As part of its Workload Trends Survey, CECA asked its members to respond to a question on their experience of costs over the past year across 10 key categories.
The survey revealed that inflation has continued to increase strongly, in particular for fuel, which increased in price by around 10%, and metals, which increased by around 7%. These increases were largely due to strengthening global demand, particularly in emerging markets.
While labour costs remained relatively flat, most other categories recorded increases in the cost of most basic materials. Notably, they recorded costs increasing at a faster rate than last year.
CECA said that it “remains deeply worried” by the combination of rising inflation and falling tender prices. This suggests that contractors are still unable to pass on their rising costs to customers, putting further pressure on margins.
If these trends continue, CECA warns, many contractors will be stuck in an unsustainable situation that threatens hundreds of companies and thousands of jobs.
CECA director of external affairs Alasdair Reisner said: “Inflation has risen rapidly up the list of our members’ concerns, and these figures show why.
“We are doing all we can to help our members handle this extra burden, including arranging seminars on commodity price hedging, and lobbying clients to include suitable inflation indexing in contracts.
“But the real worry here is that while costs continue to skyrocket, the prices our members can tender are not keeping pace, squeezing margins to an unsustainable level. Procurement practices need to take account of current concerns over inflation, in order to offer contractors a sustainable means of recovering costs due to inflation.”
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