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Q1 2024

Tender Price Indicator

With market activity slowing in some sectors and deflationary pressures mounting, contractor pricing is expected to be more competitive in 2024. Although procurement conditions may become more favourable, interest rates and the high cost of debt remain a key pressure on viability.

Despite forecasts that workload, output and new orders will contract overall in 2024, the picture is more nuanced. Pockets of the industry will remain busy and some sectors are expected to buck the broader trend. Retrofit work and commercial refurbishments will continue to grow, supporting workloads, while residential new starts remain stalled and the sector subdued.

In a continuation of last year’s emerging trend, all signs point to a further easing in the rate of tender price inflation in 2024. Key input cost pressures have eased following a rebalancing of supply and demand. Even labour, the key cost driver of 2023, is starting to normalise towards more typical inflationary growth. Although skills shortages remain in many specialist trades, contractor capacity has improved and vacancy levels have dipped, slowing earnings growth in the industry.

All forecasts in this report take account of all sectors and project sizes as a statistical weighted average, indicating an overall trend in pricing levels. It should be remembered that individual projects may experience tender pricing above or below the published average rate, reflecting the project specific components and conditions.