Contractors to ride out credit crunch until 2011

UK tenders prices are forecast to rise 4.8% in 2008 and 4.7% in 2009, according to the latest economic survey carried out by EC Harris.

The consultant's head of research, Paul Moore, told Building magazine that contractors' full order books indicate that they will ride out the storm in the financial market until at least 2011. 'A good number of major schemes have secured funding and, with many contractors having full order books for the next two to three years, tenders are set to plough ahead,' he said. In London, prices will rise as much as 6.5% to the end of 2011, buoyed by Olympic 2012 projects, said the report.

EC Harris warned of troubled times ahead, however following a dramatic fall in construction new orders to 13% in the third quarter of 2007, reported Contract Journal.

Meanwhile, Building reported that growth in the construction industry slowed to its lowest level in 16 months in January, based on data from the Chartered Institute of Purchasing & Supply (CIPS).

CIPS' construction activity index fell from 56 in December to 53.9 last month, a level indicative of a solid increase in activity, but showing the weakest rate of growth since September 2006.

'Concerns are growing over a slowdown in the housing and general economic market, which is beginning to affect new orders,' CIPS director of professional practice Roy Ayliffe told the magazine.

A third report, by Savills, has uncovered a sharp downturn in commercial development. Its index for overall activity in the UK commercial property sector fell by 14.5% in January, the third drop in a row.

The figures, again reported by Building, showed 23% of commercial developers had a fall in activity in the month, which most of them put down to deteriorating confidence in the economic climate.