New figures from the Society of Chartered Surveyors Ireland show that building costs increased slightly in the first half of 2013, continuing a trend of moderate price increases since bottoming out at the start of 2011. The Society’s Tender Price Index, which has been running since 1998 and is the only independent assessment of construction tender prices in Ireland, shows that construction tender prices increased by 0.9% since the end of last year and were up 2.7% for the full year from the first half of 2012.
Paul Dunne, Chair of the Society’s Quantity Surveying Professional Group, said: “The slow upward movement in prices in the first half of the year is due to increases in building materials and input costs internationally. The moderate rise also reflects an increasing awareness of the unsustainability of below cost tendering, which is a practice whereby contractors submit bids at unsustainable levels to secure the work and has unfortunately resulted in the failure of so many contractors, sub-contractors and suppliers working on public and private projects.”
The Index reports that since construction tender prices bottomed out at the end of 2010 and beginning of 2011, construction prices have risen by between 2.5 and 3% per year, and this trend looks set to continue.
Mr Dunne said: “Despite modest increases, current prices are still 40% below the peak level reached in 2007 and are still only at levels last seen in 1999.”
Commenting on the current state of the construction industry, Mr Dunne concluded that tenders are likely to remain competitive for the foreseeable future as a shortage of work continues in both the public and private sectors, but he welcomed the recent publication of the Forfás strategic report on the construction industry and called for the immediate implementation of its recommendations.
The Tender Price Index is the only independent assessment of construction tender prices in Ireland. It is compiled by the quantity surveying members of the Society based on actual tender returns for nonresidential projects during the period in question. It is based on predominantly new build projects with values in excess of €0.5m and covers all regions of Ireland. The Index is therefore a measure of average price increases across differing project types and locations. It should be regarded as a guide only when looking at any specific project, as the pricing of individual projects will vary depending on such factors as their complexity, location, timescale, etc.
For further information, visit www.scsi.ie.