AKC News // Tender prices continue dramatic fall

Tender prices continue dramatic fall with building costs down 17.3% on this time last year. Current price levels now at 1999 levels. Surveyors urge government to take advantage of low prices, complete infrastructure projects and secure jobs.

New figures show that the dramatic falls in construction tender prices recorded in the second half of last year, have not only continued into 2009 but have accelerated in the first half of this year. During this period prices fell by 10.5%.

The new figures, which were published by the Society of Chartered Surveyors, in its latest Tender Price Index Survey, show that prices have now decreased by 17.3% over the last 12 months. The dramatic fall off has been caused by the decline in all sectors of the construction industry including residential, commercial, public sector and civil engineering.

The President of the Society of Chartered Surveyors, Ken Cribbin said the current low prices provided the government with an excellent opportunity to roll out key infrastructural projects while at the same time securing jobs and retaining skills within the construction sector.

“Tender prices have declined by 23% since reaching their peak in the first half of
2007. The fall comes despite significant increases in the cost of labour and materials inputs over the last ten years. The only explanation for this is that contractors and sub-contractors are bidding well below cost and under pricing risk, particularly the extra risks being passed to them in the new public works contracts. They are doing this in order to secure work in an ever diminishing market. This is not sustainable for any period of time and in the absence of any pick up in activity, this will unfortunately lead to firms going out of business’ Cribbin said.

“Given that the estimated job losses in construction are likely to be just short of 200,000 by the year end, it is essential that the Government prioritize projects that generate more jobs and get such projects to construction as quickly as possible. Investment in public infrastructure also generates a return and improves the competitiveness of the economy while at the same time laying the foundations for the next economic upturn” Cribbin concluded.

Source: SCS

Date : 21-09-2009