TENDER PRICE FORECAST CONT’D
The fall in the value of sterling has led to widespread increases in material costs which
will inevitably be passed on in tender pricing, however, contractors, will need to balance
rising costs with the need to remain competitive in order to secure future workload
during a period of potential slowdown in demand growth.
It is our view that with the present level of uncertainty in the UK, both economic and
political, tender price inflation will be modest for 2017 and 2018 before climbing again
from 2019 onwards.
Forecasting in the current climate is particularly uncertain and the outlook for tender
pricing remains volatile to say the least, however, our projections are for tender prices
to rise between 2% and 2.5% in 2017, falling slightly to between 1.75 and 2.25% in
2018 before rising again to between 2.5% and 3% in 2019 and 3% to 3.5% in 2020. In
reality, to forecast possible tender price inflation beyond Brexit would be no more than
speculation in our view.
Kevin Heaton - Director
E:
T: 0117 929 2641
Sources:
Office for National Statistics (ONS): Construction Output in Great Britain: April 2017 and New Orders January to March
2017 (date 9 June 2017)
National Institute of Economic and Social Research (NIESR): Monthly Estimates of GDP 9 June 2017
Barbour ABI: Economic and Construction Market Review June 2017
Building Cost Information Services (BCIS) Quarterly Briefing: June 2017
HM Treasury Forecasts for the UK economy: a comparison of independent forecasts no. 361 (dated June 2017)
OECD Economic Outlook June 2017
IHS Markit/CIPS UK Construction PMI (date 2 June 2017)
Note:
Forecasts of tender price inflation are indicative only and actual inflation will be dependant on the particular
circumstances of each individual project including size, procurement route, programme, risk transfer and the prevailing
market conditions in each location.
For further information on forecasts of tender price inflation in your particular region please contact your local MDA
Consulting Ltd office.
