Office of Government Commerce report predicts 0.2% addition to London tender prices due to 2012 work

A new report on construction capacity for the next decade claims there will be a minimal effect on industry inflation and tender prices due to Olympics work planned in the next six years.

Treasury body the Office of Government Commerce, which commisioned Deloitte to write the Construction Demand/Capacity study, predicted Olympics construction expenditure would:

  • add an average of 0.12% per annum to output price inflation
  • add 0.2% to tender price inflation in London between 2006 and 2012
  • lead to a premium of construction inflation at 0.6% during 2006/2007
The report also predicted that industry-wide new work inflation for 2005-2015 is expected to be about one percentage point above underlying inflation (3% compared with economic-wide inflation of 3%).

The study also underlined the lack of project management skills in the UK as well as a shortage of design disciplines such as M&E and civil engineering.

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