According to the latest m&e industry report from Gardiner & Theobald Engineering Services (GTES), lead times are on the up due to increasing orders and labour shortages, particularly of qualified electricians.
The lead time for mechanical packages currently stands at 16 weeks, with electrical installations growing to 20 weeks over the last quarter. GTES predicts that electrical lead times will lengthen to 22 weeks this year, before shortening in 2002.
Buoyant enquiry levels mean that m&e contractors can afford to be selective when competing for work. The trend is for partnered or negotiated contracts in preference to competitive lump sum bids, although in the north of England and Scotland the traditional route is still the norm. Direct contracts with the client are also favoured over domestic subcontract bids.
As to the future, some contractors have noted enquiries being put on hold. This may be a short-term effect of the impending general election rather than a market downturn. Most firms expect enquiries to continue to grow over the next two years.
The north-south divide in procurement route is causing differences in tender prices. Partnering, negotiation and pfi, common in the south with some major m&e contractors quoting as much as 70% of business in the form of such contracts, is allowing higher tenders.
Few contractors in the north are able to get partnered projects and tender prices remain low, with Dutch auctions not unheard of.
Overall, tender prices are expected to rise between 3% and 5% for years 2001 to 2003.
Source
Electrical and Mechanical Contractor
