Mace predicts tender cost rise

Mace, the international consultancy and construction powerhouse, has published its latest quarterly UK construction economic forecasts.

Through the data, the company believes that tender costs will increase more than previously predicted in 2018. The predicted rise comes from analyses of a number of metrics, producing 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.

Political and economic uncertainty in the UK, with concerns about the strength of the economy and the effect of Brexit on the construction sector, was expected to result in a price drop, however increases in input prices on material and labour are counteracting this, which has 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.”

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