In the first of our specialist market overviews, Ian Purton of Gardiner & Theobald looks at the concrete sector’s lead times and costs

Market overview

Changes in the planning requirements and in the high price of land have favoured the use of concrete over steel for high-rise residential construction and a rapid expansion of growth is anticipated in this sector. Substantial amounts of concrete are being used on many of the big London projects, which has created a shortage of skilled labour in the sector and led to increased labour costs.

Lead times for concrete frames have remained relatively static at five weeks from placement of order – a much shorter lead-in time than for steel frame; although steel may offer faster on-site construction times.

While concrete is in plentiful supply, the world steel shortage and its effect on concrete reinforcement prices is the big issue dominating the industry at the moment; the spiralling cost of reinforcement prices is now starting to have an effect on the way concrete is procured.

A full version of the report is available on www.gardiner.com.

Hot topics

Reinforcement

The one item dominating the concrete industry, and construction in general, is the world steel shortage and its effect on concrete reinforcement prices. Steel supply prices at the end of 2003 were about £250 per tonne, in the past six months they have risen to £375 per tonne; and by the end of 2004 the cost of reinforcement steel is predicted to rise to £450 per tonne – if current cost increases maintain their upward trend.

Cost increases are due to the high demand for scrap steel. Since reinforcement is the cheapest product made from scrap, its price and availability will suffer as manufacturers use the scrap to produce higher value products. It is a problem made worse by the booming Chinese construction market, which is processing much of the world’s scrap metal to meet their needs.

In addition to the escalating price of the raw material, securing a ready supply of reinforcement is also proving a problem. It has been reported that stocks of 8 mm bar are in such short supply that larger reinforcing bars are being used instead. Pre-ordering of reinforcement by clients may soon be required to secure delivery in time to meet project programme.

Labour shortages

The London labour market is affected by the pull of mega-sites such as BAA’s Terminal 5, Wembley stadium and the White City development. This has lead to a shortage of labour in London, which is reflected in high wage demands and a 10% increase in labour costs for contractors. Higher wages in London and the South-east will have an impact nationally as labour travels to more lucrative projects leaving regional contractors unable to source manpower.

Aggregates tax

Concrete is dependant on aggregate supply, which in turn is influenced by transportation and extraction taxation or levies. The current aggregate levy of £1.60 per tonne, based on standard concrete mix of 1:2:4 means that the levy has added £3.71 to the cost of a 1 m3 of concrete.

Reinforcement

The one item dominating the concrete industry, and construction in general, is the world steel shortage and its effect on concrete reinforcement prices. Steel supply prices at the end of 2003 were about £250 per tonne, in the past six months they have risen to £375 per tonne; and by the end of 2004 the cost of reinforcement steel is predicted to rise to £450 per tonne – if current cost increases maintain their upward trend.

Cost increases are due to the high demand for scrap steel. Since reinforcement is the cheapest product made from scrap, its price and availability will suffer as manufacturers use the scrap to produce higher value products. It is a problem made worse by the booming Chinese construction market, which is processing much of the world’s scrap metal to meet their needs.

In addition to the escalating price of the raw material, securing a ready supply of reinforcement is also proving a problem. It has been reported that stocks of 8 mm bar are in such short supply that larger reinforcing bars are being used instead. Pre-ordering of reinforcement by clients may soon be required to secure delivery in time to meet project programme.

Labour shortages

The London labour market is affected by the pull of mega-sites such as BAA’s Terminal 5, Wembley stadium and the White City development. This has lead to a shortage of labour in London, which is reflected in high wage demands and a 10% increase in labour costs for contractors. Higher wages in London and the South-east will have an impact nationally as labour travels to more lucrative projects leaving regional contractors unable to source manpower.

Aggregates tax

Concrete is dependant on aggregate supply, which in turn is influenced by transportation and extraction taxation or levies. The current aggregate levy of £1.60 per tonne, based on standard concrete mix of 1:2:4 means that the levy has added £3.71 to the cost of a 1 m3 of concrete.

Sustainability

Green issues, and meeting sustainability criteria are becoming more and more important as a means of meeting planning requirements and clients corporate responsibility agenda.

