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SME building firms bemoan ‘rocketing’ material prices

Rising material prices are squeezing margins at more than half of the UK’s small building firms with the same percentage having to pass these price increases onto consumers, according to new research.

A survey by the Federation of Master Builders (FMB) found that 56% of small and medium-sized (SME) building firms have had their margins squeezed, an increase of one third (32%) in July 2017.

Around 49% of firms have been forced to pass material price increases onto their clients, making building projects more expensive for consumers. This figure has more than doubled in less than a year.

Other impacts of material price increases have been a third of firms (30%) recommending that clients use alternative materials or products to those originally specified, up from one in ten in July 2017, while nearly one fifth (17%) of builders reported making losses on their building projects due to material price increases.

Construction SMEs were asked by the FMB which materials are in shortest supply and have the longest wait times.

The average results were as follows (in order of longest to shortest wait times):

  1. Bricks were in shortest supply with the longest reported wait time being more than one year;
  2. Roof tiles were second with the longest reported wait time being up to six months;
  3. Insulation was third with the longest reported wait time being up to four months;
  4. Slate was fourth with the longest reported wait time being up to six months;
  5. Windows were fifth with the longest reported wait time being more than one year;
  6. Blocks were sixth with the longest reported wait time being up to four months;
  7. Porcelain products were seventh with the longest reported wait time being more than one year;
  8. Plasterboard was eighth with the longest reported wait time being up to two months;
  9. Timber was ninth with the longest reported wait time being up to two months;
  10. Boilers were tenth, with the longest reported wait time being more than one year.

SME building firms were also asked by what percentage different materials have increased over the past 12 months. On average, the following rises were reported:

  • Insulation increased by 16%;
  • Bricks increased by 9%;
  • Timber increased by 8%;
  • Roof tiles increased by 8%;
  • Slate increased by 8%;
  • Windows increased by 7%;
  • Blocks increased by 7%;
  • Plasterboard increased by 7%;
  • Boilers increased by 7%;
  • Porcelain products increased by 6%.

Brian Berry, chief executive of the FMB, said: “Material prices have rocketed over the past year. The reason for this could include the impact of the depreciation of sterling following the EU referendum still feeding through. High demand due to buoyant international markets could also be contributing to price increases. What’s particularly worrying is that when prices have increased mid-project, almost one fifth of builders have absorbed the increase and therefore made a loss. Also, if material price increases weren’t enough of a headache for building firms, they are also experiencing material shortages with wait times ticking up across a range of materials and products. Worst case scenarios include firms waiting for more than one year for a new order of bricks.

“The rise in material prices is not just a problem for the country’s construction firms – it is also a problem for home owners. Half of firms have been forced to pass these price increases onto their clients, meaning building projects are becoming more and more expensive. This problem has worsened recently with more than twice as many firms passing material prices on to their clients now compared with nine months ago. What’s more, home owners should be prepared to have to use alternative materials or products to their first choice. One third of firms have recommended that their clients should use alternative materials or products to those originally specified. Now more than ever, it’s important that builders and their clients keep the lines of communication open in order to stay within time and within budget. Specified products or materials may need to be swapped for alternatives or clients will need to accept the additional cost.”

Brain Berry added: “We are calling on builders merchants to give their customers as much advance warning of forthcoming material price increases or wait times as possible so that firms can warn their customers and plan ahead. We are also advising builders to price jobs and draft contracts with these material price rises in mind. The FMB’s latest State of Trade Survey shows that almost ninety per cent of building firms are expecting further rises over the next sixth months. This makes quoting for jobs difficult but if builders flag the issue to their client from the outset, and include a note in the contract that prices may be subject to increases, they shouldn’t be left short. What we don’t want is for the number of building firms making losses on projects to increase as this could result in firms going to the wall. A large number of collapsing construction companies will have a terrible knock-on effect in the wider economy.”

Designs unveiled for £100m Glasgow office development

M&G Real Estate has unveiled its plans for a new £100 million office development in the heart of Glasgow’s city centre.

Now branded as The Grid, the Cooper Cromar-designed project at 33 Cadogan Street will provide 277,500 sq ft of Grade A space over 12 levels.

