As the invasion of Ukraine by Russia developed through Q1 2022, it became clear that the already complex UK construction market situation would be further complicated by the added layers of uncertainty.
This uncertainty is not altogether unexpected. Although it is suggested that the Covid-19 and Brexit effects should by now be built-in to construction market performance, there remain significant considerations of effects of new variants and also concerns as to materials availability and cost, new standards for materials and also their subsequent relationships with the EU standards. Overlaying everything, is the now incorporated effect of the ongoing Ukraine situation, with risks exacerbated by high degrees of uncertainty.
In combination, contractors and sub-contractors still face a more variable and uncertain costing landscape than is usually the case, and management’s overview remains fraught with issues as to lead-in and delivery times, programme implications and overall risk premium concerns. It is this uncertainty that is contributing to volatility in pricing and forecasts.
Private sector consultants’ views of forecast tender price uplift for 2022 are noticeably wide-ranging, acknowledging not only the differing regional experiences, but the level of uncertainty that remains in the marketplace.
For these reasons, RLB has chosen to express forecasts of tender price inflation for upcoming periods in groupings of Lower, Most Likely and Upper percentages. The intent is to provide-for a range of possible outcomes in this very uncertain environment, with an indication of the currently perceived most likely outcome.