Mr. Tom Parlon:

I thank the committee for the opportunity to highlight some of the issues which the Construction Industry Federation sees affecting costs within the industry. At the outset I will give a picture of the industry which might not normally be appreciated. In our industry, 97% of entities are very small players employing fewer than ten people. The committee will see the big sites and big players but the bulk of the industry is small. Small players have extra challenges in dealing with different issues. The industry is in a pretty good place at the moment having come through a torrid time when it deteriorated to almost one quarter of its size with massive job losses, massive companies going out of business and so on. The industry is growing now. Generally when the economy is doing well the construction industry does well. CSO figures suggest that for the past 30 months, we have employed an extra 1,000 people per month. We have not heard the Minister or a Minister of State saying it is wonderful. The industry has been taking people largely off the live register, including many foreign people. Many people who were forced to leave the industry are coming back to take up good jobs again. It is a very competitive industry and is very labour intensive. Traditionally, it was very simple to look at the costs of building. One employed labour and bought the materials and put them to work as efficiently as possible. It was very straightforward.

I will go quickly through the tendering costs. Practically all the work done, whether in the private or public sector, is put out to tender. Very often the cost of tendering for projects is disproportionate to the probability of winning. There might be a pre-qualification tender and six or eight people might pre-qualify who have to employ a fairly substantial team of surveyors, engineers, designers and so on. Particularly if it is a design build, they have to go into a lot of detail in terms of coming up with the plans and so on. There is only one winner, which has to be factored into the cost. We have been negotiating with Government for more effective and fairer public works contracts. We are making some progress there but there is still a lot of work to do.

Building and material costs are a big factor. We had a decade of declining and flat building costs. The wholesale price index recently showed that in the year up to December 2017 costs increased by 3.2%. The most notable increase was glass, which went up by 21%. Sand and gravel prices increased by 8.9%. Stone prices increased by 7.8% and structural seal prices increased by 6%. Timber pipe fittings also increased in price. One of the biggest costs is insulation, which is a big factor in new quality builds now. There has been big inflation in costs.

Planning and development costs are another major issue. Regulation has increased substantially in that area. The whole process is extremely slow and expensive. Lead-in times can be slowed down massively and that all adds to cost. We have had some fairly positive amendments to planning legislation, including the fast-tracking of applications for developments with more than 100 housing units. We have LIHAF and extension to planning permission in some cases. It is still a major cost and can cause a big slow down.

The costs of building a house is a very big issue at the moment. It can be divided between the cost of providing the house and building the house. The Society of Chartered Surveyors Ireland recently did an in-depth survey of the cost of providing a house. The hard construction costs are just 45% of the total costs. Development finance, the cost of land, the design and taxation elements, levies, VAT and all of that are very big costs. While I am saying there is inflation on the building side, it is still a small part of the overall cost. We met with the IDA yesterday. A big concern is the lack of quality apartments in Dublin particularly for the big workforce of foreign workers we have here. The Minister, Deputy Eoghan Murphy, is reviewing the proposals with regard to apartment building and he is looking at parking provision. Previously one was obliged to put in very expensive underground parking. With regard to lifting the height caps, we have very restricted height caps in the city centre. With regard to build-to-rent policies, the dual aspect requirement is an issue. One cannot build an apartment unless it looks out east and west or north and south. There is also the issue of units per lift core. That is practical stuff that we hopefully will get a positive view on.

Finance is a big cost and a big constraint on the industry. Can the Chairman see the clock? She is looking over my head. Do I have time left?