Tender Price Indicator
Prospects for the UK economy have improved in recent months, but the possibility of an economic slowdown in 2023 still looms.
In construction, forward pipelines remain resilient, but the record-high levels of output and demand seen over the past two years are unlikely to be sustained with forecasters expecting weaker construction activity in 2023.
However, the construction market is still busy largely due to the spill over effects of a strong 2022, with some contractors continuing to struggle with tendering and capacity to bid on new orders. Sustained demand has also allowed contractors to continue to be selective but tendering conditions are showing some signs of moderating. High interest rates and elevated construction costs have curbed demand in recent months, prompting softer tendering competition in some instances.
Reflecting the general economic trend, the industry has moved from roaring growth to stabilisation. Project starts, contract awards and planning approvals have all largely been on a downward trend since Q3 2022. Contractors are currently being supported by a strong base level of tendering opportunities and a historic pipeline of committed work that will be built out over the next 6-12 months, but if activity continues to soften then contractors will have to consider their pricing strategies.
All forecasts in this report take account of all sectors and project sizes as a statistical 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.