Further warnings have been issued that material and labor shortages threaten to stifle the sector’s recovery from the pandemic, with Arcadis saying the problems are now threatening to delay ongoing jobs and postpone start dates for those that are still getting going .
Earlier this week, the latest PMI index showed that production had stalled in August as material shortages and a shortage of truck drivers were blamed for declining numbers for the second straight month.
In its market view for the summer, Arcadis said material costs rose an average of 15% this year alone – compared to a long-term trend of 3%.
It added that the problems caused the cost of jobs to inevitably rise northward, and Simon Rawlinson, director of strategic research and insights at the consultant, said, “The challenges the construction industry is currently facing are one clear indicator of how strongly the market was a victim of its own success. “
And he warned customers that they would soon have to get used to the fact that their jobs would be late because of hard-to-find materials and labor.
He said, “We’ve seen almost 20% activity growth since last quarter, but now there’s a very real risk of project delays, both on-site and in sourcing, thanks to rising material prices and availability issues.”
Arcadis said corporate order books increased 10.7% in the quarter to $ 18.3 billion.
But he added that bulging order books would have taken some of the pressure on contractors to win deals at short notice.
Construction bid prices would rise 3% this year but decline in 2023.
Rawlinson added, “The situation is unlikely to stabilize before 2022, so the industry needs to find a way to cope with these price increases and mitigate any negative effects.
“There is no such thing as a panacea, but greater transparency and fairer risk-sharing will be key to avoiding unnecessary project delays and cancellations.”
Arcadis added that infrastructure remains vulnerable to pressures related to material availability and raised its forecast to 4% for 2021. It stuck to its previous forecast of 5% for 2022.