A Perth construction firm is asking its customers to accept up to a 14% increase to their bills as it attempts to cope with “unprecedented” rises in material costs.
Murray Alexander, managing director of Algo, said the past 12 months have been difficult for the firm.
He said: “It has been very challenging with the increased costs we’re incurring.
“The market has been busy and we’ve plenty of work on.
“Trying to pass on increased costs to our clients is proving quite difficult.
“Once a deal is done, normally we’d just move on to the next one. But now we’re backtracking and negotiating surplus’ with clients as we go.”
The business, which has offices at the Algo Business Centre in Glenearn Road, describes itself as “renowned throughout Scotland” as a building contractor who can be trusted to deliver on time and on budget.
Costs won’t come down soon, Algo boss warns
Mr Alexander said the price increases has put a strain on the firm’s management.
He praised clients for their understanding.
“We’ve got a good client base that is spread out over quite a few jobs and they’ve all got different approaches.
“It is time consuming to work your way through that because nobody wants an increase once they’ve done a deal.
“We’re looking at 14% increases just now. Year-on-year we’re looking at 25% increases in material costs.”
The managing director said while clients expect the prices to drop again, he doesn’t believe that will be the case.
“We can’t see that in the next year or so,” he said.
“It’s letting the market readjust to the new rates and letting our clients pass on the increases to their end tenants or users.
“It’s a case of the market trying to catch up.”
“The only one that might come down is steel if there’s a lack of demand. Historically though it’s always crept up.”
Perth development plans for Algo
The firm, which has 85 full-time members of staff, has taken on two sites in Perth which it hopes to develop for business use.
One is at Broxden and the other at Auld Bond Road.
Mr Alexander said the appetite for expanding the business had been “dampened” by the cost increases.
It comes as the firm’s accounts, filed with Companies House, show turnover rose to £28.7m for the year to June 30, 2021.
That is an increase of more than £9m from its 2020 figure.
The firm’s pre-tax profits fell to £555,131 for the reporting period, from £667,433 the previous year.
The business’ wage bill also rose £400,000, to £3.7m.
The business was set up more than 25 years ago by farmer Peter Alexander, from Mains of Mause, near Blairgowrie.
Previous Algo projects have included a purpose-built showroom for Perthshire Caravans and the Madoch Centre community hub in St Madoes.
