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BCIS Tender Price Index comes with a Health Warning

BCIS Tender Price Index comes with a Health Warning

Gone are the days when inflation was added by taking the BCIS tender price index and applying it to a cost plan with the expectation that all should be ok.

For a while now the BCIS have been giving three scenarios of what might happen to construction tender levels, which as we all know are not only influenced by rises or falls in wage prices and building materials but also by undetermined future influence called “demand or confidence”.

Currently the BCIS are producing three forecast tables with an upside based upon very little impact on the economy post BREXIT, the second with a trade agreement and some impacts felt and thirdly with no agreement reached. All three scenarios have different impacts on demand. Over the next five years the compound impact of these three tables varies between 13.3% , 29.3% to 32.7% on the average rise in tender levels.

As non-political experts and non-prophets Synergy consider it essential that all Clients and their financial advisors fully consider the risks and make a collective judgement on the most appropriate level of inflation to be included in their forecasted project costs.

Posted on 10/1/2019

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