New research from the Federation of Master Builders (FMB) highlights the impact recent price rises are having on smaller building firms, citing sharp increase in building material costs and skills shortages as key factors.
Materials such as timber, brick and insulation were identified as the most affected by price rises, as well as concrete and cement; such increased expenses directly affect the margins obtained by construction SMEs.
According to the FMB research, 11% of small building firms have made a loss on projects as a direct result of price increases, while 22% have had to raise their own prices to guard against the upsurge in material costs. 8% went as far as to say they believed material costs now threatened their business’ financial stability.
The ongoing skills shortage in the UK construction industry is also a major factor putting pressure on margins, driving wage inflation in places and squeezing growth even further.
FMB research found that almost half (46%) of the construction SMEs questioned in the survey reported difficulties hiring roofers, electricians and plasterers.
However, the SME construction sector has experienced fifteen consecutive quarters of growth and continues to grow, although more slowly than before. There are also ways to guarantee margins aren’t strained by external factors, such as construction accounting software which can offer complete visibility across projects and allow for forward planning and streamlined data.
Why battle against rising costs by cutting staff and raising fees when, by investing in the right technology that gives you a 360-degree view of your business data, you can identify cost savings and improve efficiencies.
You can find out more about Eque2’s construction accounting software here.