€d_Modus Vivendi schreef op 3 juni 2021 10:50:
Bam working with suppliers to manage materials risks
03 Jun 2021 By David Price
Bam Construction CEO James Wimpenny
Bam Construct is actively working with its supply chain to mitigate the impact of materials shortages and rising prices, according to its chief executive.
Surging activity levels and constrained supply following last year’s lockdown has caused shortages and price rises for a number of key materials. Bam Construct is now working with suppliers and customers to try and mitigate the impact through contingency funds and accelerated orders.
Chief executive James Wimpenny told Construction News: “As an integrator sitting in the middle, we don't try and barter the price down in the supply chain and give the customer the benefit,” he said. “It’s a balancing act of making sure that you give the right price to the customer, but also have the right price within the supply chain as well.”
Actions to help manage cost increases include agreeing contingency funds with clients. Bam has also sped up its orders with its subcontractors so they can place orders with suppliers sooner and lock in prices before they rise.
In more serious cases, where price rises put a supplier’s future in jeopardy, Bam can offer some financial help through commercial agreements, Wimpenny said. But this is not always commercially feasible, he added.
Concerns have largely focused been how current jobs will be affected, where materials costs were based on past prices. Transport minister Chris Heaton-Harris told the House of Commons last week that major projects, including HS2, had not been affected yet.
Wimpenny warned that inflation created risks for future workloads as well. “Costs of things like steel are obviously causing a bit of a problem, not just for our existing projects, but also future ones, because that goes on to the bill for our customers,” he said. “Are they then going to want to spend 20 per cent more on one of the packages within the new building or not?”
Inflation pressure is seen as risk at Bam, but one that is manageable for now. “The key question for us all - and nobody can really see this far ahead - is how long is this inflationary issue going to be there? Is this post COVID issue, or is this a longer term structural issue?” he added.
Until the situation stabilises then all levels of the supply chain will be affected the tier one boss said. “Clients are taking some of the risk, we’re taking some of the risk and the supply chain is taking some of the risk,” he said. “[We are] making sure that’s balanced the best we can.”
Wimpenny’s comments echo those of Willmott Dixon chief executive Rick Willmott, who warned last week that tier one firms and their suppliers could see their margins “eroded” by rampant inflation, with fixed-price jobs being particularly risky.
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