Possible challenges that could impact Construction costs as we move into 2022.
Are we looking at a "Perfect Storm" as we transition into 1st Q of 2022, lets hope not.
- There is a new COVID-19 strain first encountered in South Africa (in just two weeks it has become the dominant strain in South Africa) called OMICRON, it is now in (50) + countries, showing up in North & South America, the rest of Africa, Europe & Asia, will this impact Construction in 2022, is COVID / OMICRON something we have to live with in the Construction Industry.
- Seems like the construction sector has a number of challenges in front of it, inflation / escalation, OMICRON / COVID, supply chain issues & possible energy price spikes.
- A number of medical experts / doctors in Europe & the USA are forecasting OMICRON will be a major issue, some countries have re-introduced work from home mandates.
- Some economists are forecasting Crude Oil will increase to $125 a Barrel in 2022 or higher, from it’s the current $70 to $75 a Barrel cost range, a hike of more than 60%.
- The continuing Russian troop build up in eastern Ukraine (Donbas region ) that could lead to a conflict and result in an energy shortage in Europe.
- Increased energy costs could significantly drive up Construction labor, material & in-direct prices in 2022.
- Over 80% of the worlds energy needs are met by fossil fuels with oil being a major component.
- Escalation in the USA is more than 7%, Canada is seeing an 18 year high at close to 5% & Mexico is seeing 7% a 20 year high.
- Brazil inflation was 10.5% in November, the largest increase in 20 years, Chile, Peru & Argentina are experiencing higher inflation as we move into 2022.
- Escalation is surging in some northern European countries, Estonia, Germany, Latvia, Lithuania, Russia & Poland are seeing rates in November ranging between 5% & 10%, energy prices have risen by as much as 25% in the last 3 months & the really cold winter months are still in front of these countries.
- Escalation is increasing in Asia also, India is up to 12.5%, Pakistan stands at 11.5%, the Philippines & Sri Lanka are both reporting 9.9%.
- Supply chain issues continue to slow down deliveries of key construction components to construction sites, resulting in delays & possible claims.
- Increased construction labor / material costs & shortages of key construction materials remains a problem.
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