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FIS Statement: Shortages in the finishes and interiors sector, the what, why, when and how?

FIS Statement: Shortages in the finishes and interiors sector, the what, why, when and how?

by | 25 Nov, 2021 | Labour, Main News Feed, Material Shortages

Latest update 30th March

The year started with concerns around labour, which endure, but it is the material shortages of 2021 are starting to give way to energy related concerns linked to the escalation of tragic events in Ukraine.  Key areas impacting FIS members are steel and plasterboard, with major drywall manufacturers now putting metal on allocation and ceiling grids and screws, fixings and fastenings also impacted.

Globally commodities like copper and iron ore (a key constituent in steel) surged to record highs last year (iron ore prices have more than doubled since the beginning of last year) and Aluminium prices are are up by over 20%.  We are also seeing challenges with availability and lead times for bagged cement, polymeric based materials (e.g. insulation, plastics, coatings, sealants and adhesives) and composite and wood based products (e.g. timber, plywood and paper).

Due to continued high demand for plasterboard products and challenges on the consistent availability and supply of some key raw materials, some suppliers are now on allocation and price rises for summer and autumn have been announced.

In this report we look at some of the factors that are causing shortages and how companies need to be preparing/reacting to this challenge.  The aim is to keep it refreshed so our members are have a clear picture and can have informed decisions up and down the supply chain.

Demand Related Issues

The impact of higher than anticipated demand in key sectors like housing and the domestic refurbishment sector (fuelled by growing household savings) have exceeded expectation.  It notes that this is not simply UK demand, but we operate in an increasingly globalised market.  A surge in Chinese consumption is linked to faster than expected recovery from the pandemic fuelling property development and investment in infrastructure and notably by global demand for appliances and electronic goods (many of which are manufactured in China).

A similar picture is true for timber, where demand in the US and China has hoovered up material and, according to the Timber Trade Federation, in the UK DIY and Garden projects in the UK and Brexit has added to pressure on availability.  This situation has eased in 2022, but prices remain high.

Production & Energy Related Issues

Price and availability are always a balance of supply and demand and in the case of iron ore, shutdowns in Brazil related to the Brumadinho dam disaster and technical issues with plants in Australia constrained production.

For polymeric materials such as plastics and sealants freak cold weather in 2021 and storms in the US wiped out production of crude oil in February of that year crippled production of derivative products.  Whilst the majority of plants were back up and running by the first week of April this created an air bubble in supply that is still working its way through the market.

As we step into 2022 the rapid escalation of events has sent oil and gas prices into a period or rapid inflation which is now feeding through into the price of construction products and logistics.   Since 1 April 2021, wholesale gas has risen from a weekly average of 52p/therm to £2.10/therm by the end of January.

Logistical and Freight Challenges

Beyond supply and demand availability has been further compounded by a number of issues related to freight and logistics.  At the start of the year, Brexit prompted some suppliers opting to avoid shipping to UK whilst things “ironed out” and a few border related challenges (also linked to COVID).  This led to a mismatch in import and export levels (containers going back empty) which pushed up prices.

This situation has eased, but the problem has not gone away.   The Suez Canal Queue hasn’t helped exacerbating congestion at global ports and messing up vessel scheduling.  As we move into the summer, port congestion and acute shortage of containers have combined with crude oil price spikes (linked to US weather issues) has led to freight rates for both bulk vessels and containers souring to record highs.  Speaking to one supplier this week they sited an example that a consignment from the East has seen shipping costs quadruple and the shipping cost is now costing more than the product itself!  It is widely reported in the press that the container costs have in some circumstances from £1,800 – £16,000!

A shortage of lorry drivers has also been reported by the CLC with building sites struggling to receive deliveries.   The Road Haulage Association are citing Brexit as a key reason for this.

Whilst shipping freight prices have started to ease in 2022, the invasion of Ukraine has pushed up fuel and hence logistic costs.

What’s going on with shipping rates? – McKinsey’s analyse why container shipping costs are surging and give their take on what lies ahead for the industry.

Political Challenges

The fact that US and China are locked in a trade war isn’t helping either.  Trade tensions are potentially leading to stocking to build up resilience and reduce reliance on one another.  Anything that restricts or disrupts free flow of material tends to drive prices up.  Further problems in the Middle East may also end up having an impact.

Closer to home, the European Parliament has finally ratified the post-Brexit EU-UK trade deal which means we are safe in the knowledge that we will be trading tariff and quota free.  This doesn’t mean that Brexit negotiations are in the rear-view mirror as we drive towards the land of milk and honey.  Many of the potential issues related to Mutuality of Obligation have been kicked into 2022 when the introduction of the UKCA mark could present a number of new issues related to the applicability of testing and assessment for either UKCA or CE marking.  Best case, unless this element of the deal is clarified, it is going to mean increased testing costs for manufacturers, in some cases this may mean that materials and products are not imported or exported from the UK – the additional costs simply don’t justify the returns.  We had a fairly stark warning from colleagues in the timber sector this week – it is a global market, if it gets too difficult, it will simply be sold elsewhere.

What does all of this mean?

The long and short of it is inflationary pressure on materials and products, lead times are longer and some materials may be difficult to secure.  According CPA and reported in the FT,  Timber prices have risen by more than 80 per cent in the past six months, while copper and steel have jumped by 40 per cent, according to the Construction Products Association.  Costs of paints and varnishes are also up by 30 per cent, while polymers such as polyethylene and polypropylene have risen 60 per cent and we have seen significant upward pressure on plasterboard.

A key concern is that despite inflation in materials and labour and an increasingly healthy pipeline, we are not seeing equivalent inflation in tender prices, which means margins are likely to be squeezed.  The  latest tender price reports from MACE is showing that current tender price inflation is running at just 1.5% at the moment and expected to rise to a meagre 2.0% next year.

How can I track and report price movements?

There isn’t a great index of specific prices, but you can draw out the main material movements via the Office of National Statistics (next release is summer), note this is lagging and prices are changing fairly rapidly at the moment.  It also doesn’t necessarily reflect prices on the ground due to specific grades/distribution buffering etc.

The World Bank commodity price index and London Metals Exchange give a high level picture, but doesn’t get into the detail on products used in the finishes and interiors sector.

The RICS publish the annually the BCIS Material Price Index

Probably the best reference is via the merchant groups, for example :

For the sake of balance, if you publish a similar index, please don’t hesitate to pop a link over by email or in the chat and we’ll include it here.

When can we expect an end to all of this?

With such a perfect storm of complex and cumulative issues it is difficult to know when we will start to notice improvement or how much worse things may get, but it may take some time with many predicting ongoing problems throughout 2021 and possibly into 2022.  The old adage hope for the best, but prepare for the worst comes to mind.

Certainly data from the RICS (published November 2021) construction materials costs in the UK continue to escalate, reaching a 40 year high based on the annual growth of the BCIS Materials Cost Index.  According to Joe Martin, BCIS Lead Consultant “The pressure on materials prices and availability is expected to continue at least until the end of 2022. Labour shortages are expected to evolve as the significant driver for overall construction cost increases next year and the construction sector would need to compete for it with other sectors”

How do I need to react?

The advice from the statement CLC shared at the end of this article is spot on.  Plan.

Talk to your clients about the challenges in securing material and the importance of early appointment to give you time to prepare.

Be wary of Design Liability: It is also vital to consider the specification, switching elements because you can secure them as an alternative may not necessarily support full certification and warranties as a system, to fulfil programmes.  Any change to materials and products installed should be EQUAL AND APPROVED or you may be absorbing risk and design liability.  Beyond inadvertent design liability, we are also seeing (for a combination of reasons, not least cost and availability of insurance) pressure on sub-contractors to take on design liability within their contract.  Do you fully understand what is the liability and cost of this, does your insurance cover it?  We strongly urge you to  exercise caution.

Before accepting a contract, make sure you can fulfil it.  It is vital to check you can secure the material and at what price, does your supply agreement guarantee a price?

