Our estimates forecast a construction cost increase in 2021 in the range 2.4% to 4.6% driven by increased in materials cost, productivity and cost increase on account of Covid-19 mitigation measures, and, ongoing impact of implementation of construction sector agreed SEO. A moderation of tender price increases had taken place in H2 2020.
Although economic growth is forecast in 2021 the situation with tender pricing in 2021 is somewhat unclear given the impact of sentiment and lack of price discovery due to minimal tendering in H2 2020. Based on a scenario where in H1 2021 contractors are looking to fill an order book which may have gaps on account of postponed commercial projects, projects may be priced at or just above cost. This would imply an average c. 3% increase in tender prices in 2021 given a typical main contractor cost structure.
The characteristics of the Covid Downturn are different to to Global Financial Crisis with many contractors taking a wait and see approach in Q4 2020. With most major main contractors having right sized their companies in recent years they are unwilling to take on major pricing risk given the tight net margins that historically exist.
Keogh Consulting looks to help individuals and organisations deliver the right projects the right way. Here is some of our knowledge and a few case studies that we hope will help you on your project journey.
Project Cost Calculator & Database
Cost Rental Simple Model
Cost Rental Complex Model