A question of trust: Expert advice in an uncertain time

The start of 2022 has been hugely challenging for many different reasons. The harrowing images of the war in Ukraine has put the problems in this country into serious perspective, while the rising cost of living and energy price hikes are casting a huge shadow over a time when many would have hoped to be enjoying a first unrestricted spring for three years.

For the construction industry, the squeeze has been on for some time. While construction was identified as a key sector and therefore not hit as hard initially by lockdown restrictions, the challenges became increasingly apparent as the supply chain bore the brunt of material shortages, which subsequently created delays across the industry.

As we have all experienced, the imbalance of supply and demand has led to significant price hikes, impacting contracts and putting strain on client-supplier relationships. The stark figures in the Construction Leadership Council’s (CLC) Product Availability Statement show just how bad the damage has been, with contractors reporting that some suppliers are now only prepared to hold prices for 24 hours for tender quotes on jobs – meaning decisions must be made as speedily as possible.

It is at times like these that the industry has to lean on its expertise and trust itself to battle its way out of a tough corner. From a cost consultancy perspective, this is especially challenging, as cost consultants are leant on to provide accurate and reliable advice to clients and provide the reassurance they need to be able to continue with their planned and future investments.

A twin impact

The impact of ongoing uncertainty from a cost consultancy perspective is wide ranging. Everything from procurement advice to contract types, risk profiles and project length is subject to volatility – and that is before we even look into the rising costs of shipping and manufacturing.

There have been some notable voices suggesting that these challenges – as well as the rising cost of natural gas – are due to the war in Europe. But the reality is that the industry was already predicting higher-than-average inflation costs due to the impacts of Covid, and with that the subsequent pressure on infrastructure investments from both the private sector and the government.

This has naturally led to a fair amount of introspection from clients, as they look to review their priority projects and look to those that have less risk and more cost certainty. Meanwhile, there is an expected impact on bidding for work too, as contractors may not want to fix prices, thereby creating more uncertainty for clients.

Clients will turn to cost consultants as they re-review their ongoing and upcoming projects, which will be affected by the challenges equally. We must be on hand to advise them accordingly and provide that certainty to guide them through this process, particularly to help them move projects forward as planned, rather than having to re-address them in a less ambitious manner.

Teamwork makes the dream work

All of this increases the need for quantity surveyors and construction professionals to work closer with contractors to better understand supply chain availability, resource challenges, price fluctuations and transport costs before clients can be provided with sound procurement and commercial advice.

At Pick Everard, we realise that this collaborative approach is key to navigating the difficult market we are currently facing, at any stage of a project. We work very closely with contractors to understand and manage the supply chain from the outset and through projects when they are on the ground to ensure costs are managed and risk on site is mitigated.

Quantity surveyors will increasingly be relied upon for advising clients on risk profiles depending on the complexity of the project and how the situation in the supply chain and materials market stands at any given time, and whether specific clauses are needed in contracts to mitigate this.

The challenge currently is that the situation is impacting both procurement and delivery, so one hand isn’t able to drag the other along. Contractors are less keen to fix prices for all the reasons mentioned earlier, while existing long term projects risk being paralysed by a lack of cost certainty unless the entire construction ecosystem works together to find solutions.

The industry has found itself in similar positions before, and it is by finding the strength within its own ranks that it can move forward to a brighter future.