M&G said the development aims to be Scotland’s healthiest workspace complete with electric car charging ports set up in the basement, on-site cycle storage and spa-style showers and changing rooms and laundry.

Following planning consent in 2017, The Grid, will be built on the site of the former Corunna House in Glasgow’s Central Business District. With well-being at the core of the design, The Grid is committed to securing ‘Gold’ certification from the International WELL Building Institute.

A highly visible entrance is positioned on the corner of Cadogan Street and West Campbell Street and an enhanced public realm is planned with new widened paving, trees, seating, and a building drop-off point. To the left of the main entrance is a dedicated street level cyclist entrance.

The reception area at The Grid

The building has achieved Scotland’s second ever WiredScore Platinum rating, which is the highest standard in the market leading accreditation for digital infrastructure, technology and connectivity of office buildings. The Grid’s access to superfast broadband and its agile working areas are said to enable mobility and enhance innovation for The Grid’s occupiers.

The top three floors have panoramic views from south facing terraces, which frame the unrivalled views across the city and the hills beyond. On the tenth floor, a private double height sky garden, provides a focal point for upper floor occupiers. At roof level there is ‘The Loft’, a communal business lounge and garden – an area designed to inspire, with space to meet, unwind and take in the view.

William Badger, Asset Manager at M&G Real Estate, said: “Ways of working are changing fast, and so must the buildings we create. Workspace is one of the key contributors to staff wellbeing, and we are very excited to present our vision to the market. We believe we have created something that is truly special and unique in the Glasgow market.

“With a lack of new Grade A space in the city’s office market, as well as in nearby Edinburgh, we are confident that The Grid will attract strong interest.”

Property advisors JLL and Knight Frank have been appointed as letting agents.

Demolition of the existing building is planned for later this year, with completion achievable by late 2021.

Whisky distillery fails in legal challenge over ‘unlawful’ wind farm development

The owners of a Speyside whisky distillery who claimed that the development of a new wind farm in Banffshire was “unlawful” on the basis that the construction works did not begin within the five-year time limit imposed upon the developer have had their legal challenge dismissed.

William Grant & Sons Distillers Ltd (WGS), owners of the Glennfiddich distillery and visitor centre, argued that access works were not part of the development and sought judicial review of a decision by Moray Council to the effect that the planning conditions had been met.

But a judge in the Court of Session refused to grant the orders sought and upheld the decision of the local authority after ruling that the developer Dorenell did “validly commence” the development.

Planning consent

Lord Woolman heard that the Scottish Ministers granted permission for the construction of the 59-turbine wind farm on the Glenfiddich estate near Dufftown on 22 December 2011, but attached a lengthy string of conditions, one of which was a requirement that the development commence within five years.

WGS, an “implacable opponent” of the wind farm because it considered that the development would have an “detrimental impact” on the Speyside landscape and “adversely affect” local tourism, unsuccessfully challenged the decision to grant consent.

But after the grant of the permission WGS monitored the progress of the works.

In August 2016 Dorenell served a notice on the council stating that it would commence enabling works at the end of that month, and in October the local authority confirmed that the development had been validly commenced.

The works were designed to provide access to the proposed location of the turbines by upgrading a road junction and existing forestry track.

‘Unlawful’ development

However, WGS received legal advice querying the legal status of the access works, with an opinion from counsel in September 2016 suggesting that the works may be “unlawful”.

Dorenell carried out further works on 22 December 2016, but WGS believed that commencement did not take place within five years, although it did not raise proceedings to challenge any decision taken on or before that date.

Instead, it sought to review a decision taken by the council on 6 March 2017 holding that certain planning conditions had been purified.

WGS submitted that Dorenell did not comply with the five-year time limit as the access works were not part of “the development”, because they lay outside the red line area on the map which depicted the site.

It was also argued that the works undertaken on 22 December 2016 were “de minimis” (a Latin expression meaning “about minimal things”) and “did no more than break the ground”.

‘Valid commencement’

However, the judge held that the site did not define the scope of the development.

In a written opinion  Lord Woolman said: “The Scottish Ministers gave consent to ‘the development’. That necessitates reference to the environmental statement.

