Price hikes predicted

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Tender prices will shoot up significantly ahead of inflation over the next five years, writes Marguerite Lazzel.

A new BCIS report has predicted prices will soar by 33%, against a background of 12% general inflation by 2011. This will be caused by an increase in labour and materials costs and a rise in new work.

Increased PFI contracts in the education and healthcare sectors would be the biggest stimulus for growth in workload, with office building and infrastructure work also adding demand. BCIS said that from 2007 Olympics-related construction would beef up the growth in the infrastructure and entertainment sectors.

Joe Martin, executive director of BCIS, said: 鈥淲e鈥檝e had an unprecedented period of growth for 10 years. It鈥檚 going to come to an end at some point, but not before the Olympics. As we get closer to the Games people are going to say 鈥榳e鈥檝e got to have this done before the Olympics鈥�. The whole leisure sector will grow.鈥�

In the next 12 months, BCIS expects costs to be further pushed up by the increase in steel and oil prices, combined with a surge in demand from China and India for raw materials.

Oil prices underpin everything and material prices will continue to rise, but not as fast as labour costs
Joe Martin, BCIS

But Martin said labour costs would be the biggest factor. 鈥淥il prices underpin everything and material prices will continue to rise, but not as fast as labour costs,鈥� he said. Martin warned that the UK faced the danger that migrant workers might return home as their own economies began to rally. He compared workers coming to the UK from the EU accession countries with the historic role of Irish labour in this country. He added that the popularity of the UK as a place to come to work was not guaranteed. 鈥淭ender prices steadied as an effect of the accession countries coming in, but if Germany takes off, (migrant workers) might prefer to be there, where they can drive home,鈥� he added.

THE BCIS says the growth is part of a trend for tender prices to outstrip general inflation, which began with millennium projects.

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