TfL warns of cost hikes and project delays if supply chain disruption is not carefully managed - International Burch University
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TfL warns of cost hikes and project delays if supply chain disruption is not carefully managed

Transport for London (TfL) has warned of potential cost increases and project delays if “supply chain disruption” is not carefully managed.

The warning comes as the wider UK construction sector continues to be hit by material shortages and cost increases. The impact of Covid-19 restrictions coupled with the Brexit has been largely blamed for the ongoing issues.

The capital’s transport operator has already been hit by delays to materials arriving on site this year due to Brexit regulation changes, TfL board papers released ahead of next week’s meeting reveal.

Consequently, TfL has warned that “failure [to] manage supply chain disruption” could eventually lead to delays and cost increases on infrastructure projects.

TfL’s annual Statement of Accounts, compiled by chief finance officer Simon Kilonback, adds: “TfL has experienced some supply chain disruptions, impacting cost and project delivery including border delays on goods from the EU, import and customs arrangements and quota and tariff charges on imported materials.”

Minutes from TfL’s Finance Committee meeting held on 23 June add: “Failure to sufficiently identify and manage supply chain disruption could result in an increase in TfL’s cost base, delays to project delivery and interruption to operational services.

“TfL continued to monitor its supply chain and where a risk was identified contingency plans were developed and implemented where necessary.”

Jonathan Patrick, Chief Procurement Officer at TfL, said: “In line with other major infrastructure providers, TfL is working closely with its extensive supply chain to ensure the materials and skills required to deliver its capital programme and keep the public transport network operating safely and efficiently are maintained and available as required.

”We have a number of risk-management systems in place to ensure that any potential issues, such as material shortages or changes in legislation or processes due to the UK leaving the EU, are identified in advance of them appearing to help limit any impact to both our supply chain and our customers.”

The warning comes as TfL grapples with staff shortages on its construction sites. As revealed by NCE earlier this week, more than 100 construction workers have been pulled off TfL sites due to self-isolation rules. Tideway has reported similar issues, with many of its workers being contacted by Test and Trace in the last week.

The wider materials crisis has been well documented with the cost of fabricated steel up 38% year-on-year. Other materials such as concrete rebar, timber and imported plywood have also seen big cost increases since the turn of the year.

Earlier this month, HS2 Ltd revealed that it was carrying out a review of its Phase 2b commercial case and delivery strategy as a result of ongoing construction material shortages and cost increases.

In its International construction market survey 2021, published this week, Turner & Townsend concludes that several factors are driving the materials crisis including reduced capacity, rising demand and shipping delays.

“One of the biggest impacts the COVID-19 pandemic has had on the construction industry, driving inflation, is its ripple effect across global supply chains,” the report states.

“Well over a third of our respondents said the pandemic has had a high or significant impact on their supply chains. Whilst most manufacturers have now resumed their operations, and supply chain networks have adapted to the changing conditions, new supply challenges are being faced in 2021.

“There are several contributing factors that are constraining global supply chains for building materials. When layered on top of one another, they are creating a ‘perfect storm’, causing considerable price spikes in some building materials.”

The report concludes that “by mid-2022, these surging global costs will ease and begin to correct”.

It adds: “As the COVID-19 vaccine continues to be rolled out, restrictions will ease, meaning manufacturers will be able to increase their operating capacity and increase the supply in the market.”


Department of Civil Engineering