Mace announces significant tender price increase in 2022
Mace, the international consultancy and construction company, has today published its Market View report for Q2 2022. Mace has revised tender prices upwards from 5.5% to 8% in 2022, on the backdrop of geopolitical tensions in Ukraine, China’s zero Covid policy, and rising oil and gas prices.
The latest Market View shows that continued conflict in Ukraine has resulted in unprecedented price rises for vital construction products such as steel and bricks, with rebar increasing by over 30% in March.
The report quotes rising inflation as having an impact on costs for large, lengthy programmes such as Hinkley Point C, as well as new developments which will find it harder to gain planning approval.
Short-term, Mace notes that inflation is putting sub-contractors, who have fewer resources and flexibility, at a higher risk of losing money on fixed price projects.
The Market View highlights higher labour costs as partly feeding through into current tender prices. Whereas regular construction pay growth is 4.1%, total pay has risen 6.9% compared to the first quarter of last year.
Overall, price surges in oil, gas and key construction materials alongside a potential stall of China’s economy due to its zero-covid policy could bring further uncertainty for tender costs in the UK construction sector.
Matt Fitzgerald, Commercial Director, Cost Consultancy:
“We are seeing unprecedented near-term inflation, underpinned by price surges in oil, gas and key construction materials, this situation may turn more volatile if China’s zero Covid policy stalls their economy and if anti-inflationary measures are applied too hard by central banks, this potential is making predicting near to medium term economic metrics very uncertain.”