What do the WPPN’s do for you?

In early December CEWales set up a gathering of the industry to discuss the Welsh Procurement Policy Notices. WPPN 09/21: Sourcing building materials for construction projects in Wales and WPPN 06/21: Decarbonisation through procurement - Taking account of Carbon Reduction Plans

The WPPN’s provide guidance on best practice for public sector procurement.

Although welcoming the action taken by Welsh Government we also looked at the reality within the sector and uncertainty which is now cited as a broad area of concern.  Examples include the uncertainty around inflation and the pricing of products, particularly in relation to steel, cement, bricks, blocks, glass and ceramic tiles, which are all impacted by rising energy costs.  There is uncertainty around potential spikes in the number of Covid cases over the winter having an adverse effect on product availability. The impact of full Border controls that come into force at the end of this year is a further unknown, as is the implementation of the new UK CA Mark and UK Registration, Evaluation, Authorisation & Restriction of Chemicals (REACH) regulations.

Read Construction is a CEWales member based in North Wales that has provided an overview of the impacts on local businesses and practical implications of the WPPN’s. It believes there are enormous challenges ahead which require urgent action.

A sustainable built environment is NOT a new concept, for example BREEAM is 30+ years old, however there has been little improvement in the past 30 years. But to meet Government targets, big leaps are required in the next 10 years.The industry already has solid foundations of sustainability including passiv approach, fabric first and in-use efficiency which are already embedded in projects, this gives the industry a solid foundation for Net Zero delivery.

What we need is whole life holistic carbon assessment as Net Zero Whole Life is a big challenge but Net Zero in operation is achievable and here NOW. If the industry is to achieve this then the routes to success include, early engagement, collaborative working and harness innovation and best practice, design for real world operations, validate in-use performance against design expectation, embed lessons to future projects and finally robust due diligence in removing impacts, not shifting them.

The National Federation of Builders and the Builders Merchants Federation both provide excellent viewpoints and projections on these challenges.  We understand that while the market is no longer experiencing the extremely high levels of demand seen earlier in the year, and UK manufacturers remain at full production capacity, demand continues to outstrip supply for certain products, particularly those being imported. 

Activity across the infrastructure, commercial and new housebuilding sectors continues unabated, however, and will likely remain so into the first half of 2022.  Reports from larger housebuilders and contractors suggest that while a variety of product shortages persist, the situation for most remains manageable.

Brick supply presents a longer-term issue, and imported products are helping to meet a shortfall in current UK capacity until new lines come on stream in 2023 and 2024.  The Brick Development Association suggests that with demand expected to remain high, lead times will be an issue for the coming year. 

For builders to ensure that they get the bricks they need, particularly if they are seeking non-stock bricks, they will have to work more closely with the brickmakers to ensure availability and to mitigate delays in delivery.  While this may require flexibility around choice and specification, quantities should be sufficient to meet demand. Consistently high demand over the past 18 months has also made it difficult for block manufacturers to build the level of stocks required to maintain regular supply throughout the year. Manufacturers are seeking to build stocks over the coming winter months while building sites are typically less active. Nonetheless, demand from new housebuilding is expected to put supply of blocks under pressure in early 2022.

In the electrotechnical sector, products with electronic components and those made from steel, such as cable trays remain in short supply, while twin and earth cable has become more problematic. Product pricing continues to be challenge, particularly for medium sized contractors working on tight fixed price contracts.

Reported constraints relating to a shortage of HGV drivers have lessened for the time being, though the pre-Christmas period may cause further pressure. However, imports, particularly from the Far East, continue to be affected by long lead times, delays at ports and high container costs.

Stocks of timber, a largely imported product have seen some improvement, though prices remain volatile. Market reports reveal significant delays at ports both here and abroad, having a knock-on effect upstream to the Scandinavian mills where production has been forced to slow. This suggests that supplies may remain uneven into early 2022.

So when looking at the BMF’s forecast, the remainder of 2021 is anticipated to perform robustly with Quarter 3 2021 up by +9.5% from that period last year, and Quarter 4 2021 increasing by +2.5% on Q4 2020. Forecasted overall year-on-year growth for 2022 in comparison to 2021 is +0.3%.

This slight increase is due to the expectation of the rapid price inflation of raw materials gradually losing momentum over the course of the coming year.

There are lots of activity In response to the concerns and issues the industry face, the CLC is working with the Department for Business, Energy & Industrial Strategy to build on the industry-wide perspective of the PAG and the data it can access, using horizon scanning to identify medium term problems affecting materials and product availability that can be mitigated by an agreed, planned response.

BUT as always, open lines of communication throughout the supply chain remain essential, and we encourage all sectors to continue to work closely and collaboratively to manage challenges and plan future work.