Material Shortages continue in Construction

What is the cause of the materials shortages in construction?

Since the beginning of 2021, there has been a shortage of materials in construction. We have seen a global shortage of materials like timber, plaster and steel. There are a few reasons for this. Firstly, uncertainty around Brexit and new regulations delayed shipments from the EU. Secondly, COVID-19 hit, and everything just stopped. Supply chains haven’t fully recovered. Third, there is a lack of drivers. The Road Haulage Association estimates a shortage of more than 100,000 drivers. And fourth, there is the ongoing war in Ukraine and the uncertainty that comes with that.

This time last year 8 in 10 builders had been forced to delay projects. Up to 8% of builders were actually forced to cancel projects completely because they couldn’t get the materials. Large-scale projects such as the HS2 and a shortage of tradespeople are also slowing down some projects.

Why is the cost of materials in construction so high?

Supply chain issues have also had an impact on the cost of materials. The combination of material shortages in construction, energy prices, the war in Ukraine and the cost of living crisis have all affected costs. Inflation has risen to 9.97% in August 2022 and is likely to increase to 18% in 2023. A report from Jewson in October 2022 on price rises has seen the cost of some materials rise by up to 20%.

Wholesale gas prices have also risen – £5.55 per therm in August. As we’ve discussed before, construction is an energy hungry industry. Concrete, steel and cement all take huge amounts of energy to produce, pushing the cost of the end product higher.

What materials in construction are affected?

Up to 78% of tradespeople have struggled to find the materials they need to complete projects in the past year. Availability is improving for most products but there are still issues, improvement is not a fix. The list of materials affected is a long one, but we’ll concentrate on those most in demand. Those are paint, steel, bricks and blocks and electrical products.

• Bricks and blocks – The Construction Leadership Council (CLC) thinks that these materials in particular will continue to have a long lead-in time.
• Steel – Cost rather than availability is the main issue facing those who need to purchase steel.
• Paint – Lockdowns in China have affected the availability of raw materials, therefore the availability of the finished product.
• Electrical products – Semi-conductors and microchips in particular are in very high demand due to long lead-in times.
• Plastics – Constraints on raw materials as well as Covid, labour shortages and the closure of factories in the US due to hurricanes have all had an effect on the supply chain of plastics.

How can technology help?

Although supply chain issues and their impact is not something that can be fixed by a business, the right technology can ease some of the issues caused. Using the right ERP software can greatly help in construction.  It’s software that helps manage day-to-day business, like accounting, project management and most importantly for us right now, supply chain operations. You don’t need to have a big business to take advantage of ERP either.  Any size of business can use it to bring all their data into one central source. This allows any employee to have real-time access to their data.

This detailed view allows companies to drill down into any aspect of the business including supply chain channels. So instead of reacting to backlogged orders or missed shipments, the business can identify and mitigate disruptions before they occur by monitoring KPIs. ERP also increases efficiency in the business as well as having many other benefits. For the materials shortage, this can help by reducing the number of materials used. This decreases the demand for supplies and relieves shortages.

If you’d like to talk to us about what ERP can do for your business, feel free to reach out to a member of our team!