Tender prices to drop

'Tender prices will drop by a further 10% between now and the end of 2010, according to the latest forecast from RICS Building Cost Information Service.

Construction prices have been falling since last summer, even though materials prices and wages were still rising and putting the squeeze on contractors. In its statement covering the third quarter of 2008, BCIS reports that prices fell by 0.8% from the previous quarter, which was 1.2% down on the same period in 2007. Over the same 12-month period, materials costs had jumped 7.2% and labour costs 4.6%.

BCIS expects the squeeze to intensify this year, driving tender prices down by 7% and a further 3.5% in 2010. Construction output is seen as falling in parallel by similar percentages, with no output growth expected until 2011.

RIBA practice bulletin No. 482 - 12 February 2009