In this video, I give my Q3 and Q4 predictions, or just spend the next minute or two reading on:
Wherever you’re reading this email from, there’s no escaping certain truths:
Inflation. It’s coming for all of us.
Or worse, the dreaded stagflation – inflation with a side order of slow economic growth and a rise in unemployment.
It’s difficult to maintain optimism, which is why we’ve added an additional layer of security to the service you currently have with Quantum. (Provided you are on the Pre-Award Package.)
Everyone needs more security at the moment. According to the UN, the global economy is on track to reaching crisis mode. The aftermath of a global pandemic and the war in Ukraine are just two factors contributing to this.
The world economy is suffering and there’s a downgrade in growth prospects. The World Bank predicts that global growth will drop nearly 6% from last year to just under 3%.
For many countries, inflation is the highest it’s been in decades.
You know the inflation drill – the rising food and energy costs have a knock-on effect.
And in the construction industry, this spells a myriad of issues:
- Rising material costs
- Rising labour costs
- Competing against unrealistic bids for tenders
- Uncertainties regarding future costs
Recently three more Australian construction companies have gone bust. It’s an industry-wide crisis.
When these businesses go bust, who loses money too?
The simple answer is:
Most of their Subcontractors (Except you of course, because that is what we are here for!)
Matthew Mackey a big name in construction (the executive director of Arcadis) describes the situation as “a perfect storm” where subcontractors will be the hardest hit.
He says, ‘If they’ve already signed a contract that doesn’t allow for fluctuations in materials, they’re going to be stuck with those prices.’ And, ‘If costs have gone up in six months, they’re going to have to wear those costs, and that’s the issue.’
How do you help to mitigate these issues?
- Do thorough project budgets around the most accurate pricing you have available
- Factor inflation into your bidding process
- Discuss risks with Tier 1’s and stakeholders
- Factor in supply chain uncertainties
- Negotiate completion timelines
- Weigh up stockpiling
- Be on top of insurance policies to minimize risk
- SECURE BETTER CONTRACTS
Luckily we’re here to help with all your contractual needs so that you can navigate inflation and stagflation.
We’ve also introduced (at no additional cost) some safety nets into all of our reviews. We can look into your client’s financial status; if they have been in a court case before (and for what). This gives you peace of mind and the security you need to proceed with the project (or not)
