London QS warns ‘significant resources’ being tied up on lengthy PCSAs

London QS Core Five has said its tender price index remains unchanged with a lull in demand keeping a lid on rises.

In its autumn update, the firm said sentiment remains subdued and added: “Not all the increased costs are being passed on. Low demand and a need to fill pipeline mean margins are absorbing the brunt.

“Tender returns received over the summer have been competitive. More contractors are actively engaging and some are willing to entertain single stage tendering.” 

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Core Five said bids returned to it by contractors over the summer were ‘competitive’ with more looking at pricing work on a single stage basis

The firm echoed what some have been saying about pre-construction service agreements (PCSAs) with jobs tied down in these agreements.

It added that Tier 1 and 2 contractors in M&E “remain busy tendering [but] have significant resources tied up in PCSAs on major projects and or data centres”.

Core Five also said that high-profile collapses of the past 12 months “have done less damage than was first feared. This is vital to maintaining capacity in the market to meet demand when the rebound appears.”

But it added: “Concerns about viability are growing louder, and the lack of building itself makes the strongest case for change. We may be approaching a turning point in policy.”

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