Construction tender costs stabilise, surveyors claim

BUILDING project tender prices have fallen by 33% from their 2007 peak and now the Society of Chartered Surveyors Ireland believe construction tender costs have stabilised.

Chairman of the Society of Chartered Surveyors of Ireland’s Quantity Surveying Professional Group, Andrew Nugent, said while tender prices appear to have stopped falling and may even start to increase slightly, there is still a severe shortage of work within all sectors of the construction industry and it is expected that pricing levels will remain very competitive for the foreseeable future.

“Falling tender prices have been used by successive government departments as a basis for cutting investment levels in public infrastructure projects.

“With tender prices now stabilising, it is no longer possible to attempt to secure the same amount of work for less investment, as this will inevitably reduce the quality of the project, threaten the viability of construction firms and their sub-contractors, and promote below-cost tendering,” he said.

Mr Nugent said while tender prices have fallen dramatically over the last four years — down 33% from peak in the first half of 2007 — the latest Index shows that prices have remained unchanged from the second half of last year.

A recent survey by the Society of Chartered Surveyors Ireland showed that over half of all tenders for construction projects are now coming in at around 17% below realistic construction costs.

“Although below-cost tenders may seem attractive in the short term, they have long-term consequences for the project, the client and the industry as a whole. We have seen this at first hand with the collapse of both companies and projects in the public and private sector,” Mr Nugent said.

The society wants the appointment of a chief construction adviser to work with all government bodies and agencies to oversee the planning and delivery of the public capital programme and streamline and reform the tendering and procurement process.

“We believe such a person would be able to address issues such as value for money for the taxpayer, below-cost tendering, and planning reform. There will be no winners if the current race to the bottom is allowed to continue,” Mr Nugent concluded.