Tender costs to rise more than expected in 2018

Mace has published its quarterly UK construction economic forecasts, showing tender costs are expected to increase more than previously predicted in 2018.

Mace’s tender cost update analyses a number of metrics to produce a forecast of the changes in tender costs in the UK construction sector. The latest report indicates that declining construction output and material price rises will lead to more of an increase in tender costs this year than forecast. 

Concerns about the strength of the overall UK economy and the effect of Brexit on the construction sector might be expected to trigger reductions in tender prices – but the continued increase in input prices on material and labour are counteracting any deflationary effect and have resulted in a rise in Mace’s forecasts for 2018.

The longer term forecasts published by Mace remain stable, showing a small predicted growth in 2019 followed by more substantial rises in 2020 and 2021.  

Steven Mason, Mace’s Managing Director of Cost Consultancy said: 

Whilst concerns persist on the underlying strength of the UK economy and the impact of Brexit negotiations on the UK property and construction market, the effect of these uncertainties on the supply chain’s appetite to secure work are offset by the impact of continued increases in input prices.

“A hardening of a market place that has ongoing capacity issues and that is less willing than ever to accept unlimited risk will start to see a small upward shift in tender prices in 2018 as the supply chain is no longer able to continue to absorb the spiralling impact of increasing resource costs.”