Double Check your Estimates. With pricing erratic, double check your maths – estimations need to be on point and there is literally little margin for error.  Make sure you state that the quotation is only valid for a short amount of time, and that it is dependent on material supply (do you need to update statements on estimates, quotes and to issue new advice to your team?).  If you are trimming supervision to make the maths work, what could be the risk and cost in terms of quality and safety?

Consider the resilience of your supplier, how long have you worked with them, how well do you know them, how important are you to them, how confident are you they will deliver?  There is some support and guidance on this in the FIS Project Risk Assessment Tool.

Consider the resilience of your customer, through the FIS you can get free credit checks.  This isn’t a panacea, but we have seen a number of failures in the construction sector and if margins continue to squeeze there will be more.  In the wake of the burden of retentions and aggressive tendering meaning profits will be lost and won in variation and change – will you get paid, how much and just how contractual is this job likely to be at that price?

Be realistic.  Before signing a contract with potentially onerous delay responsibilities ensure you have checked these carefully are all these risks in your control to manage?  If you are already locked into a contract and experiencing delays/inflation then look to your contracts and follow the process – remember it is likely that, regardless of blame and responsibility), you will be obliged to ensure that as soon as it becomes “reasonably apparent” that work is likely to be delayed, notice must be given to the relevant party.  If prices are spiralling, talk to your customer, negotiate.

Check for damages.  If you are yet to sign, it is well worth ensuring that supply related delays that will in many cases be beyond your control cannot be a factor in determining liquidated damages.  Remember force majeure relies on events being unforseeable.

Dust off those fluctuation clauses.  Before you sign a contract check the fluctuation clauses too (albeit they typically seem to be scratched out of the standard contracts).  If you cannot negotiate a shared risk approach with your client (and we are getting reports that clients are starting to accept fluctuations), you need to seriously consider pricing in risk moving forwards – what could worse case scenario mean to your business if prices drifted?

FIS has updated advice in our Contractual and Legal Toolkit, including advice on fluctuations, managing delays and extensions of time within contracts.  It also highlights the role that the RICS developed and CLC endorsed Conflict Avoidance Process and Conflict Avoidance Pledge can play in helping to ensure issues related to shortage and availability doesn’t flair up in unnecessary conflict and exacerbate a difficult situation to a crisis.

Bring your concerns to FIS

If you feel you are being treated unfairly, talk to us, we will do what we can.  We can, through our own contacts in the industry, the CLC and contact with the Small Business Commissioners Office and Civil Service shine a light on negative trends and poor behaviour, it can be done anonymously and handled sensitively so as not to damage your relationships.

FIS is urging the supply chain to heed the advice of the Construction Leadership Council and adopt a collaborative approach and ensure that there is ongoing and open communication through the supply chain and we are doing all we can to work together rather than tearing lumps off of each other.

Too often construction get contractual and adopts a siege mentality, parcelling up and firing risk out hoping it sticks elsewhere.  The much talked about transformation must start now, rather than pushing risk down the supply chain, we need to be communicating with clients, helping them to understand that these events are beyond the control of individual companies and we need to work together to resolve and manage.

Our supply chain has had an unprecedented and difficult year, we need to nurture it back to health, not return to old and punitive ways that will ultimately drive people out of business to the detriment of all.

Useful links:

FIS Webinar 15th June, Midday – 1pm: Managing your business in a time of shortage – Listen again here

CLICK HERE for latest Statement from Construction Leadership Council’s Product Availability Working Group June 2021

FIS representing sector at Virtual Careers Fair in December

FIS representing sector at Virtual Careers Fair in December

by | 23 Nov, 2021 | Main News Feed

FIS is representing the finishes and interiors sector at the The virtual Apprenticeships: Earn while you learn careers fair.  The event will allow young people from across the UK to find out more about apprenticeships within different sectors across the UK. It will serve to inspire and inform; supporting students to be better prepared for decisions regarding their future careers.

The aim of the event is to enthuse and inspire the next generation of apprentices and to provide them with all the information they need to know what will be available, what employers are looking for and how they apply.

Between 6-10 December 2021, STEM Learning are delivering an interactive, virtual reality careers fair aimed at 14–19-year-olds interested in finding out more about apprenticeships. Set in an online exhibition hall, up to 30 employers from across the UK will have the opportunity to use pre-recorded videos, ‘pull-up’ banners and PDFs to let students know more about their company or industry and the opportunities available. There is also opportunity to interact directly with young people who visit an exhibition stand through a safeguarded, text-based live chat function.

A similar event organised by STEM Learning took place in March this year and was a great success with over 27,000 attendees and more than 1,170 schools signing up to take part. That event can be viewed via this link to give you an idea of what a stand will look like and what content you could include: STEM Ambassadors: Illuminating Careers.

FIS CEO Iain McIlwee stated:

“Without doubt the biggest challenge facing our sector is the shortage of people.  There are many reasons why we are feeling it so deeply at the moment and we are certainly not alone, but we must redouble efforts and do all we can to reach out to young people and present the amazing array of career choices in trade, commercial, entrepreneurial and managerial options that await them.  The message is simple – whether you are looking to earn a good wage in the trades, excel in design, start your own enterprise or progress the corporate ladder, there is an exciting and rewarding career option in the finishes and interiors sector. ”

To support the show, FIS is reviewing and developing the careers section of the FIS website and is working on a number of virtual resources to support this work (all will be made available as an online pack for members to support their own career in the New Year).

If you are looking for an apprentice, please send details of the role and location to CatherineBullough@thefis.org and she can highlight specific examples. If you are able to review existing careers information or offer additional resources (video testimonials/information to support this effort) contact CatherineBullough@thefis.org or phone 0121 707 0077 and ask for Catherine (our resident STEM Construction Ambassador).

If you are already exhibiting or interested in joining FIS as an employer and recruit for your apprentice programme at the exhibition email CatherineBullough@thefis.org for more information and to ensure efforts are joined up.

Review our careers advice section
FIS Introduces New Respect Policy

FIS Introduces New Respect Policy

by | 12 Nov, 2021 | Fairness, Inclusivity and Respect (FIR)

At the FIS AGM and Awards last week FIS President Helen Tapper emphasised the importance of a redoubling of efforts from the organisation and wider community to ensure that, amidst the worst skills shortage we have known, that we are ensuring that our sector is attractive to all in our society.  To help achieve this aim FIS have launched a new FIS Respect Policy.

As the Trade Body for the £10 billion finishes and interiors sector, FIS is committed to encouraging equality, diversity and inclusion within our workforce and across the wider sector – eliminating unlawful discrimination and ensuring the sector and the businesses therein understand the importance and are equipped to support all individuals within our community.

The aim of this work is to ensure respect is a core value and reflected in all behaviour within our community and to ensure that the sector becomes truly representative of all sections of society.

The policy’s purpose is to:

  • guarantee all those working in the sector are respected and feel safe and are able to be open about who they are and contribute as their best self.
  • provide equality, fairness and respect for all in our employment, whether temporary, part-time or full-time.
  • not unlawfully discriminate because of the Equality Act 2010 protected characteristics of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race (including colour, nationality, and ethnic or national origin), religion or belief, sex and sexual orientation.
  • oppose and avoid all forms of unlawful discrimination. This includes in pay and benefits, terms and conditions of employment, dealing with grievances and discipline, dismissal, redundancy, leave for parents, requests for flexible working, and selection for employment, promotion, training or other developmental opportunities.

In launching the FIS Respect Policy, FIS CEO, Iain McIlwee stated:

“This policy sets out our stall, not just as an organisation, but as a community.  I recently completed the training to become a Fairness, Inclusivity and Respect (FIR) Ambassador and frankly I had a lot to learn – still do.  It isn’t just about what we do as individuals, it is about how we encourage and lead by example and targeted intervention.