“The environmental statement recognises that the access works had to take place first…Unless and until the access works were carried out, construction traffic could not reach the turbine location. Accordingly, I hold that Dorenell did validly commence the development in August 2016.

“The question is put beyond doubt by the works undertaken within the red line area on 22 December 2016…The test is when a material operation ‘begins to be carried out’. Very little needs to be done to satisfy that requirement…It is evident from the photographs that the works were not de minimis.”

The judge also held that WGS had failed to bring the application within the three-month time limit, as required for judicial review.

Proceedings must be brought within three months of the date on which the grounds of challenge first arose, but WGS only served the petition on 8 June 2017.

Lord Woolman said: “Looking at the chronology, WGS must have contemplated proceedings on receipt of senior counsel’s opinion in September 2016. Litigation became an option when the council approved commencement the following month.

“The grounds of challenge clearly arose at midnight on 22 December 2016. Matters crystallised then. Accordingly, WGS should have raised this action within three months of that date.

“In any event, I would have refused to exercise my discretion to grant relief. WGS has not given a good reason for the delay in raising proceedings.”

He added that to quash the decision would “undermine the needs of good public administration” and cause “serious prejudice” to the developer and third party contractors, as over £100 million has been spent on the development to date.

Bam Nuttall awarded £10m Highland mainline deal

Network Rail has awarded Bam Nuttall a contract for upgrade works to the Highland mainline – to help reduce journey times for customers.

The £10 million deal is part of an overall £57m Scottish Government-funded investment in the line linking Inverness and the Central Belt.

The contract will involve extending platforms 1 and 2 at Pitlochry station and carrying out modifications to extend the track layout.

Infrastructure works will also be carried out at Aviemore station – extending the loop (section of double-track) to the north of the station.

In addition, signalling systems at Pitlochry and Aviemore will also be altered and upgraded as part of the overall project.

These works will enable ScotRail’s longer InterCity trains (HSTs), which will start to be introduced on the route later this year, to pass each other more efficiently at both stations.

The work will help deliver an hourly service, with average journey times reduced by around 10 minutes. It will also enable potential improvements to the times of the first and last trains between Inverness and the Central Belt and to provide a better distribution of calls at the intermediate stations between Perth and Inverness.

This is the second phase of investment in the Highland mainline. In 2012, the initial phase of the project increased the number of services from nine to 11 trains per day in each direction.

Humza Yousaf, minister for transport and the islands, said: “The awarding of the Highland mainline works contact is an important milestone in the progress of the project, which is on track to complete in little over a year.

“The works planned to take place at Aviemore and Pitlochry allow for far more efficient crossing of trains, which along with the soon-to-be-introduced HSTs and infrastructure enhancements, will deliver faster more frequent journeys between Inverness and the Central Belt.”

Matthew Spence, route delivery director for Network Rail, said: “This work is vital to the introduction of InterCity trains on the line and the improved timetable that will deliver more services, improve stopping patterns and provide better connectivity for customers.

“Throughout this project we will work closely with our contractors, train operators and other partners to deliver in the most efficient and cost-effective way possible while minimising disruption for both lineside communities and passengers.”

Jerry Dickson, regional director Bam Nuttall, added: “We are delighted to have been awarded this contract and look forward to delivering this important enhancement to the Highland mainline.

“Our team will be looking for opportunities to work with the local community to identify opportunities to leave a positive lasting legacy from the work at both stations.”

Motherwell station in line for £3.5m transport hub

Plans to create an improved transport interchange at Motherwell railway station have been approved by the Glasgow City Region Cabinet.

The £3.5 million Glasgow City Region City Deal funding sought will contribute to a wider project that will see North Lanarkshire Council working alongside ScotRail Alliance and Strathclyde Partnership for Transport to create a vibrant, regional transport hub in Motherwell.

ScotRail Alliance has committed funding to upgrade Motherwell Station as part of its franchise commitment to develop large stations in Scotland. Funding from the Scottish Stations Fund will support this wider project. The joint investment will help to transform the station into a modern, accessible, customer-friendly interchange for North Lanarkshire.

