Ongoing wage inflation sending cost of jobs up
Mace has increased its tender price forecasts for the rest of this year because of ongoing inflation driven by rising labour costs.
The firm said prices would go up to 3% in London and 3.5% for the rest of the UK, having previously forecast a UK-wide rise of 2.5%.
Mace said a 6% jump in labour costs was the main reason for the upwards revision. “Pay in construction is currently going from strength to strength, leaving us with little option but to increase tender prices for this year,” the firm’s head of cost and commercial management Andy Beard said.
It added that it expected prices to rise between 2% and 3.5% every year between now and 2027, meaning that schemes outside London costing £100m in 2022 would hit £116.5m five years later.
The firm said that stagnant economic growth along with rising wages was tipping the balance towards an increase in bid values.
But Beard added: “Despite the news about inflation, we are in a much more hopeful position than we were a quarter ago. The economy has held up better than seemed likely at the start of the year and prices have reacted accordingly.”
According to payroll firm Hudson Contract, weekly pay packets in April averaged £941, a 5.4% jump on the same month last year.
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