Challenging times: Limiting the impact on construction projects

Our civil engineering framework lead, Roger Steeper considers the market challenges currently facing civil contractors and how to best navigate a way through.

Construction activity has remained the bedrock of the UK’s post-Covid growth over the past two years. The delivery of much-needed infrastructure has served as an important catalyst for additional positive investment in communities and driven the growth of local economies across the country.

Yet it hasn’t been without its challenges. Contractors have continued to grapple with the impact of material and labour shortages, coupled with rising inflation. All of which have placed a sustained pressure on project performance.

Recent market indices show that activity in the construction sector has begun to slow, with the short-term impact of inflation already clear to see.

The industry has had every challenge thrown at it over the past two years and firms need to draw on their experience of being resilient to combat the inflation that now threatens to bring about a recession. For now, prices will remain high, and contractors must be proactive in addressing this cocktail of market pressures with their clients.

Contractors that are engaged in a long-term and healthy relationship with their clients will look to draw on their experience to plan ahead and mitigate any interruption – ensuring projects remain on track as much as possible. Finding solutions will be easier for established teams where there is trust, openness, transparency and real desire to work together.

For those infrastructure projects that are affected by market volatility – either at planning stage or in development – it’s vital that all decisions made are mutually acceptable and any proposed solutions are worked through collectively. This is where a high and consistent level of engagement is fundamental to ensure all parties can raise and discuss the details and potential pressures that might lie ahead.

Ultimately, it’s the responsibility of the lead contractor to smooth any cracks that might appear during the lifecycle of the project. Having an open and honest conversation with all supply chain partners and the client team at the earliest sign of challenge will help determine the best-fit strategy to move forward.

Often this could include purchasing any critical materials earlier than required to ensure cost and supply certainty. The upward trend of prices is unlikely to plateau for some time and by utilising the buying power of large contractors to secure materials early at a fixed cost, project teams can help minimise disruption down the line.

In order to further progress the wave of community-led infrastructure projects currently taking place across the UK, it shouldn’t be uncommon to see a level of rescoping on projects to forge a way through the current climate. This could be in terms of the specification or materials used to complete the build or the revision of design choices that might be considered ‘nice to have’. Again, this comes down to the strength of the client and contractor relationship, and whether or not revisions achieve a satisfactory outcome.

One scenario we must avoid during these uncertain times is entering into a blame game - contract disputes over liability are a long way from the collaborative mindset that has helped the industry navigate the past two years so successfully. Broadly speaking, NEC contracts promote collaboration and an ethos of working together for the best result for all parties, especially the client.

As procurement specialists, we remain committed to a collaborative model that prioritises the earliest possible engagement between developers and their delivery partners. As a result, last year each and every project we supported was delivered to both time and budget, demonstrating that project delivery is possible through a collaborative approach – something the civil engineering industry must continue to adopt as market conditions continue to challenge in the latter half of the year.

This article was first published on New Civil Engineer.