Tender prices for building work stabilised in 2011

TENDER PRICES stabilised last year and increased slightly in the second half of 2011, according to new research from the Society of Chartered Surveyors in Ireland (SCSI).

The SCSI Tender Price Index, which has been analysing construction tender prices since 1998, found that tender prices rose by 2 per cent in the second half of 2011 – the first increase since 2007.

Construction tender prices have fallen by approximately one-third since their peak in the first half of 2007. Today, they are at the same level as prices in 1998.

Andrew Nugent, chairman of the quantity surveying professional group of the SCSI, said the stabilisation reflected both the “severe shortage” of new construction projects, and the reduction in the available pool of contractors, as an increasing number of companies fail, and contractors focus on overseas markets.

The levelling off also reflects “a growing realisation that pricing work at below cost is unsustainable”, he said.

Tenders are likely to remain very competitive for the foreseeable future, the SCSI added, due to the severe shortage of work within all construction sectors.

The SCSI called on the Government to appoint a chief construction adviser, similar to the UK, which would bring “a centralised approach and a cost savings strategy” to the public sector procurement process.

The association also welcomed the introduction of a new House Price Register for residential homes from the Property Services Regulatory Authority which will be operational later this year.

The register will “improve transparency and consumer confidence in the property market”, it said.