% in productivity from adopting these safety measures. Numbers like this need to be treated with care because there is a corresponding reduction in the number of people working on building sites as there will be in our ports. 

Data aside, the shortage remains a potential problem for many involved in building projects now.  Whilst the UK produces around four fifths of its own building materials, import delays could impact the progress of projects at virtually any stage.  We import timber, natural products like stone, and manufactured components like ceramic tiles from all around the world.  Our chillers most often come from Italy.  It’s true that large and complex components like curtain walling systems are also predominately manufactured overseas, but the longer procurement process that runs through design and fabrication typically includes more programme float, so a short delay can probably be absorbed more easily. That’s not to say that any imported building element is immune from the risk of delay.

We recently completed a Brexit preparedness exercise on a large central London project which revealed that most large to mid-size trade contractors in the UK are in good shape and ready to handle any transition, although the immediate effect of a no-deal outcome might knock us all off balance momentarily.  The Covid-19 impact is harder to model as the situation remains more fluid. The obvious impact of short-term shortages will be delay and cost increases because everyone will be chasing the same scarce resources.

Our advice is to carry out some quick checks on your project.  Look for materials and components coming from overseas and find out how much of what you need is already in the UK so you have clear idea of how long work can continue before any interruption in supply has an impact.  For simpler elements look for alternative domestic suppliers; the cost maybe higher but it’s unlikely to be more than the consequences of the project stopping altogether. Consider also where changes in material specification would give you greater security about the materials you need being available when needed.  This could also protect you from increasing costs too. Builders Merchants are reporting a 20% to 40% increase in the cost of timber from Scandinavia. Some resequencing of the work might also be possible if it allows you to take activities involving at risk components off the critical path.

Building is a cash flow business, always focussed on shortening the time between spending money and being reimbursed by the client. Just in time delivery is good for cash flow but risky if delays occur. It may be the time for a conversation with your contractor about increasing its inventory on your project.  It’s money you’ll spend anyway, and a marginally steeper cash flow for a short period may be a modest price to pay compared with the project stopping altogether for want of something small but vital that’s stuck in a container ship off the east coast waiting to berth.