Clients urged to bring projects to market

Aaron Morby 1 year ago
Share

Cost consultant Turner + Townsend is urging clients to bring building projects to market after forecasting a tender price fall of 1% this year.

The firm said that a short window of opportunity now exists to work collaboratively with supply chains, before a slow down in work triggers more serious structural problems among contractors.

In its latest UK market intelligence report, T+T warns clients to be wary of low or even suicidal tendering as contractors cry out for work.

Below cost pricing is already being reported. The cost consultant warns that further erosion of contractor margins could spur a wave of insolvencies impacting future capacity and capability.

The cost consultant anticipates tender price deflation across 2020 and 2021, with tender prices for real estate projects expected to reverse 1% this year owing to waning private sector investor confidence.

Demand in health and social care, life sciences and data centres, suggests more optimism for some more specialist contractors.

In contrast, infrastructure projects are forecast a brighter outlook, with inflation expected at 1% on the back of resilient demand, visibility of pipelines and government stimulus spending.

But these inflation positives will not be sufficient to offset price softening across construction as a whole.

Paul Connolly, UK managing director of cost management, said that how clients respond to this deflationary climate is now critical – their behaviour could either fan the flames or head off a serious crisis.

He said: “The Covid-19 crisis has already blown countless projects off course, but the next headwind the construction industry will have to contend with is deflation.”

He added that despite the outward attractiveness of falling tender prices, a prolonged deflationary period would bring significant hidden dangers to the industry as a whole.

Connolly said: “Transactional supplier dynamics and compromised margins will only damage an already vulnerable supply chain – insolvencies risk disrupting project delivery, eroding industry capacity and ultimately driving prices higher for all in the longer-term.

“Clients will find there is more to gain in the long-term by collaborating more closely with suppliers to ensure a healthy recovery than perhaps securing a fleeting tactical win.

“They must look beyond the transactional to ensure best value and stability, for both their programmes and the construction sector more widely.”

Five ways for clients to foster healthy recovery


  1. Collaborate with suppliers
  2. Move beyond the transactional and adopt an enterprise approach to supply chain engagement
  3. Align with the innovators and nurture them
  4. A finger on the pulse when it comes to supply chain capability and fragility
  5. Power up productivity with off-site construction

Latest news

Construction slavery gang busted – five convicted

Romanian victims were promised £50 a day to work on site but were saddled with false debts
5 mins ago

Morgan Sindall starts £31m Leeds resi scheme

Work starts on 16-storey stepped Springwell Gardens apartment block
34 mins ago

Race starts for £200m M5 Junction 10 Improvements

Cheltenham junction upgrade will see new roundabout built above the motorway
4 hours ago

New boss at Balfour Beatty Kilpatrick

Will Smith joins from consultant Cummins
5 hours ago

Contractors battle Storm Arwen to replace rail bridge

BAM Nuttall, Atkins WSP Joint Venture successfully completes marathon 78-hour installation
4 hours ago

Bids called for £835m South London council estate upgrade

London Borough of Southwark is on the hunt for four firms to deliver housing estate upgrades
4 hours ago

Willmott Dixon to build £21m net zero Preston school

Tarleton Academy will be net zero in operation
4 hours ago

Veteran pair leave Currie & Brown

End of an era as David Broomer and Euan McEwan retire
5 hours ago

Balfour Beatty launches neurodiverse site cabins

Cabins adapted for visually impaired and light-sensitive builders will become standard on Balfour sites
1 day ago

26 firms win £7bn schools framework – full list

B&K, Willmott Dixon, BAM, Kier and Wates chalk up both northern and southern major project lots
2 days ago

French specialist Matière to install HS2 cut and cover tunnels

Stanton Precast wins pre-cast segment deal for 'green tunnels'
2 days ago

Scottish house builder buys rival for £56m

Springfield buys Tulloch Homes to expand presence in the Highlands
1 day ago

Wates wins contract for underground houses

Construction to start next year on earth sheltered homes in Battle, East Sussex
2 days ago

VAT dodging electrician banned for five years

Company director barred after Insolvency Service probe
2 days ago

£11m in extra brownfield grants awarded – list

Twenty-three sites receive brownfield funding in second tranche of grants
2 days ago

GMI lands £30m helicopter logistic hub

Building work starts on Yeovil hub for manufacturer Leonardo
2 days ago

HS2 Euston team to get architect-designed site huts

Up to 2,500 workers and 150 students could be using the welfare facility on a daily basis
2 days ago

Firms readied for £1.3bn highways surfacing framework

Second supplier day to be held on 2 December ahead of March tender invite
2 days ago

Countryside Properties sets aside £41m for recladding

Progress made towards becoming 100% focused lower risk Partnerships business
2 days ago

BAM pairing takes £26m Sunderland train station

Demolition work will start next year on first phase southern entrance area
2 days ago

Osborne wins £21m London City grade II interior refurb

Work to start in the New Year on 84 Moorgate upgrade
3 days ago

Bouygues bags latest phase of Portobello Square regen

Construction to start next summer on North Kensington site
3 days ago

VolkerFitzpatrick wins £26m storage sheds deal

Firm has delivered several projects at the Daventry International Rail Terminal over 11 years
3 days ago

Massive Stewart Milne development goes into administration

Countesswells new town now in hands of administrators
6 days ago

Race starts for £2.5bn Ministry of Justice framework

Frameworks cover projects up to £30m and are divided into regional lots
3 days ago

London Uni submits North Acton high-rise tower cluster plan

Plans in for eight buildings ranging between 6-32 storeys in North Acton
3 days ago

Galliard forms new partnership to build 850 homes

Work to start on £300m Brimingham and Ipswich developments by next spring
3 days ago

Engineers battle to repair power network after Storm Arwen

Large sections of overhead power lines need to be rebuilt after "worst damage for 20 years"
3 days ago

Leeds £270m Lisbon Square towers approved

Work to start in the Spring on residential and office scheme
4 days ago

Green light for £65m canalside scheme in Wolverhamption

Construction to start next summer on transformation of brownfield site
3 days ago

Contractor services