The Irish Construction Industry continues to move from one crisis to another, just as we are exiting the Covid 19 lockdowns and expectation is high to recover lost ground, war breaks out in the Ukraine, which contributes to significant material price increases.
Main Contractors are particularly concerned about the future of price rises and are taking a more conservative approach to risk when negotiating construction projects. The high price volatility in the sector, which is evident in multiple materials/commodities used in construction (such as insulation, metals, and fuel), is one of the main reasons for continued price inflation.
It is estimated that construction output could reach €32bn in 2022, which would be an increase of 18% from the €27bn output of 2021. This would appear to be good news however the general outlook remains volatile with three major factors impacting activity:
a) Shortage of labour
b) Shortage of materials
c) Project viability
Some movement has been made by the government to address the price increases via the calculations under the price variation clauses but increases in energy costs over the past number of months are unlikely to stall significantly in the short to medium term future.
SCSI Tender Price Index
The latest SCSI Tender price index was issued in April 2022 and shows that the national annual tender price rate of inflation was 13% (January 2021 to December 2021).
The significant increases in tender price inflation are a result of pent-up demand following the easing of Covid-19 restrictions and supply chain issues that occurred as a result of Covid. Furthermore, exceptional material price increases, coupled with labour shortages within the sector have contributed to the increase in tender prices.
Construction activity levels across all commercial construction are at exceptionally high levels across the country. Anyone looking for a builder to complete construction work will know how difficult it is to obtain the services from the market, as all trades are in exceptionally high demand.
BMP are delighted to be striding into their 54th year of business where we continue to retain experienced staff and are still recruiting young candidates to ensure that we fulfil the high standards of performance that we set ourselves. The Irish marketplace is relatively small and it is massively important to us that we build on existing relationships with Design Teams and Clients.
Over the past 12 months we have continued our long line of delivering healthcare projects for St. James’s Hospital, Beaumont and The Coombe and for VHI’s flagship centre in Carrickmines. We have retained our links with Trinity College and with TU Dublin in their Grangegorman campus. The completion of the roof refurbishment of St. Patrick’s Cathedral in Dublin was a particularly memorable project for the office.
We are delighted to continue to work with some of the leading main contractors in Ireland and assist them on many varied projects from data centres to office blocks and many conservation and restoration projects.
We have also continued to build on our portfolio of reinstatement valuations which has now topped over the €2bn in value mark and consists of cathedrals to campuses, shopping centres to hospitals and everything in between.
We hope that as a company we keep rising to all challenges over the next 12 months and maintain our good name and tradition of excellence in QS services.
Damien Morgan MSCSI MRICS Director
Brendan Merry & Partners