Others have revised down increases in recent weeks

Turner & Townsend has stuck with its tender price forecast for 2023, against a trend of downgrading predictions among other consultants.

The firm’s winter market intelligence report estimates a 3.5% inflation in real estate tender price – the same prediction made in its autumn forecast – with rates falling to 2.5% the following year.

It comes after Gardiner & Theobald and Mace both pared back their predictions in light of the looming recession, forecasting inflation of 2.75% (down from 3%) and 2.5% (from 3.5%), respectively.

Martin Sudweeks, managing director of cost management at T&T in the UK, said the industry was facing a “complex economic situation” and that it should be “careful of assuming the rules of past recessions” would hold.

Sizewell C

T&T upgraded its infrastructure inflation forecast, which it put down to the government’s recommitment to Sizewell C and other major schemes

“Clients will need to consider what the economic situation means to their projects based on factors such as size, value and geography,” he said, advising firms to take time to “road test” contracts and build in assurance mechanisms to mitigate the risk of cost rises.

Despite the move towards recession, the consultant believes resilient demand and pockets of growth in sectors such as industrial development and infrastructure may maintain high tender pricing through the year.

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T&T actually increased its forecast tender prices for the infrastructure sector in 2023, up to 5.5% from the 4.5% predicted in October, which it attributed to the sustained inflation on schemes such as Sizewell C and HS2. The consultant said the rate is set to fall to 5% next year.