Movement in tender prices in Scotland 

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.

The BCIS Scottish Contractors Panel separately reports on quarterly movement in construction input costs based on their experiences working with subcontractors and preparing tenders.

Tender price movement in Scotland

Building tender prices in Scotland rose by 0.65% in 3Q2024 compared with 2Q2024, and by 3.4% in the year from 3Q2023.

This compares with increases of 0.6% and 3.5% reported in 2Q2024 and is based on the findings of the BCIS Scottish Tender Price Assessment Panel (STPAP).

Appetite to tender

The majority of panellists reported that they are able to find the desired number of suitable tenderers after searching, though said it is dependent on the procurement route. The panel commented that there is a lack of appetite for larger projects unless a two-stage tender route is adopted.

Logistics challenges

Panellists reported that projects coming to market are being affected by delays in planning, and that government policy and a lack of funding is impacting public sector projects.

Trades highlighted as proving challenging included cladding, with the liquidation of a major cladding contractor in July said to have made an already difficult market more so, and groundworks, with tenders tending to show big variances.

Other panel comments included significant prices increases for quarry material and some aggregates, while steel prices decrease.

Risk sharing

Panellists reported risk is not shared on many, if any, projects now, with contractors tending to take any risk on.

The panel suggested there is a softening in the market and that contractors are more comfortable taking on risk and giving a fixed price, though it comes with a price.

Pipeline of work

All panellists said their anticipated pipeline of projects going to tender within the next 12 months was either unchanged or reduced slightly compared with the previous 12 months.

Panellists commented that they were waiting to see how the UK government Autumn Budget will affect Scotland. There was an update to the Construction Pipeline Forecast Tool in July, which showed some projects previously classified as firm, now reclassified as speculative. A moratorium on health projects remains in place.

Differential price movement

All of the respondents said they are experiencing faster price increases in mechanical and electrical (M&E) work compared with building work, with reasons including a lack of specialist contractors. Because of continuing supply problems, they said it was unlikely the price of M&E work is going to come down.

While most respondents said they hadn’t experienced differential movement between regions in Scotland, among those that had, the Highlands and islands were said to be experiencing higher resource costs due to labour demand and accommodation requirements.

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Panel members:

• Gordon Ritchie, Gardiner & Theobald
• Iain McLean, Doig+Smith
• John McGuire, Thomas & Adamson
• Ken Wilkie, Arcadis
• Lynsay Turnbull, Thomas & Adamson
• Robert Rankin, AECOM
• Ross Lovatt, Thomson Gray
• Ross McKenzie, AtkinsRéalis
• Simon Brooke, Currie & Brown
• Suzanne Graham, Turner & Townsend