Mace flips tender price forecast due to material price hikes

Aaron Morby 3 years ago
Share

Materials price hikes have seen Mace’s consultancy arm significantly upgrade its tender price forecast for this year.

Cost consultants at the business had previously reckoned tender prices would fall by 2.5% during 2021 as firms fought it out to refill order books post-pandemic.

But sharp materials price hikes and shortages along with a stronger than expected construction recovery have prompted a rethink. Tender prices are now forecast to grow nationally and in London by 1.5% this year, before peaking at 3.5% in 2023.

Mace also said that though the labour market was stronger than previously expected, it showed little signs of adding much to inflationary pressures for the time being.

The firm believes that the present jump in material costs is unlikley to be a threat to the recovery and will stabilise with tender price inflation settling at 2.5% in the medium term.

In the longer term the drive for sustainability and net zero carbon has the potential to place further upward pressure on tender prices, warns Mace.

Latest estimates for management, material price growth and labour costs

Steven Mason, Managing Director for Cost Consultancy at Mace, said: “The tide of uncertainty that the construction sector and wider UK economy has experienced from the impact of Brexit and Covid-19 appears to be finally turning, with global supply problems and resilient levels of demand driving dramatic increases in forecast tender prices.

“While demand in some sectors remains weak, the overall picture and sentiment for construction and infrastructure projects looks increasingly positive.

“With a risk averse supply chain that is reluctant to absorb the impact of these rising input costs, we anticipate a larger than expected impact on market prices and have adjusted our forecasts for 2021 upwards to reflect this.”

Latest news

McLaren gets green light for 45-storey Leeds tower

Landmark Wellington Square scheme will see 464 flats built with 360,000 sq ft of offices
3 hours ago

Heavy rain causes 1.9% construction output fall

Hopes remain undampened of a resi-led recovery this summer
3 hours ago

Taziker restruture to return to profitability after £1.2m loss

Founders bought the business back from private equity after last year's loss
4 hours ago

£220m London wharf homes scheme approved

285 homes to be built beside protected Albert and Swedish Wharves in Wandsworth
4 hours ago

Major project veteran named civils director for Sizewell C

David Speight previously worked on Hinkley, Heathrow and HS2 client teams
3 hours ago

Morgan Sindall lands £19m Milton Keynes hospital job

Crane lifts to be carefully co-ordinated to ensure air ambulance remains active
17 hours ago

Clancy bolsters civils leadership team

Daniel Tonkin and Simon Hyams join as operation directors of water and infrastructure
1 day ago

Balfour names new project boss for HS2’s super-hub station

Steve O’Sullivan replaces Nigel Russell who was promoted to CEO of Balfour's HS2 ops
1 day ago

Buckingham Group supply chain hit doubles to £256m

Total owed to unsecured creditors soars as surety providers finalise claims
1 day ago

Builders demand an end to police plant bans

Call to suspend all embargoes on moving mobile cranes and large site kit
1 day ago

Green light for £65m Blackpool multiversity campus

Education campus of 350,000 sq ft will be delivered in phases
1 day ago

Vinci signs £138m Sheffield steel forge expansion deal

Sheffield Forgemasters signs landmark contract after two years of pre-construction works
2 days ago

McAlpine hires HS2 programme boss to head defence arm

Armed forces logistics expert Mike Hickson takes role as MD of defence
2 days ago

£200m carbon capture plan for Deeside site

Energy from waste operator enfinium looking to invest in North Wales plant
1 day ago

McAleer & Rushe promotes five staff to contracts directors

Design and build contractor targets £500m revenue next year
2 days ago

Consultant quartet win Government estate upgrade deal

Government Property Agency selects Arcadis, Tetra Tech, AtkinsRéalis and McBains
2 days ago

Resi towers pioneer to transform Liverpool site

Beetham founder Hugh Frost to help develop 1,200 new homes
3 days ago

Construction Manager of the Year crowned

Galliford Try's Barry Kingscote wins coveted prize: Full list of winners
2 days ago

Landsec £250m London terraced office job approved

Skanska tipped for 20-storey Hill House scheme near Fleet Street
3 days ago

Lendlease tops March contracts league

BAM and ISG rank third with big contract wins
2 days ago

Vistry strikes deal with Homes England for 1,000 units

Firm's timber frames factory will supply most of the Midlands houses
2 days ago

Morgan Sindall go-ahead to build 23-storey Salford resi job

Funding deal with CBRE allows latest project on bank of River Irwell to proceed
3 days ago

Unite Students gains planning for London and Bristol schemes

RG Group will build landmark Stratford tower and Freestone Island projects
3 days ago

Rolls-Royce gets go-ahead for 1.1m sq ft expansion in Derby

Major expansion of Raynesway campus planned to met submarine fleet orders
3 days ago

GMI Construction edges back into profit

A year of controlled consolidation helped generate £0.9m profit but cash at bank dropped to £10m
3 days ago

Balfour gets final sign-off for HMP Highland at £209m

Deal struck for delayed Inverness prison after costs rocket
4 days ago

Renew buys bridge maintenance business

Contractor boosts highways division with £5m acquisition
3 days ago

HS2 tests market for £150m mass transit job

2.4km long elevated Automated People Mover to go out to tender in 2026
3 days ago

Cardo completes fourth acquisition in a year

Expanding Welsh building maintenance specialist reaches £170m turnover
4 days ago

Watchdog clears Heidelberg takeover of Mick George

Four quarries and five ready-mix operations to be sold to meet competition concerns
4 days ago

Contractor services