📈 Supply Chain Meltdown: Materials Price Surge

Thursday 23rd September 2021

The Price Shock – Steel Up 75%, Timber Up 74%... Can We Still Trust Fixed-Price Contracts?

The Department for Business and Trade (DBT) released figures in September 2021 confirming year-on-year price rises of imported sawn wood at 74.0% and fabricated structural steel at 74.8% in the 12 months to August 2021.

This was the period where the word 'unprecedented' stopped being hyperbole and became standard practice. In 2021, the material prices didn't just increase—they went vertical.

When we quote a project, we price the material cost based on current market rates and hold that price for a defined period. When the market is seeing materials we need for a standard extension—timber for the roof, steel for the opening—rise by three-quarters in a year, it makes our job almost impossible.

Fixed Price Contracts Became Unviable: For large jobs with a 6-12 month duration, locking in a fixed price under this volatility meant accepting a massive risk that could wipe out all profit, or worse, put us out of business.

The Client Impact: This was tough. We had to renegotiate costs with clients who had signed contracts months earlier, relying on the 'Change Order' clause for materials inflation. While necessary for our survival, it strained client relationships and dramatically increased the total cost of projects.

Our Opinion: The crisis was global (shipping, US demand, energy prices), but the UK's high dependency on imported structural timber and steel made us acutely vulnerable. We moved quickly to source materials early, and where possible, switch to UK-made alternatives (like concrete block vs. imported timber where appropriate), but the price pain was unavoidable.

Debate Point: Should the industry standard contract (JCT, etc.) be overhauled to automatically include fair, transparent price fluctuation clauses on a pre-agreed basket of imported materials for all residential projects lasting over six months?