The vital take away though was we need to be reflective, seeking to understand not to defend and encourage others in our influence to be better.  We need to be better, not just because it is the right thing to do morally, socially and professionally – the fact is that we are short people, but still behave and communicate in ways that limits our potential to recruit and can turn people away from our sector.  I encourage all members to have a look through this policy and, if they can use to strengthen their own focus, great or if they can see areas we can tighten and improve, feed them in.  The core message of FIS is an inclusive one, together we are stronger.”

FIS members can download the policy via the FIS Fairness, Inclusivity and Respect Toolkit here (including Iain’s blog on becoming a FIR Ambassador).

FIS is supporting the Inspiring Change Conference and Awards a cross-section construction event focussed on improving FIR in our sector and businesses – the event takes place on Tuesday 30th November in London

New report confirms sector Net Zero Plans are possible

New report confirms sector Net Zero Plans are possible

by | 12 Nov, 2021 | Main News Feed, Sustainability

UK Green Building Council launches first ever UK Roadmap for achieving Net Zero carbon built environment by 2050.
  • Whole Life Carbon Roadmap from the UK Green Building Council highlights the growing need to quickly close the policy gap on net zero homes and embodied carbon
  • Only with urgent measures and intervention can the UK deliver on its interim target to cut 78% of emissions by 2035, an essential milestone in the nation’s transition to Net Zero by 2050
  • With homes responsible for 16% of total UK carbon emissions, Government must immediately bring forward a national retrofit programme to unlock significant carbon savings, as well as deliver high-quality and cheaper to heat homes for people
  • The Roadmap is the first quantification of the carbon reductions required each year from buildings and infrastructure if the UK is to be net zero by 2050
  • A transformative shift in industry practices is required and so action plans are provided for 14 key stakeholder groups

As global leaders convene at COP26 to discuss the role of the built environment in addressing climate change, the UK Green Building Council (UKGBC) has launched a Net Zero Whole Life Carbon Roadmap for the UK Built Environment (The Roadmap) detailing the necessary actions government and industry must take to achieve net zero across the sector. The built environment is directly responsible for 25% of the total UK carbon footprint, and therefore has a critical role to play in the national transition to Net Zero. Co-created by industry with over 100 organisations contributing, the Roadmap provides a shared vision and set of actions for achieving a net zero UK built environment by 2050, in relation to construction, operation and demolition of buildings and infrastructure.

The Roadmap quantifies, for the first time, the specific emission reductions across sub-sectors of the built environment that will need to take place year-on-year to meet the 2050 deadline. The analysis includes not only domestic emissions, but emissions related to the consumption of imported construction products and materials. The Roadmap establishes a net zero emissions budget and trajectory to 2050, consistent with wider UK carbon targets and budgets as set-out by the Climate Change Committee (CCC), enabling government and the UK built environment to benchmark progress over the coming years and decades.

Julie Hirigoyen, Chief Executive at UKGBC said:

“After all the talk, it’s time for action. The UK Government’s Heat and Buildings Strategy is a step in the right direction but fails to address several key priorities that this analysis clearly demonstrates are non-negotiable to achieving a net-zero carbon built environment by 2050. The Net Zero Whole Life Carbon Roadmap pulls together disparate strands of recent policy and action into one coherent pathway, with clear recommendations for National Government and Local Authorities, as well as the private sector and the wider industry. We urge policy-makers and industry to embed these recommendations into policies and strategies to make good on the promises and commitments of COP26.”

The Roadmap sets out policy recommendations for central and local governments to help drive and enable the transition needed to decarbonise the sector. These go beyond the recently published UK Government Heat & Buildings strategy and cover existing homes, existing non-domestic buildings and new buildings as well as for the infrastructure which connects our buildings and industry.

The recommendations include:

1) Nation-wide retrofitting of existing homes.

  • Establish an immediate national programme of “fabric first” home retrofit to make homes efficient, warm, and transition away from fossil fuel heating.
  • Bring forward the cut-off date for the sale of gas and oil boilers to 2030.
  • Reform EPCs and introduce minimum EPC ratings for homes at point of sale by 2028.
  • Remove VAT on energy efficient retrofit building works and introduce variable stamp duty linked to energy performance.
  • Introduce direct government retrofit grants for low-income households.

2) Energy performance disclosure for non-domestic buildings.

  • Introduce mandatory in-use energy disclosure for non-domestic buildings.
  • Accelerate the roll-out of energy performance rating schemes across non-domestic sectors, followed by minimum standards and fiscal incentives.

3) Adoption of a design for performance approach to new buildings.

  • Reform building regulations to introduce Energy Usage Intensity (kWh/m2/yr) targets for new buildings from 2025.Alongside low carbon heating for all new buildings from 2025, introduce space

heating demand limits (kWh/m2/yr), measures to limit peak demand, and minimum standards for currently unregulated key appliances.

4) Whole life carbon measurements and agreed limits.

  • Introduce the regulation of embodied carbon for new buildings and major refurbishments
  • Support and invest in industrial decarbonisation of key construction material supply chains
  • Use planning reforms to prioritise reuse of existing buildings and assets

5) National infrastructure investment based on the net emissions impact.

  • Establish a National Infrastructure Integrator with full oversight of carbon impacts

Nigel Topping, COP26 High Level Climate Action Champion, commented:

“As we start a critical decade for climate action, the United Kingdom can and should take a leadership role. This report epitomises leadership and establishes that the UK built environment has a comprehensive and rigorous plan for abating its emissions across the construction, operation, and demolition of buildings and infrastructure. I invite you all to use this Roadmap for delivering a net zero future.”

The Roadmap was co-created by the industry through a project Steering Group and four Task Groups with over 100 organisations contributing. Many of the recommendations align with existing industry initiatives such as Construct Zero from the Construction Leadership Council, and the Construction Industry Council’s Climate Action Plan as well as those contained in the recently published Scottish Government Heat & Buildings strategy. In some cases, the recommendations build on existing Government policy initiatives to facilitate adoption of further proposals and timelines.

UKGBC is one of several European GBCs developing national whole life carbon roadmaps under the #BuildingLife project and The Roadmap was made possible thanks to the support of Laudes Foundation and Ikea Foundation.

FIS Members wishing to update or develop a Carbon Reduction Plan can visit the FIS Sustainability Hub for resources and ideas or contact FIS Sustainability Champion, Flavie Lowres to discuss ideas and options.

A Focus on Construction at COP26

A Focus on Construction at COP26

by | 12 Nov, 2021 | Main News Feed

At COP26 the Construction Leadership Council hosted a dedicated session at the COP 26 conference looking at the role of construction, current focus and positive examples and how our supply chain needs to evolve.

The event kicked off showcasing a feature developed with ITN Productions.  This was followed by a number of focussed sessions, bringing forward representatives from across the supply chain.

The session was co-chaired by Andy Mitchell (Construction Leadership Council co-chair) and Sarah Linnell (an inspiring young industry professional from Cundall) and feature a range of Construct Zero Partners and Business Champions.

It really is a must watch session for all in the sector who wants to maximise your impact in reaching Net Zero.  Familiar faces to those in the finishes and interiors sector include Mike Chaldecott, CEO of Saint Gobain who talked about decarbonisation of the construction products manufacturing sector, including the plasterboard and their work to produce their first net zero plasterboard plant by 2023.

Favourite fact – a design decision on an aluminium frame commercial building to switch to Aluminium clad timber windows is equivalent in impact terms to 900 years worth of a plant based diet.

FIS Members wishing to update or develop your own carbon reduction plan can visit the FIS Sustainability Hub for resources and ideas or contact FIS Sustainability Champion, Flavie Lowres to discuss ideas and options.

 

FIS Signs Pallet LOOP Charter

FIS Signs Pallet LOOP Charter

by | 9 Nov, 2021 | Main News Feed, Sustainability

Through the FIS Sustainability Leadership Group, the trade body representing the £10 billion fit-out, finishes and interiors sector became the first trade body to sign the Pallet LOOP Charter.  The charter is focussed on delivering a simple way of actively eliminating avoidable pallet waste. 

