Consultants EC Harris are predicting slower growth outside the capital of 2% this year before increasing to 4% in 2015-16.

The upturn in the EC Harris Tender Price Index forecasts have been driven by the improvement in general economic data, growth in construction output and a stronger work pipeline.

Simon Rawlinson, head of strategic research and insight, said: “Despite some fluctuations in recent figures from the industry, we are encouraged by the positive outlook for the sector, particularly with the growth driven in London.

“As one of the fastest growing sectors in the UK, UK construction continues to bolster and support the UK economic growth which is reflected in the strengthening tender prices.”

EC Harris believe contractors are getting more choosy over the work they go for.

The consultant said: “While developers are keen to push ahead with projects in order to meet demand, they are now working with contractors that have publicly stated strategies to improve margin and transfer risk.

“Main contractors are also less willing to pursue single stage tenders – partly because trade contractors will not support their bids.

“Encouragingly, margins and preliminaries associated with two-stage tenders remain competitive but inevitably more of the second stage inflation risk will be transferred to the client.

“Tender price changes are also driven by trades coming under inflationary pressure, lower levels of discounting by subcontractors and suppliers and the inability of specialist contractors to fund a large number of bids.”