Cost of construction work rises sharply

The price of construction work rose sharply towards the end of last year according to the latest figures from the Building Cost Information service (BCIS).

BCIS said tenders in the last quarter of 2007 revealed above inflation increases for new construction work.

BICS added that despite the wider economic problems caused by the global credit crunch growth was likely to remain above trend this year.

But it said the impact of the credit crunch would slow the rate of expansion as a number of investors had delayed or cancelled schemes that were due to start on site this year.

The report said new output would continue to grow above trend in 2008, rising more steeply in 2009 on the back of continuing investment in public sector infrastructure projects.

BCIS added that new output was likely to show in 2010 as public sector growth begins to slow.

BCIS manager Peter Rumble said: "Despite contractors being a little nervous about the level of workload in Quarter 1 this year, tender prices are likely to rise on the back of strong new work output growth in 2007 as a whole, and the expected above trend growth through 2008."

He added: "Tender price rises are expected to continue to significantly outstrip general inflation over each year of the forecast period, as a result of above trend increases in new work output and pressure from input cost rises.