M&E subcontractors prices rising faster than other trades

Aaron Morby 8 months ago
Share

Specialist M&E subcontractor prices are rising faster than all other trades despite a slowdown in overall construction activity.

A new survey of over 150 subcontractors released by Southern Construction Framework reveals that build costs for the M&E sector rose 7% in the second quarter compared to the previous year.

M&E packages, which account on average for around 20% of project construction costs, continue to face challenges such as high-profile insolvencies, a shortage of skilled labour and rising copper prices.

The survey which covers mainly public sector work in the south of England also blames increasingly complex specifications for upward cost pressure.

Changes driven by stringent environmental and quality requirements are adding to the complexity of M&E solutions.

Supply chains are seeing a rise in the use of PV, air-source heat pumps, ground-source heat pumps, and mechanical ventilation, all driving the complexity of M&E solutions.

These changes have knock-on effects, which are not always immediately clear.

Heat pumps typically require larger ductworks than gas boilers, which can in turn change other design aspects. Similarly, accurately sizing basements, where many of these services are stored, is important and a source of risk.

In addition, fire regulations and local planning requirements have further tested the viability of schemes, with sprinkler systems, fire/smoke dampers, fire hydrant tanks, and electrical vehicle charging points being increasingly utilised.

Adrienne Turner, Framework Manager at SCF, said that these changes to regulation have pushed developers to scrutinise work more carefully, and design more exhaustively. Designing for the worst case has higher costs.

She said: “With M&E being a critical package for projects, and responsible for a high proportion of the construction costs, any unexpected escalations can often place significant pressure on project affordability.

“Costs for the M&E sector are increasing for a myriad of reasons, including labour shortages and changes in specification, following stringent environmental and quality requirements.

“So, it’s vitally important that cost escalations are well understood and predicted.

“Contractors must engage earlier with specialist M&E suppliers to ensure benchmarked rates and that cost allowances are accurate and reflect the designed solution.”

The report also found that despite a decrease in offcial construction output figures, tender workloads actually increased by 3.8% in the second quarter of 2024, when compared to the previous quarter.

Anecdotal evidence from main contractors and their trade suppliers suggests that subcontractors are being asked to revisit previous tenders in the search of cost savings and specification adjustments as past hyperinflation has led to outdated budgets.

Also the surge in insolvencies means that trusted suppliers are being relied upon heavily for pricing works by main contractors.

As a result, this may be driving tender workload across the industry but not necessarily resulting in an improvement in output.

The trades experiencing the largest increases were: concrete frame (11.67%),  windows (6.81%)  and steelwork (6.71%) specialists.

Latest news

Green light for £100m Liverpool Baltic station build

Enabling highway works to start in the autumn
16 hours ago

Three firms land £170m Gentoo Sunderland housing deal

PHS Solutions, Esh and RE:GEN to deliver 10-year home upgrade plan
17 hours ago

Gateway gridlock hits build-to-rent delivery as starts nosedive

Build to rent starts plunge 18% in the capital
23 hours ago

Call to shift Gateway 2 checks to end building bottleneck

"The current system isn't working but we all want to see safe buildings"
22 hours ago

GBN launches £600m bid race for SMR engineer roles

Owner engineers to provide technical and assurance services
23 hours ago

Wates hires ex-Homes England chief to head public sector push

Robert Stone to spearhead its public sector and national frameworks strategy
23 hours ago

Acheson Construction collapse costs suppliers £8.5m

One frustrated creditor seized a telehandler after contractor went into administration
2 days ago

Dominus wins go-ahead for 173-bed Glasgow scheme

Old Wynd Street job expected to cost around £25m to build
2 days ago

Safety Regulator misses deadline to clear Gateway 2 backlog

Investors pulling out of funding high rise buildings
2 days ago

CITB still sitting on £95m cash pile

Staff numbers jump from 666 to 763 as training body wage bill soars
2 days ago

£500m road surfacing framework market call

NEPO goes out to consultation on north east regional highways deal
2 days ago

Two share £220m Scottish rail repairs and minor works deal

AmcoGiffen and CPMS win civils and building repair deals
2 days ago

Builder wanted for £60m London leisure and flats job

Tower Hamlets aims to replace St George’s Leisure Centre in Shadwell
2 days ago

Contractor confirmed for business park expansion

Roe Developments to start on next phase of Castle Donington scheme
2 days ago

Driver escapes injury as scaffold collapses onto van

Major three-lift scaffold fall blocks north London high street
7 days ago

Gilbert Ash to be sold to staff

£267m turnover contractor to transition to an Employee Ownership Trust
1 week ago

M Group seals biggest-ever deal with Telent takeover

Digital infrastructure specialist deal lifts turnover to £3bn
1 week ago

Aggregates firm Ashville went down owing more than £3m

Debts revealed in Companies House update
7 days ago

Cardo saves 100 jobs at Breyer roofing arm

Private equity-backed Welsh maintenance group continues to expand
1 week ago

Excavator knocked off lorry going under bridge

Traffic Commissioner inquiry after accident in south London
7 days ago

Czech energy tycoon buys UK’s biggest rebar supplier

Spanish offload Celsa UK operation to be rebranded 7 Steel UK
1 week ago

Caddick Construction targets £400m turnover

Regional shake-up pays off at contracting arm
1 week ago

Redrow chief steps down after Barratt merger

Matthew Pratt leaving after 22 years
1 week ago

United Living names new property services senior team

New CEO and COO appointed to lead growth in housing upkeep and retrofit
1 week ago

Wynne triples turnover in three years to over £90m

Five-year growth strategy pays off
1 week ago

Speedy Hire blames Budget for branch closures

National Insurance rises accelerate closure programme
1 week ago

Builder gets suspended sentence for Covid loan fraud

M&E specialist inflated turnover to claim maximum loan
1 week ago

Scores of M&E firms win places on £400m CHIC framework

Axis Europe and Seddon secured spots on social housing deal
1 week ago

Coroner hears how worker was crushed under digger

Inquest opens into tragedy at Rose Builders site
1 week ago

Billington lowers 2025 forecast amid pricing pressure

Tender prices under pressure due to project delays and cancellations
1 week ago

Contractor services