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Tender prices increased by an estimated average of 0.5% between the last quarter of 2023 and the first quarter of 2024, resulting in annual growth of 2.9% in the BCIS All-in Tender Price Index.
This is down from a peak of 10.3% in spring 2022, according to the latest report from the Building Cost Information Service (BCIS).
The estimate is the consensus of the BCIS TPI Panel based on analysed Delphi survey results.
The range of responses reported on tender price movement between Q4 2023 and Q1 2024 went from zero to 0.8%.
Similarly to the last quarter, the panel reported overheads and profit, as a percentage of the contract sum, at an average of 5.3%.
BCIS chief economist David Crosthwaite said: “With contraction in construction demand, the knock-on effect is inevitably fewer opportunities and a greater keenness to tender. We’re forecasting annual growth in tender prices to continue to slow this year, but to rise by 17% over the next five years.”
BCIS panellists reported anecdotally on tenders coming in at and under cost plans, with contractors eager to fill their order books for up to a year’s time. This is also reflected in overheads and profit percentages, which panellists reported were starting to come in below levels observed previously. One panel member noted that while there is noticeably increased interest in new opportunities, caution persists and contractors are looking carefully before committing.
Nearly two-thirds of panel members reported differential movement between building work and mechanical and electrical work (M&E). M&E is seeing higher price levels for a variety of reasons, it appears, but particularly because of a shortage of specialist contractors and because demand has not dropped in that sector.
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