Cost of housing projects rises by £100m, report says

A total of 87 'affordable' rent homes are planned for the corner of Stebbing Way and Roxwell Road in

A total of 87 'affordable' homes are planned for the corner of Stebbing Way and Roxwell Road in Barking. - Credit: Google

Barking and Dagenham Council is facing £100m increased costs for earmarked developments in the borough, council documents show.

A business plan for projects the authority's regeneration arm Be First is aiming to progress in the current financial year was approved last March.

But cabinet members were advised that an increase in construction material prices have resulted in an estimated £97m hike in costs across its housing delivery programme.

A report by Be First said: "Subsequent to the approval of the business plan, the development and construction sector has experienced significant cost pressures and changes.

"Whilst high material price inflation is not expected to continue indefinitely, prices have increased significantly in recent months.

"The impact of Brexit and Covid-19, which has constrained the supply of materials and labour, together with increasing demand for materials and labour due to growing global construction markets in recent months, has resulted in sharp increases in material and labour costs.

"Given the current level of volatility in the construction sector, the future outlook is uncertain in the short term."

The report said there have been price increases for a number of projects during the last six months, but that negotiation with contractors, modifying
specifications and other design efficiencies have mitigated the impact.

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It added that the effect of the cost pressures on the council's wider investment strategy are being considered.

One of Be First's projects is the redevelopment of properties in Stebbing Way and Roxwell Road on the Thames View Estate in Barking to provide 87 'affordable' homes.

This scheme was set to cost £21.1m but this figure has now risen to £32.4m in a rise labelled as "breathtaking" by deputy leader Dominic Twomey at Monday's cabinet meeting.

The report said the change to market conditions and an increase of five more homes than originally planned had seen the figure go up.

Despite this, Be First said the contract value represented "value for money" in the current market.

Existing residents have been moved to alternative properties and the site is ready to be redeveloped, the report added.

At last night's meeting (February 21), cabinet members agreed to "re-affirm" the commitment to the project, as well as the use of an extra £7.5m in Right to Buy receipts and section 106 funding towards the scheme.

An increase from £3.4m to £3.75m in grant funding from the Greater London Authority is also required, the report said.