The City Region investment will see a high-quality interchange centre developed for bus, train and bike transport in front of the existing railway station, which will coordinate with ScotRail Alliance’s investment in the station itself.

This will include:

  • An expanded bus facility on Muir Street
  • New arrangements for taxis, car drop-offs and disabled parking adjacent to the station
  • A reconfigured station forecourt
  • Pedestrian and cycle network improvements, and
  • Expansion of the park and ride at Farm Street and additional parking at Pollock Street car park.

Overall, the project aims to make it easier to use public transport and improve links between bus and train services, as well as reducing road congestion. This will provide increased access for local people to jobs, education and training opportunities in Lanarkshire and beyond.

The plans include capacity for potential increased bus services to and from Ravenscraig as this site is developed in future.

The project will be taken forward in two phases: the park and ride and active travel work is expected to begin on site in September 2018; with the Muir Street interchange works starting in spring 2019.

More than 750 jobs to go at CITB as three year business plan revealed

Sarah Beale

The Construction Industry Training Board (CITB) has announced plans to reduce its workforce by more than 50% over the next three years as part of new reforms to the organisation designed to “modernise its business and relentlessly focus on skills”.

The business plan estimates that the current figure of 1,370 employees will become fewer than 600 by 2020/21.

Based on feedback from levy-payers, industry and the UK government’s ITB Review, CITB said its Vision 2020: Business Plan 2018-21 adds “substantial detail” to the Agenda for Change published last year, revealing a £689 million investment into skills.

Investment across the 2018-2021 period will reflect CITB’s strategic priorities:

  • £613m on Training and Development to deliver skills outcomes
  • £31m on Engagement, securing the skills policy framework
  • £17m on Careers, increasing from £3m in 2018/19 to £8m in 2020/21
  • £9m on building CITB’s evidence base, identify needs and delivering outcomes
  • £4m on Standards and Qualifications, providing consistency and quality.

Reforms highlighted in the new business plan are already underway with the introduction of CITB’s training model and new grant scheme revealed earlier this month.

CITB chief executive, Sarah Beale, said: “CITB has listened, and we have now taken action. This business plan sets out our ambitions for the next three years. It shows how CITB’s work across England, Scotland and Wales will modernise and repurpose. By 2020 we will be the ‘levy in, skills out’ body construction employers asked for, doing less, better, while being fully transparent and accountable.

“I am confident that this business plan will make a radical difference to CITB, enabling us to meet the skills needs of construction.”

Civils contractors said that the publication of the CITB’s business plan shows that reforms to that body will deliver a “laser-like” focus on skills outcomes for the UK’s construction sector.

Marie-Claude Hemming, director of external affairs for the Civil Engineering Contractors Association (CECA), said: “It is to be welcomed that the CITB plans substantial investment in construction skills over the next three years, as well as implementing reforms that will cut bureaucracy, improve its communications, and implement better governance.

“Making sure the workforce is sufficiently skilled to deliver the substantial pipeline of work the Government has planned is one of the most pressing challenge facing our industry.

“A reformed CITB must maintain a laser-like focus on putting the right skills in place, and on pin-pointing funding to enhance construction training, to deliver a recognised, world-class and innovative approach to developing the UK’s construction workforce.

“We look forward to working closely with CITB during this modernisation process, and to ensuring that the construction and built environment sectors are able to upskill the existing workforce and attract sufficient numbers of new entrants to meet projected demand.”

Ministers may call in Edinburgh housing plan amid panda health fears

A planning application for homes near Edinburgh Zoo could be called in by ministers after concerns were raised that noise from the building site could disturb the zoo’s pandas.

Developers Sundial Dundas Corstorphine have applied for permission for the 78-home redevelopment of the nearby Corstorphine Hospital.

However the Scottish Government has notified the City of Edinburgh Council that ministers may call in the application amid fears work on the site could affect the pandas’ health.

A letter from the government states this is due to issues of “national importance” which include “possible negative health impacts for giant pandas at Edinburgh Zoo during construction”.

It continues: “This direction does not commit ministers to calling in any such application but it does reserve their right to intervene.”