  • Use of recycled cardboard for column formwork in place of fibreglass or steel forms saves on the use of raw materials
  • Use of crushed recycled glass in concrete means less aggregate is needed
  • Concrete can be crushed and recycled as aggregate, and steel reinforcement can be recycled
  • The thermal mass of exposed concrete makes it a good construction material for energy efficient buildings. Its ability to retain heat means less energy is required to power a building’s heating or cooling plant.

Market sector growth

Changes in the planning requirements and in the high price of land favour the use of concrete over steel for high-rise residential construction. These higher land values are dictating higher density developments to generate greater returns. High-rise residential apartment blocks often utilise the additional mass a concrete frame has for improved acoustic insulation, improved energy consumption from its increased thermal mass and a high quality finish from exposed concrete. Further significant growth is anticipated in this sector.
Green issues, and meeting sustainability criteria are becoming more and more important as a means of meeting planning requirements and clients corporate responsibility agenda.

  • Use of recycled cardboard for column formwork in place of fibreglass or steel forms saves on the use of raw materials
  • Use of crushed recycled glass in concrete means less aggregate is needed
  • Concrete can be crushed and recycled as aggregate, and steel reinforcement can be recycled
  • The thermal mass of exposed concrete makes it a good construction material for energy efficient buildings. Its ability to retain heat means less energy is required to power a building’s heating or cooling plant.

Market sector growth

Changes in the planning requirements and in the high price of land favour the use of concrete over steel for high-rise residential construction. These higher land values are dictating higher density developments to generate greater returns. High-rise residential apartment blocks often utilise the additional mass a concrete frame has for improved acoustic insulation, improved energy consumption from its increased thermal mass and a high quality finish from exposed concrete. Further significant growth is anticipated in this sector.

Design considerations

  • Access: Easy access for concrete lorries. Access difficulties often preclude city centre construction of in-situ frames because of environmental problems such as noise levels, vehicle pollution and increased traffic levels.

  • Cladding: Increasing the percentage of steel reinforcement in a building's concrete frame maximises its structural stiffness; this minimises the frame's deflections under live loads such as wind pressure, which eliminates the need for expensive deflection tolerant connections between a building's cladding and its structural frame.

  • Services: Close liaison with services contractor for builders work holes at an early stage is essential. If prefabricated services are being installed, careful planning of slab prop positions will allow the services to be installed while the slab concrete is still curing.

  • Fire protection: A concrete frame generally provides one hour of fire protection, however, increased concrete thickness can extend the fire protection time.

  • Reinforcement: Procurement is driven by the reinforcement shape and the detailing required; in some instances prefabrication can be a more efficient alternative to individual site jointing.

  • Formwork: Traditionally, concrete construction has been dependent on craftsmen formworkers constructing timber shuttering into which the concrete is poured. However, advances in materials technology have led to the increased use of metal shuttering and plastic formwork, and the off-site fabrication table-form shuttering, means formworkers are no longer required on some projects.

  • Concrete Centre: Launched September 2003, the Concrete Centre is the new central development organisation for the UK's concrete and cement sector which provides assistance to people who design and construct in concrete. www.concretecentre.com

Procurement

A great deal of detailed information is required to procure a concrete frame and the early involvement of subcontractors can produce most appropriate logistic solutions. The majority of concrete frame contracts are procured using traditional measured quantities based on tenders, or a specification and drawings. Identifying the scope of works/design intent is the most important task for subcontractors when pricing.

Major players, such as John Doyle Construction and Laing O'Rourke, are keen to develop pricing from a performance specification to ensure they can price using the suitable construction method they are proficient with. When this is the case, they prepare their own pricing schedules, measured rates and/or bills of quantities. To ensure competitiveness and fair pricing the larger contractors are usually more than happy to have an open book relationship with a client and hence prefer to negotiate contracts.

JCT or ICE has traditionally been used for domestic subcontract forms – the choice of contract depends on the amount of engineering input. However, recent moves towards construction management has led to a plethora of package contracts, where the specialist concrete package contractor works directly for the client. The major players have embraced construction management in London and the South-east to such an extent that it has now become the default form of contract.

Programme

Factors affecting concrete programme:

  • Access to cranes
  • A building's vertical complexity, such as the number of lift or stair cores
  • A building's horizontal complexity, such as the number and location of beams constructed beneath the floor slab
  • Site constraints, such as site access, or the ability to lift table formwork sections to the next floor without having to dismantle them.
  • The number of times formwork can be used repeatedly without have to reconfigure it.

