Olympics will have major impact on UK costs and resources

Building costs in the UK will see two major spikes at crunch points when resources come under extreme strain in the run up to 2012, Davis Langdon has warned.

In this latest assessment of the London Olympics effect, Davis Langdon has pinpointed late 2007/8 and 2010 as the moments when industry expertise, manpower and materials will be ultra-strained.

The phenomenon will hit civil engineering projects worse than any other sector, the report predicted. This is because major infrastructure schemes such as the East London River Crossing and the widening of the M25 will be in full flow at the same time as Olympics-related civils projects such as the East London Line extension.

Apart from the two price spikes, constant lower level inflation will also dog the industry in the run up to the Games, the report said. Pressure on resources resulting from Olympics-related works over the period 2007 - 2012 will add a further 1% - 2% to current inflation trends. This will translate into an average nation-wide inflation rate of 6% from 2008 onwards.

Davis Langdon warned the situation could lead to the short-term breakdown of competitive conditions in the market as contractors find that they have plenty of work in the pipeline. It added that constraints on management and labour resources could lead to projects failing.