Positive movement in tender prices for the construction industry not forecast until 2011

[March 2010]

Building tender prices are forecast to continue to fall across the UK, by almost 5% over the next year and by a further 0.3% in the year to 1st quarter 2012, according to the latest forecast produced by Built Asset Consultancy, EC Harris.

The research shows that prices will turn round in mid 2012 and show increases of around 3.5% each of the following two years.
In London tender prices are expected to follow the rest of the UK over the next year, but then move ahead with a return to positive growth towards the end of 2011. This is because developers are looking longer term and are planning for recovery, with the timing based on going to tender during mid 2011 while prices are still low.

Paul Moore, Head of Cost Research at EC Harris commented; “Although the UK economy is technically out of recession, recovery for the construction industry is unlikely to take place this year and for many it won’t happen next year either. Although workload is expected to rise in 2011, the figures are driven to a large extent by increases in infrastructure with the private commercial and residential sectors still in decline. This situation would almost certainly be exacerbated if there were to be a ‘hung parliament’ which will lead to market uncertainty and affect investment plans.”

Increased workload in the infrastructure sector means that tender prices will fall by only 2.3% over the next year and then recover to show a rise of 3.3% in the year to 1st quarter 2012.

The research also shows there have been increases in some world commodity prices, but steel prices are still falling across the world. In the UK contractors are paying 9% less than last year for materials while site labour rates are down 3.5%.

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Notes to Editors

About EC Harris

EC Harris is an International Built Asset Consultancy - acting as trusted advisors to clients - in planning and executing strategies that optimise the construction, operation, use and ownership of built assets.  The firm has 46 wholly owned offices in 24 countries employing 3,400 people.  Turnover in 2008/09 was £306m.