The average lead time for in situ concrete frames is five weeks from the placement of an order. The primary factor determining lead times is material procurement, and in particular steel reinforcement. Reinforcement bar schedules should be available a minimum of 10-15 days prior to the steel being needed on site.

With concrete frame lead times shorter than those for steel frames, concrete contractors claim this gives their product a major advantage. Although steel may offer faster on-site construction, concrete contractors argue that their earlier start on site means three to four storeys can be reached before steel erection would even have begun allowing the follow-on trades an earlier start because the frame does not require fire protection.

In programming concrete works a period of one to two weeks should be allowed for the contractor to translate and quantify the outline drawings. Four weeks should be allowed for the concrete tender and three weeks for the tender appraisal. Bottlenecks occur in the design and approval process primarily because of the availability, or not, of experienced staff to check and "sign off" designs.

On-site formwork can be struck the next day for the construction of walls and columns, whereas for the construction of soffits contractors often have to wait four to seven days before removing the shuttering.

Costs

See "Typical concrete frame rates" table

Cost drivers

  • Span - See Design for economical spans

  • Fire Protection - Generally provides one hour fire resistance

    • add 10 mm to slab thickness for two hour: approx £1/m2
    • add 35 mm to slab thickness for four hour: approx £3.50/m2

  • Labour - Concrete is a labour intensive operation, costs therefore are influenced by increasing labour costs and shortage of skilled labour. Typical labour costs for the concrete industry are:

    • Skilled tradesman: £1000/week minimum
    • Labourer: £700/week

Typical concrete rates
Coloured concretes or those with special finishes are achieved by changing principally the aggregate and the cement. White concrete tends to be the most expensive concrete being batched from a marble aggregate. Expect costs of £250/m³ to £400/m³. Glass is often added to allow final polishing of exposed aggregate, expect a £50/m³ to £100/m³ additional cost. Self-compacting concrete is 50% more expensive than plain concrete, but the additive saves on labour costs as it flows freely without the need for labour with vibrating pokers. Self-compacting concrete is ideal for restricted access areas such as columns or a tall structure where the additive allows the concrete to flow freely at the base to fill voids to ensure structural integrity. Proposed European Union vibration regulations due to come into force by July 2005 will limit the time a worker can operate a vibrating poker, which will increase costs for plan concrete; this is likely to lead to further increase in the use of self-compacting concreteConcrete price increases occur in March typically; on 1 March 2004 the net concrete supply cost increased by £3/m³ in line with inflation.

See "Typical concrete rates" table

Typical reinforcement rates
Reinforcement supply prices continue to increase; due predominately to the collapse of reinforcement manufacturer Allied Steel & Wire in 2003 and the increased cost of raw materials. As a result, the availability of types of reinforcement is decreasing, for example, recently it has become almost impossible to source T8 rebar. The engineer's specification may call for T8, but concrete contractors will price to use the large diameter T10. However, since the average reinforcement bar sizes used in frame structures is T12-T16, the shortage of T8 is of limited impact.

One way of reducing the tonnage of reinforcement needed is to use Bamtec factory-assembled reinforcement cut-to-size mat. This saves installation time and typically reduces rebar quantities from 130kg/m3 to 110kg/m3 for a flat slab. Bamtec is about £100 per tonne more expensive than standard reinforcement bar but the saving in labour costs mean it costs about the same per tonne overall but with the advantage of savings in time and tonnage.

The rapid increase in supply prices means many concrete contractors are now unwilling to provide fixed price lump sum figures for reinforcement – unless the project is due to start immediately. The volatility of the reinforcement market is such that even with a lead in time for reinforcement procurement of just 10-15 days, further increases in the supply prices can still arise. To overcome this problem, contractors have recently started to price reinforcement as prime cost sum, so its price is not fixed at tender.

See "Typical reinforcement rates" table

Formwork
Of all the elements that constitute an 'all in' rate for concrete construction, the costs of formwork and shuttering is the most complex to price. This is because of the disproportionate labour: material cost ratio, typically in the region of 2:1. This ratio is dependent on two factors: the size of the structural members; and the potential number of uses a section of formwork can be put to.For cost planning purposes and benchmarking the following provide indicative rates:


See "Typical formwork rates" table.

Concrete frames