We realise that over the past few years, the cost of energy has skyrocketed, with current annual gas and electricity bills being 29% higher than they were in winter 2021/22 and unit prices for gas increasing by 14% in October alone. These constant increases have understandably led to widespread concern across the construction sector, as they can directly affect the entire lifecycle of construction projects, from the planning phase to the completion of developments.
In response to this growing issue, construction firms have had to come up with innovative strategies that can help reduce energy consumption, from the adoption of more sustainable methods and technologies to the use of renewable energy sources. These strategies allow companies to monitor their energy expenditure more closely and decrease their need for fossil fuels, helping them begin to offset the increased costs of traditional energy.
How Rising Energy Costs Affect Construction Project Budgets
Budgets are one of the most significant areas affected by the rising cost of energy in the construction sector. Electricity, fuel, and gas are crucial for running heavy machinery, heating sites, and powering various actions that occur during building. These constant price increases lead to higher operating costs for construction companies, forcing many to take drastic actions such as reallocating their resources, reducing their expenditure, or finding cost-cutting alternatives.
When energy costs rise, it doesn't just affect the direct use of power at a construction site. Indirectly, the cost of manufacturing building materials also escalates. This is the harsh, new reality of the past few years, with material prices rising by 24% in 2022 alone, and with these increased prices, suppliers will have to pass their higher energy costs onto their customers.
For example, cement and steel, which are two essential materials for UK construction projects, take a lot of energy to produce. When energy prices rise, these materials will become more expensive to offset the increased cost to manufacture, thus further driving up project costs for construction companies. This expenditure-reducing strategy is currently in the mind frame of many UK businesses, with 81% planning to adopt this approach in the next two years.
How Rising Energy Costs Cause Timeline Delays
Energy price hikes can also cause delays in project timelines. When energy becomes more expensive, many construction firms may need to pause or slow down their operations in order to give them time to reassess their expenditures and adopt new cost-saving strategies. These actions can lead to construction sites temporarily shutting down or extending project deadlines.
How Rising Energy Costs Affect the Life of Construction Companies
Another unfortunate consequence of rising energy prices is the financial hardship it will bring to certain construction companies, especially those that are smaller and/or already under monetary strain. With companies being unable to afford essential materials for projects or the energy needed to carry them out, many are at risk of losing money through delays, cancellations, or paying back high interest rates for loans that they have taken out. Many companies are becoming increasingly unlikely to recover from financial ruin, with another 5,900 construction companies becoming at risk of insolvency by the end of 2023.
How Construction Companies are Aadapting to Rising Energy Costs
In response to growing concerns and current issues surrounding rising energy costs, construction companies have adopted several different strategies that focus on sustainability. One such strategy involves implementing building methods and technologies that reduce energy consumption, such as prefabrication, modular construction, and smart building technologies. Modular construction, for example, allows for the creation of building components off-site, where energy consumption can be more easily managed and optimised.
Another strategy involves the usage of renewable energy sources, such as solar, wind, and geothermal energy. By harnessing these kinds of energy, construction firms can cut back on their reliance on traditional fossil fuels, which in turn will lead to reduced energy costs in the long run.
Preparing for a Sustainable Construction Future
The rising cost of energy presents significant challenges for UK construction projects, but it also offers an opportunity for innovation and growth. By adopting energy-efficient solutions and embracing sustainable practices, construction firms can mitigate the effects of rising energy costs and build a more sustainable future for the industry.
BS Fixings: Keeping Building Materials Affordable
At BS Fixings, we know that the rise in energy prices can be matched with a rise in the cost of building materials and fixings. However, we take pride in providing our customers with offers on a range of different products, helping keep your projects more affordable and within reach. We also offer you the chance to subscribe to our VIP club, where you can receive further discount codes and exclusive sales. Plus, you’ll get 10% off just for joining.
With many reduced-priced items available and plenty of special savings to be had, put your mind at ease this November and browse through our special offers today. If you have any questions, then be sure to contact us by emailing info@bsfixings.co.uk or by calling 03330 117818.
