A recently published Mace market view report for Q2 2022 has shown tender price increases from 5.5% to 8% in 2022
The Mace market view suggests that the conflict in Ukraine has resulted in price rises for construction products, with rebar increasing by over 30% in March.
It notes that rising inflation has impacted the costs for large, lengthy programmes such as Hinkley Point C, as well as putting sub-contractors at risk of losing money on fixed price projects.
Planning permission for projects will be harder to obtain
Higher labour costs are also feeding into tender prices – whereas regular construction pay growth is 4.1%, total pay has risen 6.9% compared to the first quarter of last year. New developments will also find it harder to secure planning permission.
Uncertainty for tender costs in UK construction will be accelerated in upcoming months
Further uncertainty for tender costs in the UK construction sector could be accelerated by price surges in oil, gas and key construction materials alongside a potential stall of China’s economy due to its zero-covid policy.
Matt Fitzgerald, commercial cirector, Cost Consultancy: “We are seeing unprecedented near-term inflation, underpinned by price surges in oil, gas and key construction materials, this situation may turn more volatile if China’s zero Covid policy stalls their economy and if anti-inflationary measures are applied too hard by central banks, this potential is making predicting near to medium term economic metrics very uncertain.”