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Mace has doubts about future workloads

29 Jan 16 Latest forecasts from Mace predict construction tender cost inflation to hold at 4% for this year and next before falling to 3.5% in 2018.

Mace Cost Consultancy’s latest Tender Cost Update says that residential and commercial demand continues to fuel activity and major contractors are still busy. However, it sees a weakening economic picture that will affect investment in the longer term, with global market risks making future pipelines less secure.

Mace Cost Consultancy managing director Chris Goldthorpe said: “Despite economic data predicting that economic growth is becoming fragile, many contractors and supply chains are still busy with lengthy order books and there has been a ripple effect from London into the regions. We are, however, seeing some public sector projects starting to become more competitive, and there are early signs of the market softening with some contractors now more prepared to consider single stage tendering.”

Consumer price inflation ended the year at 0.2%, but Mace believes the effects of commodity price falls will drop away and inflation is expected to creep up during 2016. Although this signals a change in the inflationary climate, the economic risks remain significant and interest rate rises are unlikely in the first half of 2016, Mace says.

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