Giant pandas like Tian Tian and Yang Guang, on loan from China since 2011, have ultrasonic hearing and can pick up noises at very high frequencies, sparking concerns about prolonged construction work just yards from their enclosure. According to The Scotsman, male panda Yang Guang had a bout of colic in November, shortly after initial works had been carried out on the hospital site. Zoo bosses cannot prove noise from the site was linked to the illness, but they are said to believe it may have been the cause.

The planning proposal is to create 76 apartments at the old hospital, including 44 new build homes, along with car parking and landscaping.

A spokesman for the Royal Zoological Society of Scotland said: “We would be concerned by any development which may disturb animals in our care, particularly sensitive species such as our giant pandas.”

A Scottish Government spokeswoman said: “Ministers have issued the direction in view of concerns relating to the potential impact of the proposed development including possible negative health impacts for giant pandas at Edinburgh Zoo during construction, as raised in representations by Royal Zoological Society of Scotland.

“As the applications for both planning consent and listed building consent remain live, the Scottish Government is unable to comment further at this time.”

CALA Homes chief executive Alan Brown announces retirement

Alan Brown

Alan Brown has announced his intention to retire as chief executive at CALA Homes after 32 years at the company.

Described by CALA’s Board as “instrumental” in driving the growth of the group, Mr Brown held a number of senior management and strategic roles in his time at the firm.

He trained as a chartered quantity surveyor and joined CALA in 1986 as development manager, progressing through the company before being appointed regional chairman for England in July 2006. Following the financial crisis of 2007/2008, Alan became group managing director before being appointed chief executive in September 2009.

Alan successfully led the group through the wider market downturn and oversaw the sale process from Lloyds Banking Group that secured the backing of L&G and Patron Capital in 2013 before delivering the acquisition and successful integration of Banner Homes in 2014.  More recently, Alan led the acquisition of the group by L&G which was announced on March 13, 2018.

Since becoming chief executive in 2009, CALA has made significant progress under Alan’s leadership and, over the last decade, has been the UK’s fastest growing major home builder, delivering record profits in each of the last five years. CALA achieved 5 stars for customer service for the first time in 2008.

A search for a new chief executive has begun. Alan will remain in his current role until the end of April, when Graham Reid, group finance director, will assume the position of Interim CEO, in order to ensure an orderly handover and transition to his successor.

Kerrigan Procter, chief executive officer of Legal & General Capital, said: “CALA has benefited greatly from Alan’s leadership over the last nine years as Chief Executive and we shall miss him. The group is much stronger and more resilient as a result of his direction and the Board is confident of achieving continued and sustainable profitable growth well into future.

“On behalf of the Board and all of his colleagues, I would like to thank Alan for his outstanding contribution to the development of CALA and wish him every success in whatever he decides to do next.”

Alan Brown said: “This was not an easy decision. I’ve spent nearly my entire career at CALA, working with a talented group of people to build the great business that it is today.

“When I took over as CEO, the company had significant challenges and as a team we’ve worked extremely hard to overcome those challenges and build a large and very successful business that now enjoys the long-term support of one of the UK’s blue chip companies.

“I have enjoyed working at CALA immensely and I would like to thank all my colleagues for their fantastic support. The Group is in great shape with exciting growth opportunities and now is the right time for me to hand over the reins to a successor to lead CALA into the next stage of its development.

“I will now be taking a short time out from corporate life in order to think about the sorts of roles and activities I wish to pursue in the next stage of my career.”

Diageo unveils new Johnnie Walker visitor centre plan for Edinburgh

Artist’s impression of the entrance of the Johnnie Walker visitor centre

Drinks giant Diageo is to build a new whisky visitor centre in Edinburgh and upgrade facilities in its existing network of 12 distilleries as part of a £150 million investment.

The centrepiece of the three-year investment will be a new state-of-the-art Johnnie Walker immersive visitor experience based in Edinburgh.

The city was chosen as the preferred location for the Johnnie Walker investment because of the capital’s particularly strong tourism growth.

The building in Edinburgh will become a new hub for Diageo’s business in Scotland linking to wider social investment and creating opportunities in the hospitality sector for young unemployed people, through increased investment in the company’s Learning for Life programme.

