Construction SMEs Affected by Fuel and Skip Price Increases

Construction SMEs Affected by Fuel and Skip Price Increases | Building News UKA new industry report has revealed that SMEs from across the UKs construction industry are being adversely affected by fuel and skip price increases. The report, compiled by the Federation of Master Builders (FMB), highlights that smaller firms are having to pass these increases to their customers, hiking up prices and potentially damaging their businesses. It is estimated that one-in-ten contractors are turning down work due to the rises in fuel costs.

Not all builders are passing on the price rises, however, and almost 75% of all survey participants reported the significant increases in skip prices are squeezing their profit margins as a result. Skip price increases have been notable across the UK, with the average cost of renting an 8-yard skip rising by £24. This translates into almost £400 over the length of hire required for an average flat roof extension, for example.

Many of those covering the additional cost are doing so because they are afraid of losing work, yet the FMB are advising builders across the UK to adjust quotations to cover the increases, fearing that many will go under next year following increasing pressure and diminishing profit margins.

Price rises across the industry

It is not only fuel and skip hire increases placing greater pressure on the construction industry, according to the report. Increases in wages due to skills shortages is not helping SMEs, and a widespread rise in materials costs has been steadily increasing since the UKs EU referendum result impacting the value of the Pound.

The FMB also expressed its concern about the construction industry as a whole, as increasing prices will filter down to consumers, who may halt planned building works and home improvements due to cost. It also expects fly tipping to increase dramatically following (what it feels are) excessive skip hire increases.

The general consensus is that however difficult it may be for builders to allow for significant price rises in their quotations, it must be done in order for the industry to continue to perform. Some construction firms are worried that price hikes may encourage ‘cash-only’ workers, which will damage the industry irreparably.

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