The Pallet LOOP is a new venture designed to deliver a tangible step-change in the transportation of building materials throughout the UK. Through its deposit-based scheme, The Pallet LOOP will remove the need to harvest 4,500 acres of trees every year to feed current linear pallet practices. This in turn will reduce related industry CO2 emissions by up to 70% and cut construction waste by around 10%.

By signing The Pallet LOOP Charter, FIS acknowledge that now is the time for change. Currently, UK construction consumes 18 million pallets each year, achieving a reuse rate of less than 10% – significantly less than FMCG retail, where pallet reuse is now the standard. This practice is clearly unsustainable – economically and environmentally.  In the finishes and interiors sector alone it is estimated that there is around 25 pallets used per £100,000 of turnover.  

Supporters of the Charter commit to:

  1. A comprehensive evaluation of how The Pallet LOOP could be integrated within our sector.
  2. Championing the adoption of a circular economy pallet solution that reduces associated CO2 emissions, delivers improved safety, and increases supply chain resilience through standardisation.
  3. Cooperating with other industry stakeholders to accelerate sector wide implementation – conscious that there is no Planet B and that that we must act now and adopt more sustainable supply chain and distribution solutions

On signing the charter FIS CEO Iain McIlwee stated:

“The shift in gear needed to help us get where we need to be as a sector isn’t going to happen by waiting for change or trying to find a magic formula, it is about looking at what we can each individually and collectively do to make a difference now.  Logistics is key to enabling change and within this a focus on eradicating single use pallets makes perfect sense.  We very much hope that finding a formula here will be a catalyst for change that can accelerate collaboration and focus the supply chain on practical steps to a practical, circular economy”.

Members of the FIS community that have also signed the charter include Meronden, Willmott Dixon, BDL and Platt and Reilly.  

You can find out more about Pallet LOOP via their website here or via the BBC Short featuring Pallet LOOP linked below.

Visit the FIS Sustainability Hub here

Fire Door Safety in the Finishes and Interiors Sector (listen again)

Fire Door Safety in the Finishes and Interiors Sector (listen again)

by | 24 Sep, 2021 | Main News Feed

This workshop and clinic targeted at managing doors responsibly in the finishes and interiors sector, run as part of Fire Door Safety Week, FIS in collaboration with the Guild of Architectural Ironmongery (GAI) and FIS is now available online.

The session (run as part of the Fire Door Safety Week initiative) highlighted the key priorities for delivering fire door safety in specialist interior and fit-out contracts.  It drew on the key pillars of quality defined in the FIS Product Process People Quality Framework to support safe specification and installations and looked at the key ways to ensure that information is managed through to inspection to ensure these essential fire safety products continue to provide protection throughout their service life.

Selecting ironmongery, common concerns and how to avoid them
Douglas Masterson, Technical Manager, GAI

Mind the Gap, the role of intumescents in Fire Door Safety
Tim Foster, Sales & Marketing Manager, Mann McGowan

The Golden Thread, essential information and how to manage it
Jim White, Associate Technical Director, Forza Doors

Fire Door Safety Clinic
Our speakers were joined on the panel by a Fire Door Inspector, Elliott Brown of The Fire Door Inspectors Limited.

The initiative was part of Fire Door Safety Week, the theme take time to save lives.  Fire Door Safety Week ran from the 20th-26th September.  The website features a range of resources to support those specifying, installing, inspecting and maintaining fire doors.

Fire Door Safety in the finishes and interiors sector

Listen again
New FIS Course: Getting Started with Digital Construction

New FIS Course: Getting Started with Digital Construction

by | 21 Sep, 2021 | Main News Feed, Transformation

To support the digital revolution in the finishes and interiors sector, FIS has team up with digital specialists Digital Construction Skills to deliver a new course – Getting Started with Digital Construction, designed to help FIS Members pick through the vast array of digital tools available and to help you make sense of them and work out which ones will have the most positive impact on your business, aligned with your business goals.  This targeted is backed by a strategy support toolkit, that will help you develop a structured digital construction strategy and give your teams the skills and confidence they need to drive change in your business.

This CITB Assured course (Grant Tier 1) is aimed at construction professionals in the Finishes and Interiors sector who would like to learn how digital technologies can benefit their business and to explore the factors they should take into account when considering possible digital solutions. It will help delegates to implement new digital technologies whilst ensuring the greatest chance of successful implementation and avoiding common pitfalls.

Who the course is aimed at:

  • Managers and decision makers
  • Business owners
  • Directors
  • Engineers
  • Project Managers
  • Quantity Surveyors/Commercial Functions
  • SHEQ Staff
  • Team Leaders

Course Content

By the end of the course, delegates will be able to:

  • List the broad categories of digital tools available
  • Describe the possible benefits of implementing digital solutions
  • List the factors they need to take into account when selecting a new digital solution
  • Identify areas of strengths and weakness within their business in terms of readiness for implementing digital construction
  • Identify the supporting skills required to successfully implement the digital tools identified for their business
  • Explain how to identify specific problems within their business which could be solved with digital solutions

The course is split over two consecutive afternoons and will take place on Wednesday 6th and Thursday 7th October 2021 and 2-5pm

To reserve you slot click here

 

Final transition for UKCA Marking delayed

Final transition for UKCA Marking delayed

by | 24 Aug, 2021 | Material Shortages

It has been confirmed that the final transition to UKCA Marking from CE Marking will be delayed by 12 months allowing time for legislation to pass through Parliament, industry to prepare for change and the newly formed UK Approved Bodies to put in place the necessary processes to support the market.

Pressure has been mounting, not just from the construction sector, but the wider product manufacturing sector, that limitations related to mutuality of recognition have thrown up a number of practical challenges that could have prevented products being available from the 1st January 2022.  A delay of the transition deadline to January 2023 has been rumoured, but was confirmed by Government yesterday that CE Marked products would still be able to be placed in the UK market for another 12 months.

Commenting on the delay, FIS CEO Iain McIlwee said:

“When we are already beset by shortages, to remove further uncertainty, at least for the short-term is good news – this announcement will give manufacturers more time to prepare, but also distribution to make decisions about stock.  Concerns with the implementation of the UKCA Mark have dominated discussions of the Construction Leadership Council’s Regulatory Alignment Group over the past 12 months and I know the Construction Products Association have been taking these concerns forward to Government on our behalf.  This delay is good news as it give us a but more time to prepare, but it doesn’t solve all the issues associated with Mutuality of Recognition and particularly the daft situation that manufacturers and suppliers will still need to re-test or assess products in a different geographical location for no reason other than politics.  In the wake of a renewed focus on Building Safety and more rigorous testing regimes, it is potty to waste money and time and tie up vital and valuable testing time to tick political boxes.”

It should be remembered that no such extension is available to products being sent to the EU from the UK, where CE Mark, where necessary issued by an EU Notified Body according to EU Rules.  This means UK Test reports will still not be recognised by the EU thus unilaterally invalidating all existing AVCP System 3 testing carried out in the UK and those for the future.  These tests will need to be repeated at an EU-27 Notified Body.  The announcement  does not change the situation in Northern Ireland.

Visit the FIS Brexit Toolkit here
FIS Update on Shortages here

Double-digit Growth Forecast for Construction Despite Product and Labour Shortages

Double-digit Growth Forecast for Construction Despite Product and Labour Shortages

by | 29 Jul, 2021 | Main News Feed, Market data

Construction output is currently very buoyant and is forecast to rise by 13.7% in 2021 and 6.3% in 2022, according to the Construction Products Association’s latest Summer Forecast published today. This positive outlook comes despite the dual constraints of shortages and sharp cost rises in both imported construction products and skilled labour over the next 12 months. Infrastructure and private housebuilding are expected to be key drivers of construction growth in 2021 and 2022, while the outlook for the commercial sector remains subdued.

