Tender prices will grow steadily in 2006 before accelerating in 2007 and 2008 ahead of the Olympics.

Tender prices remained stable in the last three months of 2005, but are likely to grow again in 2006, according to the latest Tender Price Index from the BCIS.

The figures followed a fall of 1.2% in new work output during 2005 and reports of falling enquiries in the last quarter of the year.

Peter Rumble, BCIS managing technical editor, "The stagnation in tender prices may be reflecting some caution about future workload from contractors. However, with new work output expected to recover in 2006, tender prices are likely to increase over the coming year."

The BCIS has predicted that new work output will grow a little behind its long term annual growth rate in 2006.

However, in 2007 and 2008, it expects Olympic construction and the commercial sector to drive faster growth in new work output.

The health, education and infrastructure sectors were also expected to contribute strongly to the recovery in the next three years.

Rumble added: "Tender prices are expected to rise considerably faster than inflation over each year of the forecast, principally due to pressure from above inflation increases in input costs, and above trend increases in new work output in 2007 and 2008."