The procurement of building materials has been a concern since the start of lockdown restrictions last year, and the building/contractor industry has to a degree been playing ‘catch up’ ever since.

Unsurprisingly however, both materials and labour issues have intensified significantly in recent weeks – with several factors contributing to this somewhat `perfect storm`. Alongside the pandemic, both Brexit and the Suez Canal issues are causing delays and labour shortages.

Consequently, to minimise the impact of the challenges on claim lifecycles and indemnity spend, insurers and service providers must ensure their supply chain capacity remains as strong and organised as possible.

But why have we seen increased challenges? Key causes include:

• Implementation of new safety measures and working practices
• Changes to shift pattern procedures (i.e. extensive cleaning down of work areas etc, leading to manufacturing delays)
• Shipping and port issues related to Brexit and recent Suez Canal disruption
• Increase in road haulage protocols and shipping issues (leading to delivery delays)
• Re-opening of non-essential retail, resulting in increased road haulage requirement and diluted capacity
• Packaging shortages
• Increased demand for building materials and labour (new build construction and private works)
• Pandemic related sickness and isolation resulting in workforce capacity issues

Material & labour issues

Plaster, cement and timber have been a concern for a while, however, almost every other building material is now affected by a significant increase in cost and an ever-growing challenge in procurement. Recent market research is displaying a broad fluctuation in cost increases and all research is showing substantial increases across the board.

With skilled labour/trades in high demand, wage demands have risen substantially.

Our network capacity & partnership approach – why it’s essential to get it right

We have seen lead time delays on materials increase by 4-6 weeks in some instances and have onboarded additional suppliers in these areas. We are also working closely with our contractors to ensure we get the best, fair and reasonable cost for both materials and labour for our clients.

On a more positive note, contractors are continuing to review and adapt to the ever-changing situation. By working closely in partnership, insurers, service providers and the entire supply chain can ensure customers get help and the claims journey they deserve whilst minimising the impact on costs and claims lifecycles.

Get in touch with our Director, Strategic Accounts, Adam Shaw on adam.shaw@davies-group.com to access further supplier information on price increases, or discuss how insurers can approach the intensified labour and material challenges.