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Tender costs set to rise

Tender costs set to rise

The average price of a tender is set to increase by between four and six percent per year until 2020, data from the Royal Institute of Chartered Surveyors’ (RICS) latest Building Cost Information Survey (BCIS) has revealed.Peter Rumble, head of forecasting for the BCIS, said: “The UK construction industry is showing strong signs of growth, reflected in the BCIS forecast which shows strong increases in new work output.“As a result, over the first year of the forecast period, tender prices are expected to rise by four per cent, with relatively moderate increases in input costs.“Moving forward, with workloads continuing to grow, and with rising pressure from input cost increases, tender prices are expected to rise between an annual 4.5 per cent and six per cent over the remainder of the forecast period.”Overall, building costs went down by 0.4 per cent over the first quarter of 2015, but had not changed compared to the first quarter of 2014.Low levels of inflation across Europe mean that little change in this factor is expected for the rest of the year. However, price rises are set to rise again from next year, with a predicted increase of 2.3 per cent to the second quarter of 2016.In addition to this, an anticipated wage increase of between three and four per cent a year is expected to have a substantial impact on production costs.This is part of the wider economic recovery, which is also set to cause workloads to go up by about five per cent over both 2015 and 2016. If the predictions are correct, orders will surpass the pre-recession peak in 2007 by the end of 2016. By the end of 2020, orders should be 20 per cent higher than they were in 2014, according to the BCIS. This growth will be chiefly fuelled by the private housing sector, private industrial sector and private commercial sector, which are all already experiencing growth. 

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