Mace’s forecasts for 2014 remain unchanged, with predictions of a 3.5% rise for projects in London and a 2% rise for projects outside London.
In London, it expects steady growth in demand to continue into 2015 and 2016, generating tender price increases of 4% a year.
Outside London, increases in demand remain localised and inconsistent, it said, although this is likely to become firmer in the medium term. Mace predicts a 2.5% rise in tender prices outside of London in 2015 and 3% in 2016 as the recovery spreads.
Mace surveyed its supply chain partners to get their take on the UK recovering, finding that 73% experienced increasing workloads over the past 12 months, rising to 90% who expect workloads to rise over the next 12 months. The survey responses also show that supply chain members anticipate average price rises of 4.4% in 2014.
Mace Cost Consultancy managing director Chris Goldthorpe said: “The optimism of the last six months of 2013 has continued in 2014 with more activity in the construction market which is particularly strong in London. This optimism however still needs to be supported by more private and public financial investment rather than just rhetoric. The housing market continues to lead the recovery outside London but in many other sectors, recovery is very fragile so we are still some way off before we can be confident of a sustained recovery.
“Our experience of recent tender returns indicates that, although contractors are being more selective regarding the projects that they bid for and the form of contract under which the project is being procured, it is still possible to obtain competitive tenders.”