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Credit crunch hits tender prices

Tender prices fell back in the first three months of the year despite the impact of rising costs to contractors, according to latest report from RICS building cost information service.

The BCIS tender price index shows that the price of new work was down by 2.4 per cent in the first quarter compared to the previous three months.

A comparison of contractor costs over the same timescale shows an increase of 1.1 per cent.

BCIS information services manager Peter Rumble said: “Contractors appear to be a little nervous about future workloads currently, and with new work output expected to fall slightly this year, input cost rises are likely to be the key driver of tender price rises.

"Input cost rises are currently quite strong, and are expected to remain so over the coming year. The credit crunch and the slowdown in economic growth are expected to have a greater effect on construction output than first thought.

"However, it is anticipated that the public non housing and infrastructure sectors will both grow over the next three years, with particularly strong growth in 2008 and 2009.”