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EC Harris: Building tender prices to drop 10pc

Building tender prices could fall by 10 per cent over the next year due to a sudden drop in commercial and housing activity and stricter rules on lending, according to EC Harris.

With work being slashed, contractors are doing whatever is necessary to secure workload, including cutting margins and putting pressure on sub-contractors.

Labour and materials cost increases have been virtually shaken out of the system, and the expectation is that tender prices for building work will fall by up to 10 per cent over the next year.

Over the following year a further slowdown in workload is expected to produce further falls of between 3 per cent and 5 per cent.

EC Harris Paul Moore head of cost research said: “A falling market brings additional risks which call for greater caution at the procurement stage.

“As prices are slashed, the risk of contractor / supplier insolvency is substantially increased, requiring far greater attention and caution in deciding which companies to choose.

“The lowest and apparently most attractive offer could be a sign of desperation.”