4Q21 estimate of Tender Price Inflation

The early estimate for the BCIS All-in Tender Price Index (TPI) shows a 1.5% increase between 3Q21 and 4Q21.

The resultant 4Q21 TPI figure shows an increase of 4.3% in the year from 4Q20*.

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 there has been a settling of prices in the last quarter 2021, compared to second and third quarters.

The panel reported a slight drop in Overheads and Profit to 5.2% from 5.9% in the previous quarter.

Input cost pressures were not fully represented in tenders suggesting that margins are being compressed down the supply chain. The panel was concerned that some contractors might be taking a view that the situation will settle down.

There is still hunger in the market in some places as contractors seek to fill their order books for next year, but tenders are showing a wide range.

The general price increase masks regional and sector variations.

Site productivity continues to improve, going up to 96.2% of the pre-COVID 19 levels in November 2021. There are concerns about another ‘ping-demic’ if the Omicron variant takes off.

Looking at the challenges for 2022, it was agreed that labour is set to be one of the key cost drivers. With the high cost escalations, some contractors are unable to deliver on the agreed commitments, this is likely to continue into the next year. Repayment of COVID loans and removal of support is expected to put further pressure. Should big infrastructure projects announced by the government go ahead, there will be a big impact on labour and material availability.

*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.

*** 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