The latest SCSI Tender Price Index report indicates an easing of construction price inflation, attributed to fuel and energy prices abating, coupled with a slight easing in supply chain issues.
The latest Index shows that, while costs are continuing to rise, the rate of inflation eased significantly towards the end of last year to 4%.
SCSI president Kevin James said:
“While there are signs the rapid rate of construction inflation has peaked, it is also likely the increased costs of fuel and energy will continue to impact manufacturers for the foreseeable future. The SCSI Tender Price Index has risen by a record 26 per cent over the last two years and concern remains as to how long it will take for inflation to fall to more acceptable levels”.
The Tender Price Index is compiled by Chartered Quantity Surveying members of the SCSI. The Tender Price Index 2H 2022 is based on sentiment returns only.
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Cogent Managing Director and SCSI President Kevin James shares key recommendations for Government, on the back of the latest SCSI Tender Price Index results.
Commercial construction tender price inflation is running at 14%, following an average increase of 7.5% in the first 6 months of this year.
The SCSI recommends to Government to address inflation by focusing on soft costs such as planning reforms and utility connection charges. Government should reduce overall levels of risk and costs of delivery where they can, such as reducing planning delays and timelines.
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Cogent Managing Director Kevin James offers insights into SCSI findings of 13% construction price inflation in 2021, on RTE Radio 1 Business News.
The main reasons for current price inflation are high price volatility across a range of building materials — particularly insulation, cement, plasterboard metals and fuel – labour shortages and the extremely high demand for projects across all tiers as the industry continues to readjust in the wake of the Covid crisis.
The SCSI calls on government to introduce additional measures to ensure existing projects are afforded a level of price variation. This will enable contractors to respond to frequent material prices increases and ensure more balanced risk pricing.
The industry will have to step up its cost benefit analysis of materials, utilise modern methods of construction, identify innovative cost saving solutions and streamline pre-construction periods to minimise the impact of inflation.
Tags: Price Inflation, tender price index, SCSIThe Society of Chartered Surveyors Ireland Tender Price Index Report has forecasted a national increase of 3.35% for the first 6 months of 2019. The report also highlights a slowing of tender inflation for the first time since early 2017. This will bring construction prices back to peak 2007 levels.
SCSI QS Group Chair and Cogent Associates Managing Director Kevin James, explained that “allowances for Tender Price Inflation (TPI) among construction projects vary according to their sector, size, complexity and location, therefore advice should be sought from a Chartered Quantity Surveyor before deciding an appropriate TPI provision for your construction project.”
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