Multi-million pound infrastructure investment will also be made across Diageo’s 12 malt whisky distillery visitor centres with a focus on the ‘Four Corners distilleries’ – Glenkinchie, Caol Ila, Clynelish and Cardhu.

Plans for Diageo’s ‘Four Corners distilleries’ 

Diageo’s other visitor distilleries: Lagavulin, Talisker, Glen Ord, Oban, Dalwhinnie, Blair Athol, Cragganmore and Royal Lochnagar, will also see investment to support the growth of single malt Scotch whisky. This is in addition to the £35 million already committed to re-open the ‘lost distilleries’ of Port Ellen and Brora, taking Diageo’s network of distilleries with specialist visitor experiences in Scotland to 14.

Diageo chief executive, Ivan Menezes, said: “Scotch is at the heart of Diageo, and this new investment reinforces our ongoing commitment to growing our Scotch whisky brands and supporting Scotland’s tourism industry. For decades to come our distilleries will play a big role in attracting more international visitors to Scotland. I am also delighted we will be able to bring our knowledge and expertise to help the next generation, through mentor programmes and skills training.”

Welcoming the investment, First Minister Nicola Sturgeon, said: “This significant investment will not only help attract more tourists to Scotland, offering world class visitor experiences, but it also underlines the fundamental importance of the whisky sector to Scotland’s economy. Last week, I launched Scotland is Now, a new campaign that will put Scotland in the international spotlight and showcase the country’s world-leading assets, such as whisky, to a global audience. Today’s announcement highlights to the world that Scotland is a leading destination for tourists and business investors.”

Scottish secretary David Mundell added: “Whisky is hugely important to Scotland’s economy, it is not just our biggest export, but an iconic product which draws visitors here from around the world. The UK government is wholehearted in its support for the industry – we froze duty rates again at the last Budget, and are determined to open up new markets around the world as we leave the EU. I welcome Diageo’s major new investment. It is hugely exciting, not just for Scotland but for whisky drinkers around the world who want to learn more about the history and traditions of our national drink.”

Lichfields appointed to major development at Edinburgh Airport

Early indicative designs of the proposals

Planning and development consultancy Lichfields is to help deliver the masterplan and permissions for an ambitious transformation of a major area of land adjacent to Edinburgh Airport.

The firm’s Edinburgh office will work closely with Crosswind Developments Ltd to finalise proposals for the mixed-use development in this gateway location near Scotland’s busiest airport.

This 100-acre development site has become available following the closure of the airport’s little-used secondary ‘crosswind’ runway.

Lichfields said its appointment highlights the progress which is being made on the project, with the development team hoping to submit an initial planning application next year.

As planning advisors, the firm will initially be advising on the masterplan process, planning policy position and will also be providing socio-economic analysis of the masterplan and in time will be advising on Environmental Impact and future planning applications.

Nicola Woodward, Lichfields’ Edinburgh office leader, said: “This is a fantastic project and we are delighted to have been appointed as planning advisors on one of Scotland’s most impressive emerging developments.

“It is now three years since Lichfields established a base in the Scotland and we continue to deliver on the ambitious targets we set ourselves.

“Our brief is to help develop a coherent planning case for a variety of land-uses on the site.   This is a fantastic opportunity to help support a major, job-boosting development on the edge of the city alongside the other west Edinburgh development commitments.”

Lichfields will be working to ensure the site masterplan dovetails with emerging City of Council Edinburgh development plans and planning policy emerging from the Scottish Government.

John Watson, chief executive of Crosswind Developments Ltd, said: “The Crosswinds project is part of Edinburgh’s exciting future. It will help to reinvigorate this part of the city, creating and supporting jobs, providing community facilities and investing in vital infrastructure.

“The experience and expertise that Lichfields have demonstrated in planning will support our efforts to include the needs of government, the council, other local developments and most importantly the communities we will be expanding.”

To the south of the site there is the potential for office, residential and hotel developments, whilst further north – closer to the operational side of the airport – logistics and industrial space is being considered.

The earmarked site stretches from south-east of the passenger terminal towards the Gogar roundabout on the A8.