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Tender prices set to rise by a third, says BICS report

Civil engineering costs and tender prices are continuing to rise as the UK infrastructure market strengthens. According to the latest report by RICS' Building Cost Information Service (BCIS), tender prices are forecast to rise by nearly a third in the next five years.

The report, BCIS Infrastructure Briefing October 2015, said civil engineering costs rose by 0.7% in the second quarter of 2015 compared with the previous quarter, but remained unchanged compared with the same period last year. However, these costs are expected to over the coming five years along with tender prices and new infrastructure output as a whole.

Costs will rise 3.5-5% each year, with the price of materials and nationally agreed wage awards steadily increasing. 

The report expects new infrastructure output to be "very strong" this year, remain static in 2016, and to fall by 2017 as the cycle of some major projects pass peak. It predicts moderate growth returns in 2018 and 2019, with growth rising "quite sharply" in 2020 as a result of increased investment in major roads schemes.

Peter Rumble, head of forecasting at RICS’ BCIS division, said: “With new infrastructure output set to be very strong in 2015, the annual rate of tender price increases is expected to rise in the second half of 2015 and the first half of 2016, resulting in an increase of 7.6% in the year to second quarter 2016. Over the next few years, tender price rises are anticipated to be driven primarily by increases in input costs, rising by 4% to 5%. as growth moderates and even falls in 2017. Over the final year of the forecast, stronger output growth in 2020, together with increasing input costs, are likely to lead to higher tender price rises in the year to second quarter 2020, with a rise of 6.2%.

"New infrastructure output is anticipated to be at a historically high level over the forecast period compared with pre-2010, with annual average growth of around 3.5% - a real positive for Britain and the economy.”

Author: Maureen Gaines, Editor, WET News Find on Google+
Topic: Contractors
Tags: engineering , infrastructure , construction

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