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How to protect your business as subbie shortages begin to bite

The shortage of labour in the construction industry is nothing new. This year, however, contractors and sub-contractors are feeling the strain more than ever due to the far-reaching effects of the pandemic, post-Brexit employment and citizenship rules and - perhaps - the long term impact of not attracting enough young people into the industry while the oldies retire.

We have seen labour shortages on numerous live construction projects over the past 18 months, reflecting what industry leaders are saying publicly. According to a recent report on Construction Enquirer, the widely-respected IHS Markit/CIPS UK Construction PMI Total Activity Index showed that a lack of subcontractors and materials shortages is hampering growth in the construction sector. In fact, the survey found that the decline in sub-contractor availability in July was the second-fastest fall since the survey began in 1997, exceeded only by that seen during the lockdown in April 2020.

The labour shortages come on top of the well-publicised material supply headaches faced by UK construction. The shortage of many building products and raw materials, combined with increased transport costs, is driving up prices at rates many of us have never seen before. In August, for example, we saw brick prices from one supplier rise by 10% and concrete costs jump 15%.

But with such industry-wide problems, how exposed are contractors and sub-contractors to loss and what can they do to protect themselves? It all starts with the contract terms you agree at the outset.

It may sound obvious, but every construction contract must be read and understood before signing on the dotted line. Everyone knows this is what you should do, but in reality this often simply doesn't happen! The result? Contractors, sub-contractors and employers end up falling out because they don't see eye-to-eye on issues that affect meeting deadlines and delivering the contract on time and to budget.

At times of significant uncertainty - as we are seeing currently - it is absolutely vital for contractors and sub-contractors to ensure they are protected as much as they can be. For example, it cannot be assumed that an employer will react reasonably to requests for claims and variations as a result of circumstances outside the contractor or sub-contractor's control. Some may, but the majority will say it's what you signed up for, deal with it!

That's where contract vetting comes in - a service that Quantum CPM provides to hundreds of contractors and sub-contractors every year. Quantum CPM's team of legally-trained quantity surveyors are specialists in construction contracts with the ability to scrutinise all the contract terms and conditions professionally, so they can be communicated clearly to contractors and sub-contractors.

Having your contract vetted means that your liabilities, any onerous terms, sneaky provisions and non-negotiable deadlines are flagged up before you sign the contract. This puts the power in the hands of the contractor or sub-contractor giving you three options:

• You challenge the contract and request that it is amended to provide terms that are more favourable or better suit your capabilities, or
• You agree to the terms of the contract on the basis that you are fully aware of what you are agreeing to, or
• You decline the contract opportunity and walk-away.

Whatever contract terms you do then agree on should allow for unpredictable issues, such as unforeseen material price increases or delays on site due to labour shortages, to be accommodated fairly without causing you financial loss.

But the job of protecting your interests doesn't end there - you must ensure the contract is managed throughout the duration, so that variations, claims and retentions are all handled in line with the terms. This is another area where contractors and sub-contractors lose out, but they needn't take any risks.

Quantum CPM provides a complete Bundle of Services to support contractors and sub-contractors at every stage of the contract. These include Monthly Progress Auditing, Final Account Control and Retention Fund Management.

For a free initial consultation regarding any of our services, contact Quantum CPM on 0161 974 6655 or email .