November 22, 2004—Record prices for oil have contributed to the push behind construction tender prices. Up by over 5% in the past year, they are likely to increase at double the rate of inflation over the coming year, according EC Harris.
The cost consultants say a combination of a higher level of spending in the public sector, a limited supply of skilled labor and increases in the price of key materials has led to predictions of national rises in tender prices of 3.6%. In London, there are still a large number of major schemes in the pipeline, which should result in price increases of 4.6% in the year to 3rd quarter 2005 and by a further 4.2% the following year.
Commenting on the figures, EC Harris chairman Richard Clare said: “Despite the current high levels of activity, confidence in construction has suffered as the commercial offices market has failed to show any real signs of recovery and the expected investment in infrastructure has been slow to come through.”
He added: “However, demand for contractors services has continued to increase, driven by government initiatives, particularly in health and education. With the economy still buoyant, most major contractors around the country have healthy orders books, generally underpinned by a number of large capital projects.”
Reprinted with permission; copyright 2004 i-FM