Major projects such as the nuclear power station Hinkley Point C, the Thames Tideway tunnel and the High Speed 2 (HS2) rail project are central to strong output in the infrastructure sector. While the CPA has revised down its infrastructure forecast for 2021 to 23.4%, it has upwardly raised its forecast for 2022 to 9.7% for 2022 owing to further delays and cost overruns on major projects. The Summer Forecasts also report an increase in client hesitancy to sign off medium-sized projects leading to a slowdown in the near-term pipeline for the sector.

As all major house builders continue to report that demand in the housing market and house price inflation continues to be robust, CPA forecasts house building starts to rise by 20.9% in 2021 and a further 9.0% in 2022. This is despite the government’s stamp duty holiday and Help to Buy schemes continuing currently in a restricted form. The outlook is particularly strong for houses outside major cities, owing to shifts in working patterns, and is likely to remain so for the next 6-9 months at least according to house builders.

Changes to the way people work as a result of the coronavirus pandemic have also positively impacted on private housing repair, maintenance and improvements (rm&i), which has been the quickest construction sector to recover since the initial national lockdown. Output in March 2021 was 19.3% higher than pre-Covid times, according to the Office for National Statistics (ONS), due to the ‘race for space’ – i.e. demand for better quality outdoor domestic leisure space and home office work environments. Most SME contractors are reporting projects lined up for at least the next six months.

In the commercial sector, the beginning of the year saw a rise in activity owing to fit-out work remodelling offices for staff to return in a socially distant manner. This was also the case in retail and leisure where refurbishing, reusing and repurposing helped prepare for reopening as social distancing restrictions eased. In addition, some larger office towers projects that had the contract signed or were started pre-Covid-19 continued in the first half of this year. Outlook for sector remains subdued, however, largely because of fewer big projects in the pipeline – particularly for new towers in London.

Commenting on the Summer Forecast, CPA Economics Director Noble Francis, said: “The key constraint to the CPA construction forecasts remains the cost and availability of imported products and skilled labour. The sharp recovery for both UK construction and also in places such as the US, has led to sharp cost increases and extended lead times for some key products such as paints and varnishes, timber, roofing materials, copper and steel. This is of concern particularly for SMEs, which account for 86% of construction employment.

“Whilst larger contractors and house builders have greater certainty in their pipelines of work and are better able to plan and purchase in advance, SMEs often purchase what they need on the day at builders merchants. This makes them subject to greater issues if supply is limited or costs have risen significantly, particularly for firms working on fixed price contracts. On the labour side, some contractors are finding that there is currently a shortage of key skills in some key hotspots of activity, which has been exacerbated by the fall in EU construction labour by 42% over the past four years according to the ONS.”

FIS Members can download a free copy of the latest Construction Industry Forecasts from the CPA here

Market Data

FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIIS produces a state of trade survey specifically for the finishes and interiors sector.

Find out more
Is this finally the beginning of the end for retentions in Scotland?

Is this finally the beginning of the end for retentions in Scotland?

by | 29 Jul, 2021 | Main News Feed, Transformation

Following the formation of a small working group in Scotland to look at retentions, a new paper has been presented to Scottish Government.

Retentions have long blighted construction and this paper sets out conclusions from the working group together with clear recommendations designed to support the construction sector and improve cash flow and business sustainability, particularly for small and medium sized businesses.

Whilst the recommendations fall short of recommending an outright ban on retentions it recommends automatic release and legislation that will ensure retentions are held in a Retention Deposit Scheme.

The ten key recommendations are as follows:

  • Scottish Ministers should take forward legislation that will apply to both public and private sector construction contracts to establish a statutory custodial Retention Deposit Scheme, following development of a detailed business case
  • Scottish Government should publish a retention best practice policy note for contracting organisations by end January 2022 and consider with contractors, professional bodies and the wider industry, how best to disseminate and promote compliance. This should include a move towards automatic release of retentions at the earliest opportunity unless a clear issue had been identified and an approach to, and timetable for, resolution set out. It will also provide a requirement that organisations withholding a cash retention should not:
    • repay late or partially, without full and clearly articulated justification
    • render it liable to claim by an upstream insolvent supply chain party
    • use more than one form of assurance on construction contracts
  • by end January 2022 the Scottish Government should invite all contracting authorities involved with major construction projects (a major construction contract is defined in the Scottish Public Finance Manual as one which “has a total anticipated whole life cost of £5m+) to publish their retention policy and monitor and report on compliance. This should be a requirement for all major projects delivered using Scottish Government finance
  • within six months of project handover (practical completion) for each major construction contract, require contracting authorities to publish their compliance with retention best practice or explain how and why they have deviated from it
  • Scottish Government should ensure that reference to retentions and fair payment is included within the Construction Accord
  • Scottish Government to work with industry to ensure retention best practice is reflected in standard construction contracts, including dispute resolution and conflict avoidance procedures and agreed payment procedures
  • promote further consideration/implementation across the sector of the removal of retentions from contracts as demonstrated by Network Rail.  This includes;
    • progress payments not subject to automatic deduction as work
      proceeds
    • the final payment adjusted to place greater emphasis on completing project closure activities such as the Health and Safety file and producing a [priced] list of patent defects
  • upon publication of best practice policy notes, Scottish Government and industry should host a major conference or series of webinars to focus on the promotion and implementation of retention best practice, including conflict avoidance
  • invite Government Enterprise Agencies to work with representative bodies and businesses in the construction sector to identify and deliver efficiency opportunities. This might include a feasibility study to consider implementing an approach to the management of construction project cash-flow using digital technologies such as smart contracts

Commenting on the report, FIS CEO Iain McIlwee said:

“This is another welcome intervention from Scottish Government and we are keen to support this progress.  Whilst we would all like to see a complete end to the practice of holding retentions, at least this way we see the link between working capital and retention broken in a similar way to the Aldous Bill in England which FIS Members supported.”

The full report Cash retention under construction contracts: short life working group final report and recommendations can be read here 

The FIS formal Position on retentions and Contractual reform can be read here 

Is this finally the beginning of the end for retentions in Scotland?

New Procurement Policy Note in Scotland calls for fluctuations

by | 29 Jul, 2021 | Transformation

Following successful lobbying by the CICV Forum in Scotland (of which FIS is an active member), the Scottish Government have issued a new Construction Policy Note (CPN) that sets out measures for contracting authorities to manage and mitigate market pressures affecting the availability and affordability of construction sector resources.

Amongst the key recommendations in the note that call for fairness, a focus on conflict avoidance is the recommendation to adopt fluctuations clauses, specifically:

“Contracting authorities may wish to consider writing formal price fluctuation clauses into tender documents. This should reassure bidders that they will not be exposed to large and unpredictable movements in the prime cost of materials during the course of the contract. It should reduce the pricing cover included in bids for unquantifiable inflation risk thereby bringing them in scope of a well-estimated client budget. It will also return prime cost decreases to the client, should such occur during the project.”

Commenting on the note FIS CEO, Iain McIlwee said, “This is a real triumph for the CICV and shows what can be achieved when the industry works together and provides a clear message to government.  It simply isn’t reasonable to expect the supply chain to absorb ever more risk on the thin margins that construction now offers and we are grateful to the Scottish Government for stepping in.  This note should be welcomed by construction businesses across Scotland”.

The full policy note Resources for construction projects: CPN 3/2021 can be read here.

FIS Latest Trends Survey underpins optimism in the finishes and interiors sector

FIS Latest Trends Survey underpins optimism in the finishes and interiors sector

by | 29 Jul, 2021 | Main News Feed

The FIS Latest Trends Survey indicates that overall 58% of respondents reported increased quarterly sales in Q2 2021.  Looking into the next quarter, the market is even more optimistic than in Q1 with a balance of 70% expecting increased sales in Q3 and despite material and labour shortages a balance of 33% anticipating this will convert into increased volumes of work.  Looking into 2022 81% of respondents are anticipating increases in sales to continue into 2022.

