Rising materials prices squeeze contractors

Published:  08 February, 2011

LONDON: Rapidly rising material prices threaten viability of some contractors says the Royal Institution of Chartered Surveyors.

Material costs rose dramatically in the last quarter of 2010, with 56% more surveyors reporting a rise in costs, up from 28% during the previous three months, according to the latest Royal Institution of Chartered Surveyors construction market survey.

It found that fierce competition for work is putting the squeeze on labour rates as contractors are forced to absorb rising material prices to win work. Tradespeople and professional costs fell reflecting increased competition for jobs, which is driving down the cost of labour.

The latest survey showed workloads continued to fall in the fourth quarter of last year with 5% more surveyors reporting falls than rises.

This is a slight improvement on the 10% recorded in the previous three months, but the national average hid steep regional falls.

London and the South East was the only region to report rising activity. The rest of the country saw sharp falls with Northern Ireland and Scotland suffering most.

Surveyors said the market became increasingly competitive in the last quarter of 2010 as firms struggled to secure work from a smaller and diminishing pool of opportunities.

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