costs

Turns & Townsend Warns Construction Insolvencies

The UK construction industry should beware insolvencies as demand weakens and margins are squeezed, warns UK consultant Turner & Townsend. Its latest market analysis points to falling demand, rising input costs and lower margins, and notes that the number of construction insolvencies far outstrips those in retail. The confusion over

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Underfloor Heating Cheaper Than Traditional Radiators

Force drying specialist ForceDryA has conducted a new study that looked into the installation costs of underfloor heating versus traditional radiators, showing that the underfloor heating option is far more economical than is generally perceived. The study was based on data from leading contractors for installations in a one, two

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Latest Issue
Issue 325 : Feb 2025

costs

Turns & Townsend Warns Construction Insolvencies

The UK construction industry should beware insolvencies as demand weakens and margins are squeezed, warns UK consultant Turner & Townsend. Its latest market analysis points to falling demand, rising input costs and lower margins, and notes that the number of construction insolvencies far outstrips those in retail. The confusion over Brexit keeps persisting and contractors expect tender prices to increase 2.9% in 2019, outstripped by increasing materials costs of 5.3% and labour costs rising 4.5%. Only 28.4% of contractors expect the market to improve, against 42.1% prior to the Brexit vote in June 2016. According to official data, construction witnessed the highest insolvency rate of any UK economic sector, with 2,924 insolvencies recorded in the 12 months to the end of September 2018. This figure is 28.8% higher than the UK’s struggling retail sector. Turner & Townsend thinks that the underlying cause is weakening demand in construction. Despite a small 3.4% rise on the previous quarter, new orders in Q3 2018 were down almost a third (30.8%) on the high levels seen in 2017. As a result, Turner & Townsend’s latest UK market intelligence report finds that half of contractors (50.5%) surveyed were experiencing lukewarm tendering conditions, reporting increased competition and moderate price growth. The trends are hurting profit margins. The analysis shows median margins for tier one contractors standing at 3% and 5% for tier two contractors. Since the start of 2016, median tier one margins have shrunk by a quarter and tier two margins by half, leading Turner & Townsend to warn of a heightened risk of insolvency. “So much rests on the Brexit withdrawal agreement and there remain risks of further decreases in demand, coupled with increases in the costs of materials and labour from the continent and elsewhere.  Contractors’ already-thin margins could clearly come under further pressure, ” said Paul Connolly, UK managing director of cost management. “It’s essential for clients to be proactive about these risks – monitoring for warning signs, undertaking wide-ranging due diligence during procurement, and using project controls to pre-empt and correct problems at an early stage.  It’s about checking and challenging the supply chain, but also collaborating – understand suppliers’ pressures and concerns, as well as holding them to account,” he added. Turner & Townsend’s report outlines the steps clients should take in terms of watching for warning signs, due diligence, pre-emption of problems, and creating a resilient client-supplier dynamic.

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Underfloor Heating Cheaper Than Traditional Radiators

Force drying specialist ForceDryA has conducted a new study that looked into the installation costs of underfloor heating versus traditional radiators, showing that the underfloor heating option is far more economical than is generally perceived. The study was based on data from leading contractors for installations in a one, two and three bedroom property. Three specifications were included: traditional radiators and 75mm sand & cement screed, traditional radiators with a 50mm flowing screed, and a 50mm flowing screed with underfloor heating. The findings showed that, for an 80m2 dwelling, installation costs for the sand and cement approach range from £3,003.72 to £3,483.10; for a 50mm flowing screed  with radiators costs start at £3,163.72 to £3,563.10 and for a 50mm flowing screed with underfloor heating costs range from £3,464.63 and £4,082.30. The costs for the underfloor heating approach also includes force drying, which facilitates fast, safe drying of liquid screed floors. This approach reduces drying time typically from around 90 days to as little as 28 days, representing a significant time saving and additional cost saving in the construction process. “There is a perception that underfloor heating is expensive and only practical in commercial terms for installation in higher end properties. However, our study shows that the underfloor heating method is only marginally more expensive to install than radiators, but when combined with force drying with the considerable cost benefits of the time saved  factored in, the overall costs could actually be less. This means underfloor heating with a flowing screed can be a viable solution for all kinds of housing, including social and affordable,” said Ross Verity, managing director of ForceDry. Verity also points to the environmental benefits of using liquid gypsum screed flooring, which comprise 98% recycled waste material, require less energy to produce and, because it is thinner, uses less material. These factors result in a carbon footprint over 70% lower than that of sand and cement screeds. “This approach is economical to install, environmentally friendly and performs very efficiently. It can save developers and property owners time and money during build and allows them to offer a superior product specification. Homeowners and tenants then benefit from the comfort, economy and low maintenance this kind of system offers,” he concluded.

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