Updated COVID Advice for the Construction Sector

Updated COVID Advice for the Construction Sector

The Government has introduced a number of temporary COVID‐19 measures from 30 November in response to the emergence of the Omicron variant in the UK:

  • Close contacts of suspected Omicron cases will be contacted by NHS Test and Trace and legally required to self‐isolate for 10 days, regardless of their vaccination status or age
  • Face coverings must be worn on public transport and in shops
  • Everyone entering the UK from abroad must take a PCR test within 48 hours and self‐isolate until they receive a negative result.

FIS Chief Executive Iain McIlwee said:

New restrictions do not have significant impact on what we legally have to do in the workplace, but are a reminder to be careful and to consider reinforcing the use of facemasks and ensuring that regular testing is taking place.  Beyond the safety of people, which must always be at the forefront of a business leaders mind, this is about  protecting our businesses in a time of severe skilled worker shortages.

The changes were discussed at the latest industry call with Construction Minister Lee Rowley this week, and construction sites are urged to continue to minimise the risk of spreading the virus. The Site Operating Procedures remain available as a reference document and the Build UK COVID‐19 flowchart has been updated in line with the new rules. The CLC is currently reviewing its guidance on the Use of Face Coverings in Construction following publication of the detailed Government guidance yesterday.

The Government has confirmed that the measures will be reviewed in three weeks’ time and we will keep the guidance updated.

CICV Forum has revised its free good practice guide for construction professionals, containing advice on self-isolation.

It doesn’t hurt to revisit signage to remind people on site FIS, with the help of CICV has produced a Mask for Task, Cover for Covid poster.

Vaccination guidance

The Government has announced that everyone who is currently eligible for the COVID‐19 booster vaccine can now book from three months after their second dose and all adults aged 18 and over will be offered a booster by the end of January. Whilst the majority of the UK population is vaccinated, there are a number of issues that employers need to be aware of and FIS Associate Member Citation has updated its practical guidance on developing and implementing a vaccination policy for staff, which covers whether a policy is required, recording vaccination status, and making it mandatory for staff to be vaccinated.

Visit the FIS Covid Hub for the latest updates

A tighter definition of “Placed on the Market” is good news

A tighter definition of “Placed on the Market” is good news

New guidance issued by the Department of Business Energy and Industrial Strategy means manufacturers and distributers can breath a bit of a sigh of release, but problems and a lack of clarity still prevail.  New tighter guidance issued in November clearly states:

“An individual, fully manufactured good is placed on the market when it is first made available for distribution, consumption or use on the GB market (England, Scotland, and Wales) in the course of a commercial activity, whether in return for payment or free of charge. This requires an offer or agreement for the transfer of ownership, possession, or any other property right of an individual good, after the stage of manufacture is complete.”

The specific reference to distribution settles the ambiguity in this area created by previous advice, but there remain some areas of confusion, which individual businesses are asked to identify and refer to their trade body to discuss how legal opinion can be derived, this clarification is welcomed by FIS.  The guidance goes on to cover other aspects of UKCA implementation guidance.

It has been confirmed through the Construction Leadership Council (CLC) Regulatory Alignment Working Group at a meeting attended by representatives of FIS this week, that the Department for Levelling Up, Housing and Communities’ (responsible for the regulation of construction products) is content that this guidance is consistent for construction products.

The guidance can be read in full here: UKCA Implementation Guidance (November 2021).

To support the publication of this guidance, BEIS are running a number of webinars to support the sector.

Preparing for UKCA labelling requirements Tuesday 7 December 2021 at 2pm
Placing goods on the market in Great Britain Tuesday 14 December 2021 at 2pm
Placing goods on the market in Northern Ireland Thursday 16 December 2021 at 2pm

The CLC working group remains concerned about the following areas:

  • Impending date for CA mark CE Mark transition to end versus state of readiness within the sector
  • Can current UK Approved bodies and testing houses cope with all their retesting and certification work needed to implement the CA Mark
  • When can historical data be used and when cannot it be used
  • Potentially limiting and confusion in protocols for sub-contracting testing
  • How are change can be implemented in existing long term contracts
  • The definition of batches when it comes to transition dates
  • Clarity over numerous issues related to the Northern Ireland protocol
  • What happens with components of a CA marked products that could be CE marked and what happens when a component needs replacement
  • The rules related to rebadging be used and how stock needs to be rebadged
  • Whether and when will EU provide clearance for EOTA guidance to be used
  • Clarity on whether the Secretary of State has to publish European Assessment Documents and guidance to support the UK Approved Bodies in issuing UKCA marking

To highlight the extent of these concerns the CLC has written to the Secretary of State – you can read the letter here.

The FIS Brexit Toolkit is available here

 

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?

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

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.

New report confirms sector Net Zero Plans are possible

New report confirms sector Net Zero Plans are possible

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

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.