Shortages remain the biggest concern to market expansion with material shortages acute and labour shortages becoming ever more a concern.  Over 60% of firms reporting labour shortages with 22% reporting that the availability of migrant workers has now fallen by more than 25%.  The situation will not ease over the summer with holiday plans adding to the pressure – 71% of firms are anticipating problems over the next 12 months. Drylining, Ceiling, Fixing, Plastering, Carpentry and Joinery and Partitions Installer all being listed as areas of concern.  Worryingly, whilst 48% believe the major issue is COVID delaying return, 34% predict that the labour will not return.

Commenting on the report, FIS CEO, Iain McIlwee stated: “The numbers reflect the conversations that we are having – there is work out there and members are getting busy.  The conditions in the market, however, remain incredibly difficult and despite inflation, packages continue to be squeezed hard to hit unrealistic tender prices and programmes.  It is imperative that, as a supply chain, we recognise the only way to ensure that shortages do not cause chaos is to plan better, build time into the procurement process and ensure that engagement is early enough to minimise design and programme problems that result in rework and waste.  We also have to ensure commitment is given and contracts are exchanged earlier, ensuring that there is sufficient time to support the complex and precise planning, enabling labour and materials to be secured to deliver quality.  The days of snapping your fingers on a Friday and 60 bodies arriving on site on Monday have to be consigned to the past.”

The FIS Q2 Market Trends Survey is available for download here

FIS works in collaboration with the Construction Products Association (CPA) to produce this report and manufacturing data is aggregated as part of their wider survey.  The wider manufacturing sector posted a fourth successive quarterly expansion in the second quarter of 2021, according to the latest Construction Product Association’s (CPA) State of Trade Survey. Private housing, infrastructure and private housing repair, maintenance and improvement (rm&i), in which activity remains firmly above pre-coronavirus levels, continued to be the main drivers of growth. Material cost inflation, however, remained a prominent feature and supply-side constraints were seen as the key concern for the year ahead.   The full CPA survey can be downloaded here.  

 

Market Data

FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIIS produces a state of trade survey specifically for the finishes and interiors sector.

Find out more
Are you FIR Real? Why I am not really worthy to be a FIR Ambassador, but will try

Are you FIR Real? Why I am not really worthy to be a FIR Ambassador, but will try

by | 15 Jul, 2021 | Fairness, Inclusivity and Respect (FIR), Sustainability

Last month I completed the training to become a Fairness, Inclusivity and Respect (FIR) Ambassador, I don’t feel worthy of the title yet, but I have completed my training and made my commitment.

So why now?

Every now and again something jolts us outside of our comfortable perception of the world and our self.  For some, this week it will be the unacceptable face of racism that reared its ugly head when three young Englishmen, missed a penalty and were abused for the colour of their skin. For me, it was closer to home, tripping over my own naivety and being challenged on a statement I made about being ill-equipped to lead on diversity issues because “I’m a middle aged, white man’.  Even as I type it I cringe at how naïve that statement was – and, whilst it was a horribly uncomfortable moment for me, I realise just how important it was to be called out on it.

Like any moment of intense shame, I immediately set about trying to justify my statement, but the more I dug the more I realised there was no justification – my conscience wasn’t just pricked it was torn apart.  I am not saying I didn’t think the FIR agenda was important, but the sad admission in that statement is that I didn’t fully grasp my responsibility as an individual in trying to lead and support change.  The uncomfortable truths continued to flow in the self-reflection that shame typically drives.  I had always leaned a bit towards the “this is a meritocracy” type thinking.  When you stand back, this is almost as naïve and damaging as a statement that starts with those dreaded words “I’m not being racist but…”.  I decided rather than wallow in the negative, I had to go back to school, in this case the Supply Chain Sustainability School, and address my ignorance with training.

The training has been eye-opening.  There were more uncomfortable truths – I’ve hidden behind the internal monologue that “I have never worried too much about sexuality, gender, disability or race”, that I was pretty “right on” when it came to this “FIR stuff”.  But, over the past couple of months I now understand why this is simply not enough.

The FIR agenda is about so much more than looking past diversity, it is about recognising the value in diversity.  I had, wrongly, positioned FIR to be about sexuality, race and physical disability, I had failed to grasp the wider issues of age related prejudice, failed to recognise and support people with particular personality traits and failed to understand the impact of deeply hidden mental health issues and neural diversity which can leave people feeling isolated.

In the training I learned more about the dangers of conscious and unconscious bias, the importance of empathy, self reflection and awareness and how to regularly challenge myself and my beliefs.  Part of the training was online and part in a workshop format, we looked in the workshops at how to create an environment which goes beyond being intolerant of intolerance, but ensures that nobody can be disadvantaged by anything we say or can control and how we can better work with those around us to ensure that the culture in our organisations and wider sector is equally welcoming and open to change.  How we can create an environment that can and does celebrate diversity.

I can’t change the past, but I have been shamed and inspired over the past couple of months and recognised the need to redouble my efforts to be better today and in the future.  I can draw confidence too from a better understanding of what fairness, inclusivity and respect really mean and my role in identifying and uphold these values.  Vitally too I now have access to a network of other FIR Ambassador’s who have, like me, committed to being better, a network where we can learn from one anothers successes and failures without fear of judgement.

My FIR Ambassador’s commitment is to:

  1. Make a difference by influencing and inspiring others within my organisation
  2. Encourage colleagues at all levels to become engaged with Fairness, Inclusion and Respect issues.
  3. Collaborate with other FIR Ambassadors, particularly those outside my business to help drive cultural change within the construction industry
  4. Share knowledge and resources, both within my organisation and with other FIR Ambassadors
  5. Provide an annual update on my Ambassador progress to the FIR Programme team

And I urge anyone to call me out if I am not living up to this.

We have set up a FIR Toolkit on the FIS website and looking to embed the core principles of Fairness, Inclusivity and Respect in all that we do and help businesses to understand and champion diversity and ensure that the finishes and interiors sector is an environment where people feel welcomed, safe and included.

You can access the FIS Fairness, Inclusivity and Respect Toolkit here.

If anyone wants to talk about the Ambassador’s course, don’t hesitate to get in touch, links are in the above toolkit – I would recommend it to everyone.

Blog by Iain McIlwee, FIS CEO
E: iainmcilwee@thefis.org
M: 07792 959 481

Some concerns related to the disproportionate impact of the Building Safety Bill

Some concerns related to the disproportionate impact of the Building Safety Bill

by | 9 Jul, 2021 | Building Safety Act, Main News Feed, Transformation

FIS Statement on the Building Safety Bill

The main impact of the Building Safety Bill centres on who and how the building process will be regulated and who is accountable for what.  It is, for the most part, a huge improvement to the regulatory landscape and will, without question drive a healthier culture centred on improvements in the exchange of information, better design and specification, considered procurement and ensure key details are decided before we are stood on site, scratching heads.  An area of concern is, however, the accompanying changes to the Defective Premises Act and particularly the intent for retrospective application which potentially places a significant and disproportionate burden on contractors and suppliers.

The Building Safety Bill – Headline Changes

The Bill will see the implementation of specific gateway points at design, construction and completion phases to ensure that safety is considered at each and every stage of a building’s construction, and safety risks are considered at the earliest stage of the planning process.

It also focusses on key roles for individuals during the design, build and occupation of a high-rise residential building.  These roles come with clearly defined accountability and responsibility.

