A tool designed for building professionals to help prepare top level cost plans, provide early cost advice to clients and benchmark costs for both commercial and residential buildings
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LoginPublished: 04/03/2024
BCIS set up the Scottish Tender Price Assessment Panel to help measure the trend of contractors’ pricing levels in accepted tenders in Scotland.
The panel is comprised of cost consultants from firms involved in multiple construction tenders in Scotland.
As well as reporting on quarterly and annual movement in tender prices, the panel provides commentary on conditions affecting pricing levels on construction projects in Scotland.
Building tender prices in Scotland rose by 1.0% in 1Q2024 compared with 4Q2023, and 4% in the year from 1Q2023. This is based on the findings of the recently formed BCIS Scottish Tender Price Assessment Panel (STPAP).
When asked how easy it is to get contractors to tender, 25% of respondents said contractors are very eager to tender while 12.5% said they cannot get anyone to tender. The panel reported a two-tiered market around appetite to tender, with smaller contractors keen to tender while larger Tier 1 contractors are quite busy and more risk averse. Single stage tendering was also reported to be less appealing to contractors.
Considering future work, 37.5% of respondents said their pipeline of projects going to tender within the next 12 months had reduced slightly, 37.5% said it was unchanged, and 25% said it had increased slightly.
Panellists said budget freezes in the public sector, including a recent decision by the Scottish government to freeze all new NHS construction projects for two years, are having an effect on the industry, though they said work remains available. An NHS Scotland spending review is expected at the end of March, which panellists believe should help clarify maintenance and renewal budgets.
Beyond domestic logistics challenges reported by respondents, which include availability of labour and skills shortages, the potential inflationary effects of events in the Red Sea are also being monitored. While panellists said they have not yet seen direct impacts of the attacks on the supply of construction materials, they confirmed uncertainty associated with the increased timeframes for shipping.
As construction cost increases have calmed, panellists agreed that there has been a clear shift towards fewer mechanisms used to share the risk of inflation.
The majority of respondents said they are experiencing faster price increases in mechanical and electrical (M&E) work compared with building work, with reference to a lack of capacity, particularly of skilled labour, and escalating materials prices.
While half of respondents said they hadn’t experienced differential movement between regions in Scotland, among those that had, the Highlands and Islands continue to be highlighted as seeing higher tender pricing levels.
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Alan Wilson, Doig+Smith
Gordon Ritchie, Gardiner & Theobald
John McGuire, Thomas & Adamson
Ken Wilkie, Arcadis
Robert Rankin, AECOM
Ross Lovatt, Thomson Gray
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A tool designed for building professionals to help prepare top level cost plans, provide early cost advice to clients and benchmark costs for both commercial and residential buildings