‘Don’t panic’: industry can cope with Olympics work

The Construction Products Association has hit back at claims that the industry will face significant construction cost inflation, resource issues and material supply capacity problems during the run-up to the 2012 Olympics.

Responding to a recent report by Orman Risk Analysts, which claimed that the industry faces great strain from resurgent commercial and infrastructure sectors in the build-up to 2012 Games, (CJ 24 May) the association has called on the industry "not to panic".

Construction Products Association economics director Allan Wilén said: "The report identifies some 60 office blocks currently in pre-construction which the report’s authors believe will drive a marked upsurge in commercial office development over the next four to six years. However, more than twice as much office space is already under construction in central London."

On infrastructure, Wilén added: "The rapid growth envisaged in the report for infrastructure output in the South East is based on the assumption that all planned major projects including CrossRail and Thameslink 2000 are started at the earliest opportunity and without any phasing.

"The second phase of the East London Line will not start until after 2012, while Network Rail is considering a two-phase programme for Thameslink 2000, with major track improvements again starting after 2012. The timetable of the CrossRail project is uncertain."

Wilén added that the Highways Agency’s planned £4.5bn M25 DBFO, which has a planned annual expenditure of £230m over the seven years from 2009, is the equivalent to only 13% of total infrastructure work in London and the South East.

"Given the sustained 27% fall in infrastructure output in the region since 2001, which has seen its share of infrastructure work drop from a third to a quarter of GB output, the industry should have sufficient capacity to accommodate the project."

On materials, Wilén added: "There has been a marked acceleration in material price inflation in the past year. The recent rise has been driven by rising cost pressures, rather than pulled up by strong demand.

"There is no evidence that excessive demand growth is driving up either construction material prices or tender price inflation. Indeed, overall construction output fell during 2005 and weak growth of less than 1% is forecast for the current year."

Find out more at the Contract Journal conference, Building for London, to be held at Lord’s Cricket Ground on 28 June. For more details contact Vicky Weyman on 0208 652 2180, or visit www.buildingforlondon.co.uk.