Much has been reported about current
challenges to building companies and contractors in the construction industry
as building material
costs and labour generally continued to rise due to covid and lockdown
disruptions to both national and international supply chains.
The Cordell Construction Index reported a 7.1% construction cost increase in
2021. This is the fastest increase in 16 years. The forecast is that
construction costs are expected to keep rising. In Sydney this figure is
predicted at approx. 5.6% in 2022.
Timber costs increased by 20-30% in the first six months of 2021. Some builders
and had their projects delayed up to 16 weeks as they waited on timber orders
to be fulfilled.
Structural steel being relevant to “I” and “U” beams utilised in open plan
renovations and extension projects by builders and renovation specialists such
as Rebilt came under increased demand. Steel pricing was then set for 24 hours
only – an unprecedented decision by suppliers.
Gypsum
and ready mix concrete product prices escalated, co-joined with labour costs.
Resellers, retailers, labourers, admin staff, project managers, site managers,
builders, logistical staff experienced disruptions as these workers covid-isolated.
Property
prices surged forward in 2021 by an average of almost 25% for the year being the
fastest rise since 1989.
Possibly larger construction companies and project home builders with a number
of fixed price contracts may set their sights on their company ability to meet
it’s long-term debts and financial obligations [i.e. solvency] to honour competitive
pricing as projects are rolled out.
The more “under-the-radar” price increases included pricing increases in skip
bin hire, petrol and diesel, shipping and delivery costs [most building
materials are made overseas,] equipment hire, contract works insurance,
materials liability, tools, site protection costs, home warranty insurance and
indemnity insurance hikes — with more increases anticipated.
Some trades throughout 2021 were prompted to link supply rates to material costs on tenders to compensate for increases allowing for price adjustments.
Rebilt is
aware that the momentum of covid-19 together with escalated building activity due to the HomeBuilder scheme
[that ended last year] and lockdown-fuelled home renovations have led to price gains
across the board. Labour shortages has seen increases in demand leading to bumped-up
labour costs.
Globally fractured supply chains requires
that building companies must respond well but generally the building industry has
been struggling. The HIA’s Mr Reardon, however, said he believed most builders
would trade through the current activity citing, “I do not anticipate a substantial change in bankruptcies
within the industry in 2022,” he said.
At the beginning of 2021
Rebilt company directors Neil Walker and Michael Hunnam identified the new
season as a curve ball but an opportune
time to respond to the new challenges with innovative project management initiatives and increased client care.
The company vision was re-clarified:
“The Rebilt vision is to be the #1 agent for change in the building
industry bringing clarity, certainty and confidence for homeowners for
their extension and renovation projects.”
Rebilt sought to limit
the number of extension and renovation projects to retain capability levels of
project management. This decision was contrary to overloading the company
structure to capitalise on additional new contracts.
Rebilt sought cutting-edge web-based technologies to tighten project
administrations and time-frames while upgrading communications with it’s
clients in a minimum “twice weekly” consistency.
These new initiatives ensured
that Rebilt could deliver extension and renovation projects on time even as
demand and costs escalated and clients were advised as to possible external
delays bringing the client into a “we’re in this together partnership.”
Where possible supplier and trades loyalties were re-invigorated and some critical
materials were pre-purchased, earmarked and under lock and key. The larger
projects were spreadsheet priced at a nominal fee-for-service to ensure both quantities
and pricing accuracies.
Says Rebilt Business Director Michael Hunnam “these centrepiece project
documents formed part of the client’s construction contract and were ready for
longer range pre-ordering to secure materials and trades. In actuality this
initiative assisted the supplier’s own inventories, improved company administrations
and controlled project durations with less delays. It’s a policy likely to
remain in place because it just works so much better.”
In some cases, delays were even “built in” to project expectations in this new
brand of “covid-style” stewardship.
In one instance where a prefabricated roof truss had a blown-out delivery of
between 6-8 months due to timber shortages, collaboration with the consulting
engineer was sought and the carpenter[’s skill-set] was upgraded for the
carpentry to be hand-cut on site immediately saving months of unnecessary “down
tool time.”
Says Rebilt Operations Director Neil Walker “hand-picking the trades for their
skill-sets in the extensions and renovation sector is an essential policy at
any time to avert spiralling costs and project delays. It’s another way Rebilt
is able to invest certainty in any project for our clients.”
