Tender price forecast
“Construction costs continue to exceed tender price levels at an alarming rate.”
Turner & Townsend survey respondent
The tendering market was stagnant for the final quarter of 2023, although this is slowly picking back up. However, there are signs of main contractors coming under financial pressure. The continuing increase in construction costs, including labour and materials, is causing concern among funders and clients.
Material costs grew by 1.0 percent, with steel and timber experiencing fluctuations, while concrete products continued to increase. Labour costs are also on the rise, up 6.0 percent, slightly ahead of inflation.
Tender price inflation as of Spring 2024
2023
2024
2025
Source: Turner & Townsend survey
This increase is fuelled by an industry-wide skills shortage Throughout the survey responses, the shortage of skilled labour is a recurring theme, with concerns expressed about the ability to acquire skilled management and site supervision, overseas talent housing and the lack of skilled operatives to complete tasks in line with programme timelines. The market resources pressures have eased slightly, however, with the slowdown in the commercial office sector and office fit-outs.
Source: Turner & Townsend survey
The forecast for tender price inflation has been adjusted, acknowledging the volatile material costs and tightening labour market. Looking ahead for 2024, labour costs are expected to increase by 5.0 percent and materials costs are estimated to grow by 5.0 percent.
“Material cost and labour cost continue to rise, which means main contractor margin is under threat.”
Turner & Townsend survey respondent
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