IMPACT ON ENERGY/ MATERIAL PRICES AND SCENARIOS FOR TENDER PRICING
Russia’s invasion of Ukraine has replaced COVID-19 as the top risk to global supply, with the crisis prompting a spike in energy costs and a consequent resumption of an inflationary trend. Rising energy prices will invariably impact the manufacturing costs for many construction products and materials. Indeed, the CLC has confirmed that manufacturers have increased prices by between 5-10% so far this year, with the cost of the most energy-intensive products rising by as much as 20%.
While the UK is not as reliant on Russian energy and commodities as mainland Europe, the shockwaves stemming from the crisis will be far-reaching. As a result of Russia’s actions, supply chain disruption, shortages, and price hikes will affect materials and deliveries. The reallocation of certain types of materials will only intensify the situation.
This report explores to what extent the UK is exposed to the impacts of the crisis, and how it might impact construction costs. An assessment of the potential implications for certain key trade packages is included, as well as a table outlining three potential scenarios and how each might impact demand, supply, and macroeconomic factors. The potential effect on tender price inflation has also been provided for each scenario.