Consultant says firms being hit rising costs and doubts about upcoming work

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Alinea says tender price inflation in London and the South-east will increase this year and next fuelled by a softening commercial market and increased labour and materials costs.

The consultant, which is working on the City’s tallest tower scheme, the 62-storey 22 Bishopsgate building (pictured) being built by Multiplex, said the rise will be 1.5% this year, jumping to 2% in 2019.

In a note accompanying its latest market report, the firm said growing trade tensions across the world – with the threat of a trade war between the US and the EU increasing – and Brexit were “fashioning a delicate environment for supply chains”.

It added: “The balance of these influences [uncertain economic conditions and increasing materials and labour costs], together with a perilous state of constructor finances, and an industry beset by productivity and performance issues, points, we believe, to an absence of wholesale discounting. We foresee a continuation of tender price inflation in London & the South-east.”

The firm said the twin impacts of the Grenfell fire and the collapse of Carillion earlier this year underlined how the industry needed to change.

It said Dame Judith Hackitt’s report into building regulations and fire safety following last June’s fire had “used some alarming words” to describe the industry.

The firm added a culture of excellence needed to be mandatory in the industry as well as finding better ways to procure projects.

“Productivity is an endemic problem and we do not help ourselves through a failure to properly embrace BIM or to imbue our projects with excellence by consistently doing the simple things well,” the report added.