3Q21 estimate of Tender Price Inflation

The early estimate for the BCIS All-in Tender Price Index (TPI) for 3Q21 is based on 2.5% increase on previous quarter* up from 0.8% in 2Q21.

The resultant 3Q21 TPI figure shows an increase of 2.7% in the year from 3Q20*.

The estimate is the consensus of the BCIS TPI Panel** based on the analysed Delphi survey results, it does not necessarily represent the views of individual participants.

There was a wide range of responses to the survey, the panel agreed that the second quarter had seen a spike in cost escalation which had affected tenders in the third quarter. The consensus was an increase at the upper end of the range.

The panel reported a slight increase in Overheads and Profit to around 6%, suggesting that cost increases are being passed through in tenders.

The appetite for fixed price dropped significantly and contractors are adding significant risk premiums.

The crisis of transportation, lack of containers is expected to persist into 2022, and labour is expected to be a long-term cost driver.

Site productivity is up to 94% pre-COVID-19 level but during the quarter sites were affected by the Test & Trace system, absentee rates as high as 20% were reported on some sites for some trades. The worst effects of this now appear to have been mitigated, and productivity has generally been re-established at more normal levels.

*Note: the BCIS TPI Panel estimate has been applied to the previous quarter index and rounded to the nearest whole number for publication.

**The BCIS TPI Panel. BCIS has recruited a panel of practising cost consultants from firms involved in multiple tenders in each quarter to provide an early estimate of tender price movement in the latest quarter based on a panel (Delphi) survey approach. For further details see New BCIS methodology for Tender Price Index estimates. Insert link https://www.rics.org/uk/products/data-products/insights/new-bcis-methodology-for-tender-price-index-estimates/

*** Basis of BCIS Tender Price Index. TPI figures prior to 4th quarter 2018 are based on project indices, generally single stage, traditional procurement, average value < £5million, (minimum £100,000, no maximum). Excludes M+E and other specialist trades, e.g. facades. BCIS has assumed this reflects market projects let on single stage Design and Build and Specification and Drawings. Indices are normalised for location, size and procurement. Percentage changes are mid-quarter to mid-quarter. Where the sample is below 20 the index is also influenced by the BCIS forecast.

The current BCIS TPI Panel members are:

• Ian Aldous, Arcadis
• Simon Cash, Artelia
• Rachel Coleman, Alinea
• James Garner, Gleeds
• David Happell, Exigere
• Nigel Hawes, Exigere
• Richard Hill, Currie and Brown
• Roger Hogg, RLB
• Kristopher Hudson, Turner & Townsend
• Agnieszka Krzyzaniak, Arcadis
• Mark Lacey, Alinea
• Peter Maguire, WT Partnership
• Gavin Murgatroyd, Gardiner & Theobald
• Don Patterson, Equals Consulting
• Simon Rawlinson, Arcadis
• Adam Reeve, Calfordseaden
• Steve Waltho, Turner & Townsend
• Stuart Wigley, Baily Garner
• Max Wilkes, Faithful + Gould