{"id":79621,"date":"2020-07-21T09:03:37","date_gmt":"2020-07-21T08:03:37","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=79621"},"modified":"2020-07-21T09:03:37","modified_gmt":"2020-07-21T08:03:37","slug":"uk-construction-industry-forecast","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/uk-construction-industry-forecast\/79621\/","title":{"rendered":"UK construction industry tender price forecast downgraded"},"content":{"rendered":"

Arcadis<\/a> has downgraded its tender price forecast for the year 2020 to 4% decrease in London and 3% drop regionally, as it warns the UK construction industry recovery will take longer than initially thought<\/h2>\n

Despite the UK moving into phase 2 of post-Covid recovery<\/a>, Arcadis says the risk of disruption remains, with delayed project starts and completions, and increased fixed costs threatening to sap the strength of the UK construction industry.<\/p>\n

As a result, Arcadis has downgraded its tender price forecast for the year 2020 to -4% in London and -3% in the regions, with the risk of further deflation into 2021.<\/p>\n

The analysis is thanks to Arcadis\u2019 latest Summer Market View; \u2018Great Expectations\u2026?\u2019, in which the company asks whether the recovery measures announced so far will be sufficient to support the industry long term.<\/p>\n

Now that most construction sites are operational, productivity has recovered better than expected, ranging from between 70-90% depending on the sector and the stage of the project. This has contributed to the lowering of prices, edging the balance of the UK construction industry closer towards deflation.<\/p>\n

A risk-averse approach<\/h3>\n

With further disruption associated with Brexit<\/a> and changes to labour markets ahead, Arcadis expects that contractors and their supply chain will continue to take a risk averse approach to business development \u2013 focused on quality work rather than work at any cost. However, this presents an opportunity for clients who are ready and able to work with their project teams to bring forward de-risked and deliverable projects.<\/p>\n

While the mid-term outlook is pessimistic, Arcadis maintains a bullish view longer term. Tender price inflation has been forecast at 5% for 2024\/25, reflecting not only the size of the potential pipeline, but also the long-term contraction of the UK labour force.<\/p>\n

Despite this, the path to recovery will not be straightforward, and new projects will be exposed to an increased level of risk, not just from potential new waves of infection but also new risks associated with health and safety, productivity, viability, and supply chain stability.<\/p>\n

This increased sensitivity to risk among both clients and contractors is likely to be seen in higher hurdle rates on investment returns, more demanding contract terms and greater project selectivity.<\/p>\n

Urgent, short-term actions<\/h3>\n

Simon Rawlinson, head of strategic research at Arcadis, said:\u00a0<\/strong>\u201cClients are reconsidering their business needs, with risks around lower productivity, future Covid-19 disruption to works, and supply chain resilience all having the potential to cause delays and increases in costs.<\/p>\n

\u201cWe need a different approach, not just to make sure that projects succeed, but also to ensure the long-term health of the sector.<\/p>\n

\u201cLooking at the wider industry, a successful rebound will depend on urgent, short-term actions \u2013 such as longer site operating hours, extended planning consents and prompt payments \u2013 combined with strategic longer-term thinking.\u201d<\/p>\n

Rawlinson added: \u201cSmall steps will enable gradual progress towards \u2018bigger\u2019 tasks such as rebooting apprenticeships, embedding digital technologies<\/a>, or exploring more collaborative business models and contractual terms.<\/p>\n

\u201cWe have a real opportunity here to strengthen the collaborative spirit of the industry as well as enhance procurement. This will have the benefit of increasing transparency as well as embedding some pragmatic thinking into contracts to increase overall project resiliency.\u201d<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

Arcadis has downgraded its tender price forecast for the year 2020 to 4% decrease in London and 3% drop regionally, as it warns UK construction industry recovery will take longer than initially thought.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[676,54592,908,780,701],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-79621","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-construction","8":"tag-coronavirus","9":"tag-economy","10":"tag-collaboration","11":"tag-supply-chain"},"acf":[],"yoast_head":"\nUK construction industry tender price forecast 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