The Rising Costs of Running a Building Company
One of the things driving construction costs up right now in the UK is the price of hiring a skip. Most builders have discovered that the price of skips has increased over the past year - with the average price of an eight yard skip rising by £24. Nearly two thirds of builders claim they have had to pass on this increase to the client, as the increase has squeezed profit margins. This has resulted in home improvement projects becoming more expensive for homeowners, with an extra cost of £360 being tacked on for the average extension.
There are wider concerns that the increase in price for skip hire is likely to lead to an increase in fly-tipping. In 2015 and 2017, more than a million cases of fly tipping were dealt with by local authorities in England! This is already an unacceptable number of what has become an inexcusable practice – it spoils our environment (whether done in town or countryside) and too much tax payers’ money is spent on both cleaning up the resultant rubbish and prosecuting offenders through the court systems.
Another commodity that has risen in price recently is diesel – more bad news for builders, especially the small construction companies that the UK economy relies so heavily on. By the end of October we were seeing reports that diesel prices had its longest price rise streak in two years – at 17 weeks. Builders are also passing these increases on to customers, pushing the cost of building projects up a little more. Some builders are even turning down jobs they would normally accept due to the distances involved which will eat into profit margins and many others are looking at methods of reducing vehicle use – no mean feat when you have heavy tools and materials to transport.
To add to the woes of SME building companies here in the UK, we’re being warned that diesel prices may increase “significantly” in 2019 as a result of the new international rules requiring ultra-low-sulphur fuel in the merchant shipping sector. Worldwide refining capacity of low sulphur marine fuel is not sufficient to cope with demand.
The increase in skip hire prices coupled with the rise in diesel prices have come at an inopportune time for Britain’s army of small builders. The cost of doing business for construction firms is already on the increase with wages and salaries being pushed up, partly as a result of the serious skills shortage we face. Furthermore, materials prices are also on the increase – a situation that is likely to cause more problems for builders in the UK.
Ultimately, these increases in operational costs will have to be passed on to the clients if the construction industry is to thrive and flourish in the coming years. We’ll have more information on these issues over the coming months. Why not follow us on Facebook and Twitter to make sure you get notification of all of our news as it happens?