PHOTO: Photo: 123RF

The construction sector needs a rethink as challenges posed by the pandemic place the future of some firms at the risk of failure.

Business advisory firm BDO’s annual construction sector report shows the industry was struggling with product shortages and significant pressures from higher material costs and wages.

“With these factors combined, the sector is heading into very challenging times,” BDO construction & real estate sector national leader James MacQueen said.

“Construction businesses that anticipated, planned and negotiated contracts for these challenges should perform well.”

Not everyone was in that situation and there could be some collapses of firms operating on thin margins, which would compound the challenges, he said.

Supply chain disruption over the past 12 months which restricted the availability of certain products was now the biggest single contributor to construction delays.

More than half of firms said they could not receive key materials including steel, timber, and plywood when they needed them.

The competition for building products saw 70 percent of firms report that their margins had been eroded by the increased cost of materials.