Future increases to construction costs predicted

Economists have warned that construction and building costs look set to rise over the next few years as competition increases post-pandemic and competition for resources and supplies grows. While the ongoing crisis of the coronavirus COVID-19 global pandemic saw activity around the world stall to a halt, lockdown measures, social distancing restrictions and vaccine rollout programmes have successfully started to curb the virus’ spread. As a result, more business and other areas of society have opened up over the past few months and prices for materials and labour are expected to increase along with demand. 

The prediction came from BIS Oxford Economics Associate Director, Adrian Hart. Hart voiced his concerns during a recent online conference that lasted four days and was hosted by his company. Hart spoke widely on the topic during the conference, and was clear in his belief that the construction industry would face challenges in the reopening. 

In a statement at the conference Hart talked of the connection of oil and gas projects with market pressures: “When you use past peaks as a guide and when you strip out oil and gas construction …  we start reaching in my mind a bit of concern about capacity and capability from about FY23 onwards. That’s when you are starting to see a simultaneous recovery in residential and non-residential building joining an already pretty strong engineering construction market. That means we are pushing total construction activity to levels that we have never seen before when you strip out oil and gas.”

It is expected that the weaker and low levels of activity throughout the sector this past year. With productivity lacking, Hart outlined the impact on governmental policy as profit margins in the sector decreased. It is important, he says, for taxpayers to receive the maximum amount of investment for their money.

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