updated on 17 January 2022
QuestionHow will material shortages in the construction industry impact the legal sector?
Brexit. Covid-19. Blockage of the Suez Canal. Shortage of HGV drivers and labour in general. Rise in shipping costs. Global warming. All of these issues combined have hit the construction industry like a ton of bricks, leading to a severe materials shortage, impacting thousands of developments and projects across the country.
A global shortage of key materials such as timber, steel, cement and aluminium has caused prices to surge to a 40-year high, according to the Royal Institution of Chartered Surveyors (RICS). The greatest increases were seen in the steel industry, which suffered its seventh price increase in 2021 alone, as well as the timber industry, which saw its prices hike as high as 120%. The latest Federation of Master Builders (FMB) Survey stated that 97% of builders reported the rising price of materials as an issue.
With continued disruption likely thanks to the global pandemic, and no indication of waning demand, developers, contractors and sub-contractors are all becoming aware of how this disturbance to the construction industry could impact their contracts.
Changes to come?
Under most common forms of construction contracts (eg, JCT or NEC), the contractor is responsible for providing goods and materials needed and therefore absorbs the risk. It is understandable then that contractors and sub-contractors are becoming increasingly concerned about the increased risk of liability for delays caused by situations potentially out of their control.
There are some ways in which contractual negotiations may change in reaction to the current climate.
Overall then, it seems likely that the materials shortage within the construction industry will continue to impact the legal industry; contractual negotiations may have to become more flexible, all parties will have to plan further ahead and collaborate together to create reasonable allocation of risk within their contracts.
Dana Cook is a trainee solicitor in the construction team at Womble Bond Dickinson.