Unveiling the Irish Department of the Environment and Local Government’s annual review of the construction industry, Dempsey revealed that it was already working at close to full capacity. Construction output grew 8.5% in 1998 to IR£9.2bn (£8bn).
The review forecasts that output will continue to rise, by 13% in 1999 and 10% in both 2000 and 2001. This compares with a European Union average annual growth rate of 1-2%. By the end of this year, building output will have grown by 80% since 1994.
Dempsey said fewer firms were bidding for individual projects, adding that busy contractors were asking for more time to formulate bids, and that tender prices were rising 8-12% a year.
He said: “With the cost of materials remaining relatively stable, it is clear that other cost increases are responsible for the unsustainable price increases.
“I will be asking the broadly based Forum for the Construction Industry to give added urgency to their consideration of measures that might be taken in both the short and long term to expand building capacity.”
Dempsey said this would be crucial if the Irish government were to push ahead with its National Development Plan, which will see up to 500 000 new homes provided in the next 10 years.
Peter McCabe, a director at Irish construction employers’ group the Construction Industry Federation, which is a member of the forum, said that clients in Ireland were still getting “terrific value” despite price rises.
He said much of the increase could be attributed to the extra costs that contractors are having to bear in complying with new European regulations on safety and occupational health.
The forum, which also includes government, materials producers and unions, is confident that the ongoing boom can be serviced because there is now so much money to be made out of construction.
McCabe said he was confident that Ireland’s construction boom would continue because it has been mainly based on new build, and many older buildings now need refurbishment.
The Dublin Corporation objected to the scale of the 600 000 m2 offices, conference centre, shopping and residential scheme after commissioning a study on it from Arup Associates. The Spencer Dock Development Company is to appeal.