Tender Prices Are Steady For First Time In Years

Latest figures from the Society of Chartered Surveyors Ireland show that construction tender prices have stabilised.

While tender prices have fallen dramatically over the last four years – down 33% from its peak in 2007 – the latest Index shows that prices have remained unchanged from the second half of last year.

It is the first time that prices have remained steady over the last four years. Prices are now back to levels last seen in 1998 when the Index was first published.

Andrew Nugent, Chairman of the Quantity Surveying Professional Group of the Society of Chartered Surveyors of Ireland, said: "While tender prices appear to have stopped falling and may even start to increase slightly, there is still a severe shortage of work within all sectors of the construction industry and it is expected that pricing levels will remain very competitive for the foreseeable future."


Mr Nugent added: "Falling tender prices have been used by successive government departments as a basis for cutting investment levels in public infrastructure projects.

"With tender prices now stabilising, it is no longer possible to attempt to secure the same amount of work for less investment, as this will inevitably reduce the quality of the project, threaten the viability of construction firms and their sub-contractors, and promote below-cost tendering."

Another recent survey by the Society revealed that over half of all tenders for construction projects are now coming in at 17% below realistic construction costs.

The Society has recommendations for better procurement, including selecting contractors who tender realistic prices for work, rather than the lowest cost tender.

The quality of the materials used and the professional standards applied throughout the project must also be considered, and assurances must be given that the contractor has the viability to ensure that the project will be completed on time and within budget and to the required standards.

Subsequently, the Society has called for the appointment of a chief construction advisor to work with all government bodies and agencies to oversee the planning and delivery of the public capital programme and streamline and reform the tendering and procurement process.

Mr Nugent concluded: "We believe such a person would be able to address issues such as value for money for the taxpayer, below cost tendering, and planning reform. There will be no winners if the current race to the bottom is allowed to continue."

(LB/GK)