Two new regulators are being created through the Bill.  The Building Safety Regulator will be holding individuals to account and taking enforcement action when required.  It also defines the role of the Construction Products Regulator in providing oversight for testing and control of the supply of construction products and sets the ground for the n Building

Other key areas covered by the Bill include:

  • Building Safety Risks defined as fire spread (one flat to another or one floor to another) and structural failure.
  • High Risk Buildings defined as those that are at least 18m in height or have at least 7 storeys and have at least two residential units (a dwelling, flat bedroom in a hall of residence or any other unit of living accommodation)
    • This brings into scope care homes and hospitals meeting the same height threshold during design and construction
    • It also brings into scope buildings owned or occupied by the Crown which meet the scope criteria e.g. Crown Estates, Duchy of Lancaster or Duchy of Cornwall or Government Departments. This is in line with the Fire Safety Order and Health and Safety at Work Act which applies to Crown buildings
  • Draft secondary legislation sets out technical definitions, excludes certain buildings from the regime and, for design and construction purposes, defines the use criteria for a building to be covered.
  • Secondary legislation is also drafted to confirm height will be measured from ground level on the lowest side of the building to the floor surface of the top storey (which does not exclusively contain roof-top machinery or a plant room)
  • New powers for the Secretary of State to use secondary legislation to amend definitions written in the Bill
  • Introduction of a new developer tax a levy on developers ”to ensure that the industry makes a contribution to setting things right”.

Areas of concerns – Retrospective extension of the Defective Premises Act (DPA) 1972

Whilst there are many reasons to applaud the introduction of the Building Safety Bill and the positive impact it is undoubtedly going to have on the construction process going forward, our applause missed a beat when we read and absorbed the impact of section 125 related to the extension of the Defective Premises Act (DPA) 1972.  You may not be familiar with this particular piece of legislation, but it is where the 6 year liability related to claims against defective works is rooted.

The phrase: “Where by virtue of a relevant provision a person becomes entitled to bring an action against any other person, no action may be brought after the expiration of 15 years from the date on which the right of action accrued.” has massive implications for the construction sector moving forwards, but our main concern is when combined the commentary from Robert Jenwick that made it clear that the intention will be for changes to apply retrospectively, allowing claims from 2010.

The wording also indicates that this claims window would be applicable to all “relevant building” effectively extending the scope of the DPA away from new premises to cover all refurbishment and renovation work.

Should this Bill pass through Parliament unamended, clients bringing claims based on workmanship issues from 2010 in “relevant buildings” would have a 15 year window (way beyond existing typical contractual defect liability terms) to bring a claim against the contractor.

Timescales for the Building Safety Bill

The Building Safety Bill is not law yet, it was introduced into Parliament on 30 June 2021 and the process of scrutiny by Commons and Lords is expected to take no less than 9 months at which point Royal Assent will be granted..  The timescales below give insight into when and how the various elements are anticipated to come to bear.

FIS is currently seeking clarification on the changes to the DPA (an initial view has been provided here as part of a SpecFinish article by Michael Woolley, Legal Director of Hill Dickinson LLP.  We remain concerned that the Building Safety Fund and various cladding and remediation and support do not adequately address legacy issues.  The legal requirement for building owners to prove that they have explored alternative ways to meet remediation costs before passing these onto leaseholders means that we are also likely to see surveyors commissioned to find problems, actively seeking to find ways to impose the cost on contractors as an easier route than addressing poor procurement and failings in the regulatory environment.

We will continue our work with the wider construction sector in representing the views of our members on this matter and will be raising these concerns through the Civil Service and relevant Politicians over the coming months.

Building Safety Bill documents

FIS hosted an update and debate on the introduction of the Building Safety Bill in October 2020 – you can access a recording of the event here

View the original announcement of the Building Safety Bill here.

Managing your business in a time of shortage

Managing your business in a time of shortage

by | 5 Jul, 2021 | Main News Feed, Material Shortages

This month we have seen further announcements on price rises, whilst at the same time we can see in the latest tender price reports from MACE showing that current tender price inflation is running at just 1.5% at the moment and expected to rise to a meagre 2.0% next year.  It doesn’t take mensa maths to work out what this is doing to margins.  Whilst we try and get our heads round the fact that despite rising costs of labour and materials and a healthy pipeline emerging prices are being squeezed in this way, we have updated our headline and supporting guidance on managing your business in a time of shortage below.

Talk to your clients about the challenges in securing material and the importance of early appointment to give you time to prepare.

Be wary of design liability. It is also vital to consider the specification, switching elements because you can secure them as an alternative may not necessarily support full certification and warranties as a system, to fulfil programmes.  Any change to materials and products installed should be EQUAL AND APPROVED or you may be absorbing risk and design liability.  Beyond inadvertent design liability, we are also seeing (for a combination of reasons, not least cost and availability of insurance) pressure on subcontractors to take on design liability within their contract.  Do you fully understand what is the liability and cost of this, does your insurance cover it?  We strongly urge you to exercise caution.

Before accepting a contract, make sure you can fulfil it.  It is vital to check you can secure the material and at what price, does your supply agreement guarantee a price?

Double check your estimates. With pricing erratic, double check your maths – estimations need to be on point and there is literally little margin for error.  Make sure you state that the quotation is only valid for a short amount of time, and that it is dependent on material supply (do you need to update statements on estimates, quotes and to issue new advice to your team?).  If you are trimming supervision to make the maths work, what could be the risk and cost in terms of quality and safety?

Consider the resilience of your supplier, how long have you worked with them, how well do you know them, how important are you to them, how confident are you they will deliver?  There is some support and guidance on this in the FIS Project Risk Assessment Tool.

Consider the resilience of your customer, through FIS you can get free credit checks.  This isn’t a panacea, but we have seen a number of failures in the construction sector and if margins continue to squeeze there will be more.  In the wake of the burden of retentions and aggressive tendering meaning profits will be lost and won in variation and change – will you get paid, how much and just how contractual is this job likely to be at that price?

Be realistic. Before signing a contract with potentially onerous delay responsibilities ensure you have checked these carefully, are all these risks in your control to manage?  If you are already locked into a contract and experiencing delays/inflation then look to your contracts and follow the process – remember it is likely that, regardless of blame and responsibility, you will be obliged to ensure that as soon as it becomes “reasonably apparent” that work is likely to be delayed, notice must be given to the relevant party.  If prices are spiralling, talk to your customer, negotiate.

Check for damages.  If you are yet to sign, it is well worth ensuring that supply related delays that will in many cases be beyond your control cannot be a factor in determining liquidated damages.  Remember force majeure relies on events being unforseeable.

Dust off those fluctuation clauses.  Before you sign a contract check the fluctuation clauses too (albeit they typically seem to be scratched out of the standard contracts).  If you cannot negotiate a shared risk approach with your client (and we are getting reports that clients are starting to accept fluctuations), you need to seriously consider pricing in risk moving forwards – what could worse case scenario mean to your business if prices drifted?

FIS has updated advice in its Contractual and Legal Toolkit, including advice on fluctuations, managing delays and extensions of time within contracts.  It also highlights the role that the RICS developed and CLC endorsed Conflict Avoidance Process and Conflict Avoidance Pledge can play in helping to ensure issues related to shortage and availability doesn’t flair up in unnecessary conflict and exacerbate a difficult situation to a crisis.

Material Shortages

The finishes and interiors sector is facing unprecedented material shortages and inflation in a number of areas (including gypsum products, steel, fixings, insulation, sealants and adhesives and timber).

Find out more about our work to support the supply chain in a time of shortage

 

BREXIT: Updated guidance on usincg the UKCA marking

BREXIT: Updated guidance on usincg the UKCA marking

by | 8 Jun, 2021 | Main News Feed

BEIS have issued an update to “Using the UKCA marking” guidance last issued on 31 December 2020. More information has been added on when a you can self-declare along with updates to the ‘Relevant UK and EU legislation” to remove inaccurate legislation.

The updated guidance can be viewed here.

Summary of changes

While this is general guidance there are several references to separate guidance being available for construction products which should be read. These link back to guidance issued in September 2020 dealing with the two UK Statutory Instruments – Construction Products (Amendment etc.) (EU Exit) Regulations 2019 and 2020.

Notable differences in the text are as follows:

On page 2, Selling goods in Great Britain

  • The following has been added:
  • ‘The circumstances in which you can use self-declaration of conformity for UKCA marking are the same as for CE marking. If you were able to self-declare conformity for the CE marking, you will be able to do the same for the UKCA marking.
  • Check the list of areas where self-declaration is permitted.’

