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Tender prices are rising

3 Jul 14 Tender prices rose by 3% in the fourth quarter of 2013 compared to the previous quarter, and by 6.7% year-on-year, according to the UK construction Tender Price Index compiled by RICS’ Building Cost Information Service (BCIS).

BCIS anticipates that tender prices will continue to rise over the next six months.

The total volume of construction output remained unchanged in Q4 2013 compared with the previous quarter, but rose by 3% compared with Q4 2012.

The total volume of construction orders in Britain rose by 2% in Q4 2013 compared with the previous quarter and by 4% compared with a year earlier.

Total new work output remained unchanged in Q4 2013 compared with Q3 2013. However, looking at the new work sectors, output fell by 4% in the public non-housing sector, by 5% in the private industrial sector and by 4% in the private commercial sector, whilst there were rises in the remaining sectors.

Comparing the new work sectors in Q4 2013 with the same quarter in 2012, output rose by 21% year-onyear in the public housing sector and by 15% in the private housing sector, but by only 1% in the private commercial sector.  Over the same period, output fell by 2% in the infrastructure sector, 4% in the public non-housing sector, and by 20% in the industrial sector.

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Materials prices rose by 0.4% in Q4 2013 compared with Q3 2013 compared with both the previous quarter and the same quarter in 2012.

Average weekly earnings (AWE) in the construction industry rose by 1.2% in Q4 2013 compared with Q4 2012, slightly ahead of the 1.1% AWE rise in the whole economy. In 2013 as a whole, AWE in construction rose by 0.4%, compared with a 1.0% rise in the economy as a whole.

BCIS information services manager Peter Rumble said: “It is anticipated that tender prices will continue to rise over the next six months, a view that is echoed by contractors who responded to the recent BCIS survey of contractors.

“Tender prices have risen by 7% over the past year, and it is now felt that short term capacity issues may keep increases higher over the next year, as contractors struggle with the increase in workload. As the industry begins to cope with the increase in workload over the following year, tender price rises are expected to slow a little. Tender price rises over the remainder of the forecast period will be driven by increasing demand and upward pressure from input costs.”

Meanwhile, a study of the Yorkshire, Humberside and the North East market by Aecom has concluded that tender price inflation in the region could potentially reach 5% next year, reflecting a resurgence of the commercial property market in Leeds.

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