Coping with rising costs is a balancing act for those vital specialist firms

Paul McNeive

Stock image

April 21 2022 02:30 AM

There has been much commentary on the problems developers and building contractors are facing with rampant cost inflation in the market. But how about the smaller sub-contractors and specialist firms, which are a vital part of every project? How are they navigating through these busy, but challenging times?

I spoke with Karl Stynes, a director of CJ Ryder Lawlor, believed to be Ireland’s longest established firm of electrical installation and engineering contractors, and he told me that successfully dealing with fast increasing costs is a “balancing act”.

He said that the firm, which employs approximately 50 staff, has moved away from larger, longer duration jobs, and that up to 70pc of their work is directly for corporate clients, with the remainder for builder contractors.

This strategy, he says, has helped them avoid a lot of the problems where contractors on fixed price contracts are being caught out by rising costs.

Mechanical and electrical work can represent a third of the cost of any new building, with pure electrical work accounting for 10-15 pc. Of that cost, roughly half is labour, and half is materials.

As examples of the pace of cost inflation, Mr Stynes told me that “containment”, which is metal ducting, trunking and cable trays, has increased in cost by 70pc over the last 12 months and that they have just been advised of another 18 pc increase from May 1.

The rate of change is so fast that price quotations from suppliers for heavy cabling, which depends on the price of copper, are now only valid for 24 hours.

This, Mr Stynes says, is making it extremely difficult for clients to budget. When the firm provides a price quotation, it can take a month or two for the client to commit, by which time, the costs have risen.

The other major challenge in the industry is the difficulty in sourcing electricians and apprentices. Some of the firm’s staff have been with them for over 30 years and part of the “balancing act” is being selective in the work taken on and keeping the staff fully employed.

CJ Ryder Lawlor has an impressive list of clients, many of which have been with the firm for decades.

A good example is McDonalds – the company fitted out the first restaurant on Grafton Street in Dublin in 1977 and is just finishing a three-year programme of refitting every property in the country.

Other clients include Irish Life, Facebook and RTE, where the firm recently worked on the new radio studios.

Mr Stynes told me they are seeing an increasing demand for retail fit-outs, and a major new area of demand is from hotels wishing to add electric-vehicle charging ports.

This, he says, is causing problems for some existing hotels, which do not have enough power available to the premises. Newer “smart-chargers” are now being installed which monitor the availability of power at the property, and prioritise the building’s requirements, over vehicle charging.