On page 3, When to use the UKCA marking

  • The following has been added:
    This does not apply to existing stock, for example if your good was fully manufactured, CE marked and ready to be placed on the market before 1 January 2021. In these cases, your good can still be sold in Great Britain with a CE marking even if covered by a certificate of conformity issued by a UK body before 1st January 2021. These goods will need to be placed on the market before 31 December 2021.

On page 3, How to use UKCA marking, Placing the UKCA marking, General Rules

  • The following has been added:
    A product may have additional markings and marks, as long as they:
    • Fulfil a different function from that of the UKCA marking
    • Are not likely to cause confusion with the UKCA marking
    • Do not reduce the legibility and visibility of the UKCA marking.

On page 4, Rules for using the UKCA image:

  • The following has been added:
    The UKCA marking can take different forms (for example, the colour does not have to be solid), as long as it remains visible, legible and maintains the required proportions.’

On page 5, UK Declaration of Conformity

  • Please note that construction products manufacturers have a Declaration of Performance so CPA recommends that this also applies to DoPs
  • The following sentence has been added:
    ‘We recommend that manufacturers have a separate UK Declaration of Conformity to their EU Declaration of Conformity.’

On pages 6-7 there is a new table titled ‘Legislative areas where self-declaration of conformity for UKCA marking is permitted’.

  • This lists the CPR  with a product scope of AVCP System 4.

On page 8, there is a new item ‘Transitional measures relating to the UKCA marking.’

  • The last sentence categorically states that these transitional arrangements do not apply to construction products.

It has also been noted that guidance issued in the original document “Using the UKCA mark from 1 January 2021” dated 1st September 2020 now excludes the following text:

  • Future use of markings in the UK
    From 1 January 2022, the CE marking will not be recognised in Great Britain for areas covered by this guidance and the UKCA marking. However, a product bearing the CE marking would still be valid for sale in the UK so long as it was also UKCA marked and complied with the relevant UK rules.

CPA update on outstanding areas of BREXIT concern

Visit the FIS Brexit Toolkit here

Thanks to the Construction Products Association for pulling this information together on behalf of FIS Members

BREXIT: Updated guidance on usincg the UKCA marking

BREXIT: Updated guidance on “Placing manufactured goods on the market”

by | 7 Jun, 2021 | Main News Feed

BEIS has issued updated guidance on “Placing manufactured goods on the market in Great Britain”. This is dated 1st June 2021 and replaces guidance last issued on 31st December 2020.

The updated guidance can be viewed here.

Summary of changes

The main change to the document covers updates to UK legislation given in the table under the heading “Relevant UK and EU legislation”. Changes are made concerning legislation for:

  • Personal protective equipment
  • Gas appliances
  • Ecodesign Directive

New items included are:

  • Energy Directive
  • Directive 2013/29/EU – Pyrotechnic Articles

Other differences in the text are as follows:

On page 2, Contents

  • Paragraph 3 the following sentence has been added:

“This guidance explains what you need to do for any goods you’re placing on the GB market after 1 January 2021.”

  • Paragraph 5 the following sentence has been added:

“placing a good on the market means individual good, not a type of good.”

On page 3 under ‘Old approach goods’ and ‘Other goods’

  • Reference is now made to ‘goods on the GB market’ whereas previously it read ‘goods on the UK market’.

On page 3, Other goods

  • Construction products has now been added to the list of goods with special rules. This links to the guidance issued on 1st September 2020 –Construction Product Regulation in Great Britain.

On page 4, Check if you need to change your conformity assessment or marking

  • Paragraph 2 – The words “…after 31 December 2021” have been removed from the end of the sentence

On page 4, Using the UKCA marking

  • The first sentence now read “You only need to use the new UKCA marking before 1 January 2022 if all of the following apply.” This previously read “…UKCA marking after 1 January 2021…”

On page 5, Mandatory third-party conformity assessment for the UKCA marking.

  • Paragraph three – a new sentence has been added which reads “The UK Market Conformity Assessment Bodies (UKMCAB) database (link inserted in the document) lists all bodies which can provide conformity assessment for the UK market.”

On page 6, CE marking if you’re placing a qualifying Northern Ireland good on the GB market.  Paragraphs 4 & 5 are new and read:

  • “Find out whether your goods qualify for unfettered access (link inserted in the document).
  • “Find out more about the government’s approach to unfettered access (link inserted in the document).”

On page 7, Check your legal responsibilities

  • Manufacturers – new text added but nothing new as regards requirements
  • UK distributors and suppliers, paragraph 3, bullet point one – the last sentence has been added and reads “After 31 December 2022, your details must be affixed to the product or, in circumstances where the legislation allows, on the packaging or on an accompanying document.”

CPA update on outstanding areas of BREXIT concern

Visit the FIS Brexit Toolkit here

Thanks to the Construction Products Association for pulling this information together on behalf of FIS Members

Apprentice Wage Rates

Apprentice Wage Rates

by | 16 Apr, 2021 | Skills

Following the increase in the National Minimum Wage (NMW) rates from 1 April 2021, the Construction Industry Joint Council (CIJC) has confirmed that, where the pay rates for apprentices in the Working Rule Agreement do not align with the NMW, the NMW takes precedence and apprentices should paid in line with the latest NMW rates.

In last week’s newsletter we reported that the Minimum Wage Rate changes announced in the Budget came into force on the 1st April.  New rates of the National Living Wage (NLW) and National Minimum Wage (NMW) come into force on 1 April 2021. These follow recommendations made in the autumn by the Low Pay Commission (LPC). To mark the uprating, this report looks ahead at the implications of the incoming rates and the LPC’s remit for the year ahead.

The new NLW and NMW rates are set out below. The NLW now applies to all workers aged 23 and over. The previous age of eligibility was 25. This will come down again to 21 by 2024.

Previous rate Rate from April 2021 Increase
National Living Wage £8.72 £8.91 2.2%
21-22 Year Old Rate £8.20 £8.36 2.0%
18-20 Year Old Rate £6.45 £6.56 1.7%
16-17 Year Old Rate £4.55 £4.62 1.5%
Apprentice Rate £4.15 £4.30 3.6%
Accommodation Offset £8.20 £8.36 2.0%

These increases mark the first step on the path to the Government’s target of an NLW set at two-thirds of median earnings by 2024. This report sets out the latest pathway to that target, based on projections of average pay growth. We are currently consulting on the NLW and NMW rates to be introduced from April 2022.

More information on the NLW and NMW is available here
Visit the FIS Employment Toolkit here

COVID-19: Employer Testing Duty and Self Isolation Rules

COVID-19: Employer Testing Duty and Self Isolation Rules

by | 16 Apr, 2021 | Main News Feed

If you are an employer that requires staff to travel regularly across UK borders, you must take reasonable steps to facilitate your employees to take tests.

To help protect the country from coronavirus (COVID-19), there are testing regimes in place for those who travel regularly across UK borders. If you are an employer that fulfils the following definition, then you must take reasonable steps to facilitate the taking of tests by your employees:

  • you employ more than 50 employees, of which some or all are required to take workforce tests, including agency workers you are responsible for
  • your employees are required to complete testing after international travel

As an employer your ‘reasonable steps’ to facilitate the taking of tests might be:

  • establishing workplace coronavirus (COVID-19) testing or providing your employee with home testing
  • supporting access and signposting employees to testing outside of the workplace

Remember:   A key consideration for any policy is that if you get a positive lateral flow test (LFT) which is confirmed by a positive PCR test, LFT testing will not be effective for 90 days after you have tested positive so you must not use the tests during this period.

For more information on defining “reasonable steps” click here
BuildUK has set up a guide to help set up and run a workplace testing site
BuildUK has also produced a helpful flow-chart around what to do if a worker needs to self isolate

Visit the FIS COVID-19 Hub here