If you have the money, make most of tenders

Aug 13 2008 by Tony McDonough, Liverpool Daily Post

TENDER prices for property construction work are falling despite rising costs and developers should take full advantage, says a property consultancy.

King Sturge says developers and property owners that have the funds to proceed with building or refurbishment projects should act quickly.

The agency reveals that the drastic downturn in the housing industry has led to a surplus of sub-contracting firms such as painters, plumbers and carpenters, who are chasing less work and driving down tender costs. The reduction in work available has made many larger firms nervous about what lies ahead so they are slashing costs and these two factors have combined to drive down prices.

Senior King Sturge associate Tony Roberts said: “All the market indicators predicted that tender costs would rise, but we have a unique situation where they have dropped and cost savings are possible for those in a position to move quickly.

“Our research shows that the tenders we have been receiving from contractors for refurbishment works have been lower than expected over the last few months.

“Material and fuel costs are rising dramatically so this upward pressure will eventually reverse the situation and we will see tender prices rise again.”

The latest figures from the UK’s leading provider of cost and price information for construction and property occupancy, the Building Cost Information Service (BCIS), supports this view as it reported a fall of 2.4% in tender prices for the first quarter of 2008.

Other reports suggest that the construction industry has hit an 18-year low as the effects of the credit crunch spreads beyond house-builders and demand cools across all sectors.

Mr Roberts believes that prices could begin to climb upwards as soon as September or October.

“There is a very brief window of opportunity for those in a position to tender work now to do so and benefit from these lower prices,” he added.

tonymcdonough