01 Feb 2022

January 2022 Newsletter – Red Diesel Cost and Contract Provisions

Red Diesel Cost and Contract Provisions

Don’t let the recent increases in materials and labour costs distract you from increases in costs elsewhere in the industry. During the 2020 Budget, the government announced that it will remove the entitlement to red diesel and rebated biofuels from April 2022 for contracting organisations. Inevitably, this will result in the increase of construction costs far beyond inflation because plant runs, primarily, on red diesel.

To put it plainly were the proposed change from red diesel to white diesel to happen today Contractors would see a 104.4% cost increase in the price of fuel for their plant. On the ground, this means that the cost to run a 13 tonne digger for a day would go from £49.56 to £101.30. This makes recent price increases for materials and labour due to Covid-19 and Brexit seem relatively small.

It is not just Contractors that need to be wary of this change though. Employers should also plan for this change. Employers may wish to start asking Contractors to include within their tenders for the use of white diesel in lieu of red diesel. This should save all parties from any post-contract arguments regarding the change.

Employees to shout about

Magnitude are proud of the achievements of their Employees and there are two to mention this month.

First, Jamie Neville has just won for the 3rd year running from BAM Construction and Liverpool John Moores University: Best Student at Final Level – Quantity Surveying. Magnitude’s congratulations go to Jamie and we are excited to see him go from strength to strength.

Second, Magnitude have been delighted to welcome Tom McKenny into his new role at Magnitude as Associate Director. Tom brings a wealth of experience, energy and drive to Magnitude and we very much look forward to benefitting from his gifts in his new role.

Project of the month

Magnitude are delighted to announce that spades will hit the ground in the middle of February for works at Runshaw College on their new £3m classroom block. Magnitude are acting as Employer’s Agent, Quantity Surveyor and Project Coordinator alongside DAY Architectural as Architect. Magnitude are excited to see this project progress and look forward to another successful completion in October this year.

We hope you’ve returned after the holidays refreshed and ready to make 2022 the best year yet. As always we are here for all your Quantity Surveying needs. Please feel free to reply to this email with any question or enquires.

The Magnitude Team