1Q2022 estimate of tender price inflation

The early estimate of tender price inflation for the BCIS All-in Tender Price Index (TPI) shows a 1.5% increase between 4Q2021 and 1Q2022.

The resultant 1Q2022 TPI figure shows an increase of 6.5% in the year from 1Q2021*.

The estimate is the consensus of the BCIS TPI Panel** based on the analysed Delphi survey results, it does not necessarily represent the views of individual participants.

There was a wide range of responses to the survey, but the panel agreed there had been growth in prices and the uncertainty caused by the situation in Ukraine influenced prices in the second half of the quarter.

The panel reported Overheads and Profit at 5.2% unchanged from the previous quarter.

Contractors’ appetite to tender varied with the procurement route, keener for two-stage design and build contracts as opposed to single stage.

Tenderers were requiring more time to tender, where tender time was tight tenderers struggled to secure prices from suppliers. Difficulties to secure price commitment from supply chain beyond 3–6-month period were reported.

The panel agreed that the measures in response to COVID-19 have become embedded in contractors’ working practices and industry had emerged from the pandemic with better project planning and productivity.

Labour availability is cited as a significant challenge for 2022 and it is likely to get worse before it gets better. Further materials’ price increases, for example, steelwork, aluminium, concrete, plaster/ plasterboard as well as longer lead-in times continue to be a concern and could lead to further tender price inflation in the near future.

The world reaction to the war in Ukraine has bought uncertainty in resource costs, availability, logistics and future demand, which will influence tender price inflation for the next quarter.

*Note: the BCIS TPI Panel estimate has been applied to the previous quarter index and rounded to the nearest whole number for publication.

**The BCIS TPI Panel. BCIS has recruited a panel of practicing cost consultants from firms involved in multiple tenders in each quarter to provide an early estimate of tender price movement in the latest quarter based on a panel (Delphi) survey approach. For further details see BCIS tender price index panel.

*** Basis of BCIS Tender Price Index. TPI figures prior to 4th quarter 2018 are based on project indices, generally single stage, traditional procurement, average value < £5million, (minimum £100,000, no maximum). Excludes M+E and other specialist trades, e.g. facades. BCIS has assumed this reflects market projects let on single stage Design and Build and Specification and Drawings. Indices are normalised for location, size and procurement. Percentage changes are mid-quarter to mid-quarter.

The current BCIS TPI Panel members are:

• Anjni Varsani, Gardiner & Theobald
• Don Patterson, Equals Consulting
• Dominic Pavlopoulos, Equals Consulting
• Gavin Margatroyd, Gardiner & Theobald
• Ian Aldous, Mace Group
• James Garner, Gleeds
• Kristoffer Hudson, Turner & Townsend
• Max Wilkes, F+G
• Michael Urie, Gardiner & Theobald
• Peter Maguire, WT Partnership
• Rachel Coleman, Alinea
• Richard Hill, Currie and Brown
• Simon Cash, Artelia
• Stuart Wigley, Baily Garner
• Adam Reeve, Calfordseaden
• Agnieszka Krzyzaniak, Arcadis
• David Happell, Exigere
• Mark Lacey, Alinea
• Nigel Hawes, Exigere
• Roger Hogg, Rider Levett Bucknall
• Simon Rawlinson, Arcadis
• Steve Waltho, Turner & Townsend