Declining tender prices are coming to an end

Citation

(2011), "Declining tender prices are coming to an end", Structural Survey, Vol. 29 No. 2. https://doi.org/10.1108/ss.2011.11029bab.003

Declining tender prices are coming to an end

Article Type: Newsbriefs From: Structural Survey, Volume 29, Issue 2

Keywords: Construction, Prices, Trends

Tender prices fell once more in Q2 2010 according to the latest UK Construction Tender Price Index compiled by BCIS. The fall in tender prices has been slowing dramatically over the last year from an annual fall of 13 per cent in Q2 2009 to 4 per cent in Q2 2010; with only a 0.5 per cent quarterly fall in Q2 2010 suggesting an end to falling tender prices over the upcoming quarters. A recent BCIS survey of contractors also showed the majority are expecting tender prices to remain static over the next six months. The upward push of the continued increase in resource costs is competing with the downward pull of uncertain future demand. Material prices rose by 3.8 per cent in Q2 2010 which is a 6.5 per cent increase on 2009. National statistics show significant increases in certain material costs, including concrete reinforcing bars, ceramic tiles and fabricated steel work. Sharp increases in annual materials prices are expected through to Q2 2011. Employment figures within the construction industry rose 2.6 per cent from Q1 to Q2 2010 but were still 3.3 per cent down on the same period in 2009. Average earnings within the construction industry however remained unchanged in Q2 and nationally agreed wage rates are expected to rise just behind the rate of inflation until Q3 2011. Construction orders fell by 14 per cent in Q2 2010, with all sectors in decline except the industrial sector which rose by 26 per cent. However current levels of demand are holding up, with new work output rising by 9 per cent in the first half of 2010 compared with the same period in 2009. New work output is now expected to grow strongly in 2010, with output slowing to marginal growth in 2011 as public spending starts to fall away, but private sector output starts to recover more strongly. Slow growth is expected in 2012 as public spending cuts deepen.