HS2 Ltd is carrying out a review of its phase 2b strategy, in light of the ongoing materials shortage in the UK construction industry. New Civil Engineer reports that minutes from the project’s board meeting, which have only just been released, reveal that the commercial case and delivery strategy are to be assessed for impact on the materials market.
The supply chain problems and rising costs in the UK construction industry have been building up over the past few months, due to a perfect storm of factors. The building sector is booming, as The Guardian reports, but growth is being threatened by a severe supply chain bottle neck.
According to the latest HIS/Markit CIPS report, demand is at its highest level since June 1997, but 77% of firms are reporting longer lead times from suppliers, and prices are rising at the fastest rate since the survey was launched.
The extra pressure on the system can be partly put down to more homeowners seeking extensions and renovations during the lockdown. There is also a backlog due to the initial global wide factory shutdowns during the first Covid outbreak in March 2020, and a general global shortage of raw materials.
This has been exacerbated by pandemic-related disruption to shipping and clogged ports, not helped by the Suez Canal blockage earlier this year. On top of all this, Brexit uncertainty has led to extra paperwork and hold ups at UK ports, which has particularly affected timber supplies.
There is also a severe shortage of lorry drivers which is slowing down the logistics, as the haulage industry struggles to recruit new drivers in the wake of new Brexit immigration rules and Covid-related backlogs to driving tests. The new rules have also affected labour supply in the construction market, where job vacancies are at the highest level for 20 years.
Despite repeated claims from Transport Minister Andrew Stephenson that the materials shortages were having no impact on HS2, an internal review of the northern leg is being carried out to make a value-for-money assessment.
The minutes from the meeting state: “It was noted that the Economic Analysis would be finalised for submission to the Department for Transport in June 2021 and, following assurance, in July 2021, with assured analysis of the transformational impacts delivered in September 2021, ahead of the publication of the Outline Business Case […]”.
Construction News reports that in May, British Aggregates Association executive officer Richard Bird said that he was concerned shortages in aggregates could increase as infrastructure projects ramp up. “Once HS2 gets going, there could be shortages because all the aggregates will go on that,” he said.
Fabricated steel prices in May were more than 38 per cent higher than prices a year before, and imported plywood prices went up by 29.8 per cent during the same period. Despite this, HS2 boss Mark Thurston said he expected material costs inflation to level out over the coming months, and declined to comment any further on the issue.
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