Tender price rises forecast

Tender prices are forecast to rise 6 per cent nationally over the coming year, slowing to between 5.5 and 6 per cent in 1998, according to the latest EC Harris Economics Survey.

London is predicted to exceed the national trend, with growth this year at 7.4 per cent, dropping back to 6.5 to 7 per cent in the following year.

The overall upswing in the building industry is touted as the reason for the increases, fuelled by rising confidence in the private commercial sector and demand for high quality office space among developers in London.

Particularly busy will be the south east of England, with the Channel Tunnel Rail Link, Heathrow Terminal 5 and Millennium Exhibition site. Lottery and Millennium funded schemes for the entertainment and leisure sectors will be add to the squeeze, along with the go-ahead on PFI schemes in the public non-housing sector.

Though the forecast is optimistic, pressure still remains on contractors to keep pricing competitive. The industry view is that an increase in workload will allow contractors to up their profit margins.