CLOCKING OUT
Richard Winson , Director at Naismiths Analytics
‘ normal ’ cost inflation that is expected over longer-term projects – mean that those forecasts are extremely unreliable .
This is a growing challenge for consultancies that are acting as the eyes and ears of the investors , who are increasingly looking at ways in which more data-centric approaches can be taken to financial forecasting and bring about a long overdue move to the digital age .
A moveable feast
The biggest challenge when it comes to financial forecasting for construction schemes – particularly those that have a larger gross development value and are therefore more attractive to funders – is that they are by their very nature long-term projects . Ignoring the extreme challenges that have been prevalent over the past couple of years , short-term issues can generally be mitigated by taking a flexible and collaborative approach with the contractor and supply chain .
However , the peaks and troughs of the business and economic climate are much more pronounced on projects that can take multiple years to complete and – in turn – bring return on investment for funders .
There are a multitude of factors at play in this equation , but typically it boils down to having a budget that works for the build programme , and vice versa . The volatility of the current economic climate means that investors are finding themselves in very challenging conditions . While we are thankfully a long way past the inflationary peaks of 2023 , there is a reticence to adjust budgets in line with this just yet while the market is still to settle fully .
Combine this with other challenges such as the current labour shortages in the construction
68 www . intelligentbuild . tech