NEW research has revealed that building tender prices in Scotland rose by 1% in the first quarter of 2024 compared with Q4 2023 and 4% in the year from Q1 2023.
The findings were revealed by the BCIS Scottish Tender Price Assessment Panel (STPAP), comprised of cost consultants from firms involved in multiple construction tenders in Scotland.
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 impact, though work remains available.
As construction cost increases have calmed, panellists agreed 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.
Half of respondents said they hadn’t experienced differential movement between regions, but among those that had, the Highlands and Islands continue to be highlighted as seeing higher tender pricing levels.
