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Construction Companies Are Affected Rising Material Costs and Labor Shortages

Professionals in the sector show more concern about the difficulties in finding workers than about the lack of raw materials. (Construction Companies in Lahore).

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Homes Under Construction

Construction progresses steadily as the pandemic evolves and the horizon clears. But that does not prevent the sector from seeing big clouds that threaten its future and that are already putting its present in difficulties. This follows from a survey periodically carried out by the Royal Institution of Chartered Surveyors (RICS, an international professional association that issues certificates of good practices in the real estate sector). (Construction Companies in Lahore).

Rise In Construction Costs

And the General Council of Technical Architecture. In its latest edition, relating to the third quarter of this year, the construction activity index jumped nine points compared to the previous one and presented a positive balance of 26 points. But, at the same time, the companies and professionals consulted believe that construction costs are going to rise by 8% in a context of labor and material shortages.

Measure Of Activity Index

Activity Index measures the difference between a company with a high workload and a company with a low workload. It remained negative from the first quarter of last year and 2021 until April to June. It turned out to be a positive trend. It is now rising and approaching the average (more than 30 points, unchanged from the previous quarter) (Lahore Construction Company).

Companies Focused on Infrastructure & Non-Residential Private Sector

The indicator also offers broken down data between various subsectors of the construction activity. The most optimistic, once again, is that of companies that build homes (49 points), although it fell slightly compared to the previous quarter (55 points). Companies focused on infrastructure, on the contrary, offer a positive balance of only 3 points (by 11 between April and June). Between the two, the non-residential private sector experienced an increase in activity during the summer and ended with a positive balance of 38 integers.

Optimism In the Sector

When the lights go out, the study also asks the same company if they expect workloads to increase or decrease in the next 12 months. This response provided a positive view across the department. The balance is positive for all companies at 41 points. Those who dedicates to housing are again in the lead with 67 points. Infrastructure (25) and construction of other types of non-residential buildings (23 points) are practically related. (Lahore Construction Company).

Good Prospects in The Immediate Future

But these great opportunities soon do not mean that this sector is unaware of a particular threat. The senior economist is not surprised that trade expectations remain very positive. At the same time, however, he warned that there were concerns about the impact of rising material costs and labor shortages on them due to payments to the Rehabilitation Fund. The latter is crucial because the industry needs to increase staff to meet higher demand.

Shortage Of Labor and The Lack of Training

When companies asked what factors slow down their activity, around four out of five mention the shortage of labor and the lack of training of the same. It is a concern that is growing (71% in the second quarter) and that adds to the ordeal of the breakdown of international supply chains: the cost of materials and their scarcity are the following most cited problems (more than 70 %). (Construction Companies in Lahore).

Costs Of Materials and Labor

It depends on the company and discusses by experts. Material and labor costs as well as auction prices, such results expected to increase construction costs by 8% in the coming months. But at the same time, companies are keeping up their expectations for profitable growth. When asked if the margin is increasing by a positive 2-point balance. The balance in the third quarter was -14 points.

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