Contractors face construction price falls of 6% by 2018

Grant Prior 8 years ago
Share

Construction prices are predicted to fall by as much as 6% by the end of 2018 as the balance of industry power shifts back to clients.

Latest forecasts from Arcadis predict a further erosion of contractors’ margins as demand drops and input costs continue to rise.

The consultant sees growing competition among contractors for work particularly in the industrial and commercial sectors.

Arcadis said: “We could see a construction market with a number of speeds and not all sectors will be exposed to major price corrections – in the infrastructure sector, steady demand should enable suppliers to maintain price levels.

“However, in the high-risk prime residential sector, Arcadis anticipate that fewer contractors will be willing to bid for work.

“In many sectors the balance of power is shifting to clients. Whether these clients continue to build, and how they choose to procure will have a significant impact on how the construction cycle unfolds and by how much construction prices adjust.”

William Waller, Market Intelligence Lead for Arcadis,said: “There are significant indications that the commercial cycle has peaked in a number of sectors.

“Any contraction in workload is going to have severe consequences for an industry that has barely recovered from the 2008 crash.

“The combination of deflating construction prices and inflating input costs will impact overhead and profit levels, potentially leaving the supply chain squeezed in the middle.

“This could drive commercial behaviours where suppliers ultimately either cannot or will not endure further price deflation, and this is reflected in our forecasts. However, we need to retain some perspective. This is not another 2008.

“There are numerous different scenarios influencing the market at the moment, but the most important factor is a need to keep building.

“A sustained commitment to infrastructure and housing delivery will support the construction industry and deliver positive economic impact for the UK.

“Even with the challenges of Brexit, our view is that the UK still represents an excellent place to invest and as long as projects are deliverable and investible, they will continue to attract investment and support economic growth in the longer term.”

Latest news

Carpenter killed by falling timber frame panels

Court fines specialist contractor £8,000 after site tragedy
2 days ago

Road sweeper specialist files administration notice

Go Plant lodges court notice
2 days ago

Anglian Homes rides in to finish crashed Everest contracts

Rival doubled glazed window specialist commits to complete orders
2 days ago

Final work starts to connect super sewer to London system

End in sight with 1.5m thick concrete wall to be demolished to link-up to Lee Tunnel sewer system
2 days ago

Legal challenge launched against £1.5bn A66 dualling

Balfour Beatty, Kier and Keltbray must now await outcome of court challenge
2 days ago

John F Hunt wins 24-storey Battersea tower

Specialist to carry-out demolition, enabling works and RC frame construction
3 days ago

William Hare wins steelwork on £500m Broadgate towers

Specialist to work on 2 Finsbury Avenue with McAlpine
3 days ago

McAlpine appoints MD to grow ventures business

Owain Thomas will build on private rental and healthcare development successes
3 days ago

BAM Co-op Live Arena opening delayed yet again

Another gig cancelled last night amid last minute safety concerns
3 days ago

National Grid unveils winners for £9bn network upgrade

New 'enterprise model' to deliver infrastructure schemes quicker and cheaper
4 days ago

Turkish insulation panel maker to build £45m UK factory

Assan Panel to open first UK plant at Freeport East
3 days ago

Expanding consultant Stantec swoops for Hydrock

Stantec UK business expands by a third as 950 staff join from Bristol-based engineer
3 days ago

Contractors wanted for £800m highways deal

Bids invited for Eastern Highways Alliance Framework 4
3 days ago

Galliford Try names group head of infrastructure

David Lowery promoted to Divisional Managing Director – Infrastructure.
3 days ago

Chigwell Group looks at stock market listing

Essex contractor registers as Public Limited Company
4 days ago

A57 Mottram Bypass clears final legal challenge

Balfour Beatty to get go-ahead to start shortly
4 days ago

100 jobs axed as Geoffrey Osborne confirms administration

Chairman Andrew Osborne calls it a 'sad day' as board loses fight for survival
5 days ago

Midgard set for Notting Hill office tower overhaul

Landmark project edges towards final approval after 10-year planning saga
4 days ago

Cumbrian civils firm clinches £40m Sellafield contract

Civils specialist Stobbarts will support McAlpine on groundworks and concrete
4 days ago

Designers named for London 2000-bed student rooms job

Bouygues will build £400m London School of Economics student scheme next to Tate Modern
4 days ago

£117m-turnover contractor files administration notice

ARJ Construction lodges court notice
5 days ago

£1bn London Blackfriars tower blocks approved

Trio of buildings rising to 45, 40 and 22 storeys approved by Southwark Council
5 days ago

Council decides to end Balfour deal after 13 years

Contractor has been maintaining roads across Herefordshire since 2013
5 days ago

Six civils clients to switch to low carbon concrete and steel

National Highways, Northumbrian Water and Sellafield sign fresh decarbonising pledge
6 days ago

Fortem extends homes repair deal across Birmingham

Willmott Dixon owned firm adds another two years to deal worth £170m
5 days ago

Kier wins £118m civil service Darlington hub

Work is expected to start towards the end of this year
6 days ago

Green light for 34-storey Digbeth apartments tower

480 flats will be delivered for Clarion housing association
5 days ago

LHC starts race for major retrofit and decarb framework

Hunt starts for firms to help with 6.1m social homes upgrade target
6 days ago

Windows giant Everest crashes into administration

Around 350 jobs at risk while hunt starts for a buyer to salvage business
6 days ago

Green light for £500m Newcastle health complex

Mixed use scheme will promote healthy living across all stages of life
6 days ago

Contractor services