Contractors’ tender prices are set to increase by nearly 5% because of fears the supply chain cannot handle the current level of construction, forecasts consultant EC Harris.

EC Harris managing partner Tom Kane said that the record levels of construction last year and the Government-fuelled workload rise led contractors to increase tender prices because they were concerned the supply chain couldn’t deliver. “As a result, price increases for construction will run well ahead of retail price inflation over the coming year,” he added.

The consultant predicted that building tender prices would rise nationally by 3.5% (4.5% in London) this year to the first quarter of 2006, and by a further 3% (4.2% in London) to 2007. Meanwhile, tenders for civil engineering works were expected to increase by 4.4% and 4.6%.

The survey also highlighted that the continued high level of spending on public health, education and social housing was almost certain to continue, but that the lack of resources, especially in the health sector, remains a worry.

The full survey is at www.echarris.com.

Source

QS News