Tender price forecasts rise as contractors turn the screw

Aaron Morby 10 years ago
Share

Mace has upped its tender prices forecast for 2015 as contractors increasingly seek to boost margins and walk away from bidding risky jobs.

The cost consultancy arm of the contractor said construction was becoming a sellers’ market amid rising demand.

Mace has hiked its tender prices forecast for the year by 1%, both nationally to 4.5% and in London to 5.5%.

Rival cost consultants EC Harris and Gleeds are going even further predicting tender prices will rise by 7.5% and 7.0% in the capital this year.

The hardening line being taken by main contractors with clients is causing some tension.

One major private residential client told the Enquirer: “We are looking seriously at changing our favoured contractors because our existing firms are trying to push up prices too far.”

Mace Sweett G&T Gleeds EC Harris T&T F&G
London
2015 5.5% 5.3% 5.0% 7.5% 7.0%
2016 4.0% 4.9% 4.0% 6.0% 5.0%
2017 3.5% 5.0% 3.0% 4.5% 4.3%
National 4Q-4Q 3Q-3Q
2015 4.5% 4.2% 4.0% 5.2% 4.6% 4.3% 4.0%
2016 4.0% 4.4% 3.5% 4.9% 4.4% 4.4% 4.5%
2017 4.0% 4.6% 3.5% 4.7% 4.8% 4.5%

Chris Goldthorpe, managing director for Mace Cost Consultancy, said:  “The increases are not generally being driven by rising costs, as the cost of materials and labour has remained relatively stable with a small number of exceptions.

“Because of the strength of demand, contractors and subcontractors are able to fill their order books without having to offer cut-throat prices and they are able to increase profit margins, particularly for those projects that they are not particularly keen on winning.

He added: “With overheads and profit margins now regularly exceeding 5% for main contractors, and higher for sub-contractors, the combined effect is to push up tender prices at above the level of general inflation.”

Mace forecasts that steady inflation will increase tender prices nationally by 4% in 2016 and 2017 with prices in London also rising by 4% in 2016 but slowing to 3.5% in 2017.

Looking ahead, Mace warns that there are concerns about the effect the slower European economy will have on the UK, and the uncertainty surrounding the impact of the Greek General Election on the wider economic outlook.

Latest news

Balfour Beatty terminates Danny Sullivan labour deals

Around 500 workers on HS2 will be moved to alternative agencies or be taken on direct
2 days ago

Trio face prosecution after Hinkley site death

Main contractors and client to face charges over death of site supervisor
2 days ago

Buyers see recovery in house building sector

But civil and commercial work still in the doldrums
3 days ago

Apprentice saws-off thumb on hotel refurb site

Court hears how digit was reattached and teenager continued training with another firm
3 days ago

Laing O’Rourke tops June contracts league

£919m animal super lab dominates new orders
3 days ago

TSL turnover smashes £500m as profit almost trebles

Data centre and logistics contractor rises high on surging demand
3 days ago

Gleeson Homes chief exec leaves business after restructure

Management revamp after "challenging" year
3 days ago

Green light for 1,600-home Oldham town centre overhaul

Plans for over 1,600 homes across six regeneration sites approved
3 days ago

DSM wins Norwich city centre clearance job

Anglia Square shopping centre clearance for £300m scheme
3 days ago

13-year-old becomes UK’s youngest qualified digger driver

Grandson of Gallagher Group chairman sets industry record
3 days ago

Cubby reborn in £12m Svella-backed takeover

£50m revenue target set as 14 firms combine under new Cubby Group banner
4 days ago

North East NHS trusts plot £3bn health estate overhaul

Market engagement begins for major construction push across four trusts
4 days ago

HG goes green on cranes in £1.2m switch to battery power

Diesel-free crane drive cuts fuel bills by 94%
4 days ago

Developer fined £165,000 for fire safety failings

Firm ignored fire safety orders on apartment job in Preston
4 days ago

Bidding to start for £1.8bn North West framework

Contractors invited to bid for latest Procure Partnerships deal
4 days ago

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
4 days ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
5 days ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
5 days ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
5 days ago

80 energy projects unlocked as Ofgem backs grid expansion

£24bn energy networks deal gets green light from regulator
6 days ago

How to see your stories on the Enquirer

Join our Suppliers and Buyers directory to get your news published
5 days ago

Henley lands Midland Mill revamp on Leeds tower scheme

Restoration of 18th-century mill kicks off on South Bank regeneration project
5 days ago

New boss at Eric Wright Civil Engineering

Gavin Hulme takes top job as Diane Bourne moves to group role
5 days ago

Pinewood submits £1bn data centre plan

Studio giant adds green and learning spaces to tech hub blueprint
6 days ago

Record results after TClarke goes private

Britain's biggest M&E contractor flourishes after de-listing
6 days ago

Dalkia lands £200m nuclear maintenance deal

1,000 nuclear FM staff to join M&E contractor
6 days ago

Construction comeback to outpace wider economy

Arcadis forecast fueled by spending review optimism
7 days ago

First steel goes up on giant car battery site

Severfield gets to work on McAlpine Somerset site
6 days ago

Permasteelisa wins cladding deal on Bovis city tower

Facade specialist lands package at 60 Gracechurch Street
6 days ago

Fox buys recycled asphalt specialist Fisher

Acquisition adds major recycled asphalt capacity in north west
6 days ago