A poll conducted by Aecom has revealed that due to the growing skills shortage in the construction industry, construction costs in London have risen by ten per cent in 2015 and seen contractors turn down on in two bidding opportunities.
The survey also revealed that some main contractors are turning down 75% of new business opportunities, with labour costs in London being cited as a major reason for this.
The results from the infrastructure and support company’s poll show that joinery workers’ wages have risen by up to 15% this year.
Director of Cost Management at Aecom, Brian Smith commented: “The industry is taking a far more strategic approach, targeting schemes that will deliver planned margins.
“Other considerations increasingly include the reputation of the developer or whether there is any successful prior relationship, as well as the visibility of reliable funding.
“Risk appetite amongst contractors is low, with a desire for certainty meaning that projects may be taken on a smaller margin if the return is guaranteed.
“In this environment, clients can be confident that the contractors they engage with will be fully committed to successfully delivering a project.
“Developers do, however, need to consider how they can position their projects to best possible effect to attract and secure interest from the best qualified contractors.”
In a blow to the Chancellor George Osborne’s housebuilding plans, the stability of the London residential market is seeing some companies limit their involvement in housebuilding projects in the capital.
Costs are expected to continue to rise by 7% in 2016 before falling back to 5.5% in 2017.