Bid prices to rise 6% this year

Construction tender prices are set to rise by 6% during 1995, according to the latest forecast from cost consultant EC Harris.

The forecast is lower than previously predicted because of a downturn in construction workload. Last year prices rose 13%, according to E C Harris.

The firm also forecasts that contractors' profit is unlikely to rise over the next two years because rising material costs will determine price rises.

Construction workload has shown an alarming downward trend with new orders peaking in the fourth quarter of 1993 and since then progressively falling by 6.5%, 4.4%, 3.3% and 9.1% over the four quarters of 1994. In all, the total value of new orders in the last quarter of 1994 was 21% lower than the previous year.

Infrastructure has been badly affected with orders in the second half of last year running at 60% of the average of the previous two years. Roads were the worst hit with a drop of 53% from the end of 1993 to the end of 1994.

EC Harris's survey found that material prices rose 5% to 6% in 1994 with the rate of rise slowing marginally in the second half of the year with the faltering recovery in construction making prices difficult to stick.

The consultant expects similar increases this year with heavy materials such as rebar, structural steel, ready mixed concrete and glass all expected to show substantial rises.

Labour rates are rising just above inflation with skills shortages easing with the drop in workload. Increases of around 3% are expected over the next two years.