Experts at Mace highlighted the trend in their latest Tender Cost Update which increased its forecast for London tender cost inflation from 3.5% to 4.5% for both 2014 and 2015.

Managing Director for Mace Cost Consultancy, Chris Goldthorpe, said: “While it is still possible to obtain competitive tender returns in the regions, the London market has seen contractors unable to meet the rising demand, resulting in a selective response to tender invitations and an unwillingness to take on risk.

“It is now a regular occurrence for contractors to turn down tender opportunities, particularly if they involve single stage tendering, incomplete design information or significant construction risks.

“We are also seeing overheads and profit allowances increasing to levels that have not been seen for the last five years as competition is reduced.”

Outside of London Mace’s forecast for average inflation in tender prices remained unchanged at 2% for 2014, rising to 2.5% in 2015 and 3% in 2016.