Clients urged to draw up realistic project budgets as costs rise

Clients must help out contractors by drawing-up realistic project budgets that take into account the rising cost of raw materials.

That is the plea from the Civil Engineering Contractors Association after its latest cost survey revealed that the rate of inflation for civil engineering has rocketed from 5.5% last year, to 7.75% for England and Wales, and 10% for Scotland.

Gas oil fuel has risen to an average rate of increase of 19.5%, while DERV fuel has risen 15.25%.

Materials costs have also shot up, with reinforced steel showing an average rate increase of 14.75%, steel up 13.75% and fabricated steelwork 12.75%.

CECA chairman Peter Andrews said: "Contractors always do their best to raise efficiency and absorb cost increases, but it is very hard to cope with increases running at more than 7%-a-year when they have absolutely no control over the costs of key items such as fuel and steel.

"Clients need to recognise this. They must acknowledge the pressure on contractors and allow for this in their budgets."

CECA warned that government expenditure plans based on the Retail Prices Index measure of inflation will be a doubt because they do not reflect the true cost of infrastructure projects.

This, the association said, is particularly important as the industry needs clear and transparent long-term investment programmes to be able to plan effectively.