London tender prices ratchet up

Aaron Morby 11 years ago
Share

Cost consultant EC Harris has upgraded its tender forecasts to keep pace with the recovery in London.

An uplift in workloads and suppliers prices has seen the cost consultant forecast 0.5% tender price inflation for the capital in the last quarter of the year.

Previously 2013 was expected to see construction costs remain flat.

The firm said that major contractors were now reporting rising prices on some structures and envelope packages.

The survey also shows growing momentum in the office sector in London and an increase in ‘speed to market’, from acquisition to completion, as developers pursue scarce letting opportunities.

Despite growing optimism developers are remaining risk averse preferring to secure large pre-lets to obtain project finance, while also passing design and delivery risk to contractors through design and build contracts.

EC Harris warns of capacity constraints ahead, with the potential pressure on supply following four to five years of slow demand and lower capacity leading to delivery issues and price impacts.

It said the strength of the rebound has caught much of the industry by surprise with extended delivery times for bricks and blocks, and increases in day rates of up to 20% for some labour.

Price pressure is most evident in residential construction, and the niche London Super Prime market, where scarcity is felt most among high-end finishing trades.

EC Harris said it estimated tender price inflation in London to rise to 4% for 2014.

Regionally, the recovery in housing has stemmed expected price falls, with tender prices expected to remain stable to the second quarter of 2014 before a moderate rise of around 2.0% in the second half 2014.

EC Harris maintains its inflation forecast for the infrastructure sector at 3.2% for 2014.

Simon Rawlinson, EC Harris head of strategic research and insight, at EC Harris said: “While the move towards an upturn in construction is a welcome relief , as the market moves to recovery and more normal trading conditions, clients need to consider ways to engage with the supply chain to mitigate wider risks associated with an upturn, including price uncertainty and business failure.

“Potential solutions include the positioning of the project in the market, the client’s buying strategy and a change in the balance of risk and reward for the supply chain.”

Latest news

Breyer Group battles for survival as rivals circle

Housing maintenance firm fights three winding up petitions in a month
19 hours ago

Galliford Try gets go-ahead for Milton Keynes PRS tower

33-storey tower needs gateway 2 approval before work can start
13 hours ago

Careys facing £2.4m claim by developer over demolition cartel

Giant Hong Kong developer claims it was overcharged on Lots Road Power Station job
19 hours ago

Lendlease Construction renamed Bovis

US private equity firm completes £35m purchase of UK contracting business and rebrands
18 hours ago

Multiplex profit drops a third as revenue rises to £780m

Spate of new orders sets contractor up for three years of work
18 hours ago

Galliford Try and Breheny land latest Sizewell C road deals

More infrastructure deals for new nuclear power station
1 day ago

Worker trapped in collapsed septic tank pit

Contractor and director fined after worker suffers multiple fractures
19 hours ago

Homes England buys stalled Broad Marsh site

Demolition to finally be completed as developer hunt begins
1 day ago

Vistry go-ahead for 353 homes at Rochester Riverside

Work to start on next phase of Kent town regeneration at end of this year
2 days ago

M&E firm J S Wright collapsed owing £19m

Trade creditors hit for £11.4m by employee-owned Midlands firm
2 days ago

Right to work checks to be extended to self-employed

Government plans crackdown on illegal working and rogue employers
2 days ago

Midlands developer turns to London with £1bn resi schemes trio

SevenCapital plans 1,000 flats in Kensington, Islington and the Isle of Dogs projects
2 days ago

Deck falls off huge scissor lift at Winvic site

Two men seriously injured as platform plunges to the ground
4 days ago

Weston targets Build to Rent with new division

Weston Partnerships signs first deals with asset managers and councils
2 days ago

Bouygues seals deal for £119m Cardiff college campus

Construction to start in June on two new buildings
5 days ago

£140m cash injection to speed-up flood defence schemes

Funding part of £2.65bn investment over the next two years
2 days ago

Bid race starts for £15bn schools framework refresh

DfE throws framework open to more contractors
5 days ago

Berkeley’s £600m Borough Triangle project approved

Controversial scheme features two towers of 38 and 44-storeys
5 days ago

London Mayor calls in blocked 600-bed student scheme

Refused 20-storey London PBSA block may still be built
5 days ago

HG to build 500-bed London Stratford student scheme

Work will start later this year subject to gateway 2 safety approval
5 days ago

Arrest after pedestrian death on construction site

Tragedy during site preparation works for new Wigan car park
5 days ago

British Steel threatens closure of Scunthorpe blast furnaces

Chinese owners say sectional steel and rail supplies will be maintained
6 days ago

Planning green light for Sheffield warehouse site

Existing factories to be demolished in new scheme for Rula Developments
5 days ago

New rail property company to unlock land for 40,000 homes

First four sites released in Newcastle, Cambridge, Manchester, and Nottingham
6 days ago

Drainage specialist Subscan files administration notice

Specialist employing 131 people files court notice
6 days ago

Four win Network Rail £300m engineering design deal

Eastern region deal will include design for Northern Powerhouse Rail
6 days ago

Funding go-ahead for Banwell bypass after fresh cost hike

Galliford Try contract rises £14m to £64m after final design change
6 days ago

Graham wins Southport £75m Marine Lakes Centre

Firm replaces Kier which parted ways with backer Sefton Council
6 days ago

Chancellor unveils extra £2bn capital spend a year

Construction promised a defence dividend in military base and homes upgrade work
6 days ago

McLaren confirms subcontractor team on £135m warehouse job

Work starts on TN2 Gateway site in Kent.
7 days ago

Contractor services