Tender prices hold firm but likely to fall 2.5% in 2021

Aaron Morby 4 years ago
Share

Mace expects tender prices to perform better this year than in 2021, but as contractor’s pipelines weaken further, prices will start to fall.

While new orders will recover from the 50% second-quarter decline, contractors may need to become more aggressive in finding replacement work.

The group’s cost consultancy arm is now forecasting a 2.5% fall next year, followed by recovery in 2022.

 As a result of the lockdown, productivity fell by 11.4% in the second quarter, giving an early indication of the impact of social distancing measures implemented on construction sites, according to the report.

Looking ahead, returning to pre-Covid-19 output levels will be difficult, due to social distancing regulations remaining in place and limiting potential output.

Brexit uncertainty may dampen the recovery and keep contractors even more competitive with their tenders, warns the report.

Steven Mason, managing director for Cost Consultancy at Mace, said: “As the economy continues through the early stages of recovery, the construction industry has proved so far to be remarkably resilient.

“The focus upon managing the immediate disruption caused by labour and material shortages and drops in output and productivity may have dissipated, but the mitigation of the ongoing impact of Covid-19 and an impending Brexit deadline will continue to have a major influence on the market and tender prices.

“The unprecedented drop in new orders in Q2 has compounded the growing sentiment that our industry faces a turbulent time ahead, and there will be increased pressure on the supply chain to secure workload at any cost.

“In spite of expected further fluctuations in input costs we expect this increasing appetite to secure future work to continue to supress tender prices for the remainder of 2020 and throughout 2021.”

Latest news

Former Crossrail boss Mark Wild to lead HS2

Wild to bear down on spiralling costs and bring rejigged scheme in on time
3 hours ago

Receivers in at £125m Manchester tower developer

Domis Construction walked away from scheme following doubts over funding
24 hours ago

McAlpine pulls out of £55m Carlisle Citadels project

University of Cumbria starts hunt for replacement contractor
4 days ago

Strabag UK suffers further big trading loss

Austrian contractor is gearing up for major presence in the UK market
4 days ago

Durham Uni picks UPP for £130m student scheme

Firm will deliver 1,000 self-catered bed spaces
4 days ago

Architects now upbeat after 10-months of work gloom

Larger practices see rising workloads in next three months
4 days ago

Motorist dies after collision with road paver

Police Scotland investigating fatal crash
4 days ago

McLaren Living appoints HG Construction for £69m scheme

Build to Rent scheme will transform former vacant car park site in Leeds city centre
4 days ago

Squibb liquidator probes £2m of “missing” plant

Machinery, cars and scrap metal have disappeared at demolition specialist
5 days ago

Galliford Try to re-enter affordable homes market

Contractor sets out new five-year plan to build margin to 4%
5 days ago

Former Sellar chief to lead civils contractor Kilnbridge

Owen Dannatt joins as new CEO as founder Dermot McDermott becomes Chairman
5 days ago

Hunt starts for nuclear fusion plant construction partner

Fusion energy plant to be built at West Burton coal power station site.
5 days ago

National Grid raises £7bn for big infrastructure upgrade

Rights issue to fund a major round of capital investment in energy infrastructure
5 days ago

Grenfell police probe to last at least until end of 2025

19 companies and 58 individuals could eventually face charges
5 days ago

Mace confirmed on £100m London office retrofit

Work underway on Helical's 100 New Bridge Street job near Ludgate Circus
5 days ago

Wylfa chosen for next big nuclear power station build

Government names Anglesey site for a large-scale gigawatt nuclear power plant.
6 days ago

Bowmer & Kirkland trading profit halves

Contractor buys HVAC specialist Adcock despite challenging market
6 days ago

Piling specialist Van Elle plans further job cuts

Piling specialist plans further cost savings in face of lower demand
6 days ago

Civils contractor A Catlow files administration notice

High voltage cable specialist lodges court notice
6 days ago

Green light for ARC Oxford lab campus

Work to start later this year on £40m Ascent building job
6 days ago

Stonehenge tunnel hit by another legal delay

Court upholds latest appeal against £1.7bn scheme by campaigners
6 days ago

Plans go in for huge Olympic Park construction hub

Bow Goods Yard could deliver 3.5m tonnes of materials a year to sites across London
6 days ago

40% affordable homes target for Labour’s new towns

Labour pledges to select new town sites by end of first year
6 days ago

Plan for £100m Liverpool Baltic station

Construction work could begin next year
7 days ago

Surgo Construction went down owing £4.5m

Biggest creditor is Bellway Homes after dispute on housing job
7 days ago

Vistry seals £157m West London housing deal

Around 575 homes to be built at Merrick Place scheme in Ealing
7 days ago

Streamlined Watkin Jones returns to profit in first half

Multi-room specialist sees secured work pipeline hit £1.4bn
7 days ago

Bellway hires ex-brickie as group construction chief

James Griffin to oversee move to the Future Homes Standard and timber frame.
7 days ago

Persimmon under fire for delays to £10m relief road

West Suffolk Council serves Breach of Condition Notices after timetable slips again
7 days ago

BAM wins £33m Kent secondary school job

Replacement Swanley academy to be built at live school site
7 days ago

Contractor services