A tool designed for building professionals to help prepare top level cost plans, provide early cost advice to clients and benchmark costs for both commercial and residential buildings
Published: 27/02/2022
Tender prices in 4th quarter 2021 rose by 4.9% compared with a year earlier. Strong annual increases will continue over the first three quarters of 2022 in the order of 5% to 7% per annum, generally as a result of the following over 2021:
- contractors no longer being able to absorb the additional cost of following social distancing
- a number of contractors going into liquidation
- strong upward pressure from input costs
- rising demand
- materials and labour shortages
- logistics problems.
However, quarterly increases in tender prices are expected to slow over the second half of 2022, resulting in an annual increase of 4.4% in 4th quarter 2022, with materials related pressures subsiding, but still with pressure from site rates. With demand increasing over the remainder of the forecast period, tender prices are forecast to rise ahead of input costs, with prices rising by 22% over the whole of the forecast period (4Q2021 to 4Q2026).
Materials prices rose by 3.8% in 4th quarter 2021 on a quarterly basis and by 20.0% compared with a year earlier. The materials supply situation is expected to stabilise by 3rd quarter 2022 and prices will rise by 12% over the forecast period (4Q2021 to 4Q2026).
There is a shortage of labour currently. According to the Hays/BCIS Site Wage Cost Index, all-in site rates rose by 8% in 4th quarter 2021 compared with a year earlier but quarterly increases slowed from the previous quarter from 3.7% to 1.2% . This will be reflected in the BCIS Market Conditions Index, putting upward pressure on tender prices. By comparison, promulgated wages where they were awarded in 2021 were in the order of 2.0% to 2.5%.
The BCIS General Building Cost Index rose by 2.3% in 4th quarter 2021 compared with the previous quarter, and by 10.7% compared with a year earlier. Costs will rise by 14% over the forecast period (4Q2021 to 4Q2026).
Total new work output increased by 1% in 4th quarter 2021 compared with the previous quarter and by 5% compared with a year earlier. New construction output will rise by 12% over the building forecast period (2026 compared with 2021).
