RICS report says tender price and construction output will full by about 10% over next two years

Tender prices will fall 10% in the next two years according to the latest predictions from the Royal Institution of Chartered Surveyors.

The index finds that tender prices have already fallen 1.2% in the last year on the back of an 18% drop in workload over the same period. The latest figures, which cover the third quarter of the financial year, find that the falls in tender prices have occurred despite rising materials and wage prices.

The Building Cost Information Service figures say that construction output will fall a further 7% this year and 3% in 2010. Tender prices will also fall by 7% in 2009, and by 3.6% in 2010, the index finds.

Peter Rumble, BCIS Information Services Manager, said contractors will have to be competitive just in order to stay in business. He said: “Those who traditionally carry out a significant proportion of public sector work are likely to fair better than those carrying out mainly private sector work. However this is assuming that a prompt release of public funds is delivered, as promised in the Pre-budget report, which is already looking unlikely.”