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Rising material prices: why your tenders must include a 'valid until' date

Every day it seems we are seeing stories about construction raw materials, products and systems rising in cost. And often these represent multiple price increases by suppliers within the blink of an eye.

Take British Steel, for example. As Construction Enquirer reported, in May alone the structural steel producer hit the building industry with two hefty price hikes - an extra £50 per tonne at the start of the month and then a further £100 per tonne jump by mid-May.

One of the steelwork contractors Construction Enquirer spoke to said: "This is now totally ridiculous. We are being advised structural steel is heading for a peak of over £1000 per tonne."

"We are passing costs to clients advising our prices are fixed on the day only and they are not happy to say the least."

"I know of one fabricator who took on a 1,800 tonne job at £460 per tonne with no way of going back to the client. It's double that price now."

Batten down the hatches!

And the situation is no better with timber. Again, Construction Enquirer is keeping track of this. According to its recent report, prices for timber battens have gone 'through the roof' with shortages being experienced by many roofing contractors.

They quote Eddie Stanton, chief executive of national roofing contractor Avonside Group, who said: "The price of roofing batten is rising on a monthly basis, already in excess of 50% over the past six months, and supply lead times are getting longer."

"Global timber shortages combined with rising demand from the housing industry are putting a squeeze on firms that are now reporting shortages of battens alongside concrete roof tiles."

Protect yourself in one simple way

This dramatic volatility in the prices of raw materials is difficult to manage to say the least, but one of the most important steps any sub-contractor can take to protect themselves is also quite a simple one...

In any tender you submit or customer quotation, it is absolutely vital that you state that the quote is only valid until a specific date. Choose a date that you can comfortably accommodate given your own recent experiences in your supply chain.

If you don't include a tender validity date, you are leaving yourself wide open to being hit financially and you will end up losing out given the current market conditions.

It is important also to not ignore what could be heading your way. UK inflation may officially still be very low, but that's not the experience for those in the construction sector as these huge price hikes in steel and timber demonstrate.

Ignore the national economic data as it does not reflect the situation in our sector. So, when you are quoting or tendering today, it is sensible to build-in anticipated material price increases, as much as you can based on previous months, so your costs are going to be more realistic by the time the contract is awarded.

Need specialist advice?

Quantum CPM are qualified quantity surveyors who offer specialist advice to sub-contractors and contractors large and small on how to protect themselves in construction contracts.

We can advise on all areas of contract management, from your initial arrangements prior to agreeing the contract through to recouping retention funds after the work is completed.

To discuss how we can help you call 0161 974 6655 or email .