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Construction tender prices to rise by 7% this year, surveyors warn

“Success is measured in what you build, not what you spend.”

Image: Eamonn Farrell via Rolling News

CONSTRUCTION TENDER PRICES will rise by 7% this year, bringing prices back up to 2008 levels, according to new figures from the Society of Chartered Surveyors (SCSI).

Prices increased by 3.5% in the second half of 2017 for non-residential construction, according to the Surveyors. This means the annual rate of price inflation for 2017 was 6.2%.

While the above percentages represent a national average, the rate of increase isn’t uniform across the country.

For the second half of 2017, Dublin showed the highest percentage increase at 3.9%. This was followed by Connacht and Ulster at 3.4%. The increase in the rest of Leinster and Munster was just over 3%.

The SCSI has been compiling an index of construction tender prices for the past 20 years.

Director General of the SCSI Aine Myler described the increases as unsustainable and said they may hamper the ability of the present and future governments to deliver on the objectives outlined in the National Planning Framework (NPF) and National Development Plan (NDP).

She said these increases are being driven by a strong pipeline of work combined with an acute skills shortage, and that development and construction companies are finding it more and more difficult to recruit skilled and unskilled workers.

“These are significant rate increases and are simply not sustainable in the medium to long-term,” Myler said.

“The growth in employment and housing that underlines the plan means we’ve got to deal with pent-up demand in the residential sector while also addressing infrastructure and future commercial needs,” she said.

Myler warned that these demands will stretch the viability and affordability of these projects, both private and public.

The government needs to help push the construction industry to be more efficient and look at areas where it could be adding to those costs. Success is measured in what you build, not what you spend.

The impact Brexit was also of significant concern to the SCSI.

Myler said that the government needs to work with the construction industry to develop Brexit impact scenarios.

“We’ve seen the upside projections about increased demand for space, but restrictions on the movement of labour, currency risk and new tariffs on materials are all key issues that could quickly derail both the NPF, NDP and the wider recovery,” she said.

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