Inflation and Economics

Question 1

What did the RICS Global Construction Monitor, for Q1 show?

Answer 1

1) 91% believe cost of materials is holding construction industry back.
2) 71% shortage of material hindering construction.
3) Labour and Skill shortages are also affecting construction.

Question 2

Why has there been a price increase in materials such as steel/glass.

Answer 2

Energy costs increase has directly affected steel/glass as they are energy-intensive materials.

Question 3

What are the skill shortages?

Answer 3

Skilled Trades (55%), QS (53%) and BS (38%).

Question 4

What is inflation?

Answer 4

General increase in prices and fall in the purchasing value of money.

Question 5

What has caused inflation?

Answer 5

1) Demand for oil and gas is pushing up energy prices worldwide.
2) Shortages of many goods, including building materials and computer chips,
3) Government support to businesses

Question 6

What are some items that have been affected by inflation?

Answer 6

Energy such as gas and petrol has risen.

Question 7

Inflation – effect on construction market and tender prices

Answer 7

Materials combined with logistics issues and staff shortages. Average price of materials rose by 16% during Q1. Increasing Tender prices, which puts pressure on fixed-sum contracts.

Question 8

Why is the construction industry important to the UK Economy?

Answer 8

9% of GDP (Gross Domestic Product) and we employ just over three million people in the construction industry.

Question 9

What could an alternative be to a fixed sum contract?

Answer 9

Include fluctuation clauses.

Guaranteed maximum price contract or target cost contract.