Firm’s latest report expects tender price deflation to continue for the rest of the year
Turner & Townsend has told clients to bring projects to market faster to reassure contractors worried about pipelines drying up amid the ongoing covid-19 crisis.
The consultant said announcing projects earlier would improve confidence and market resilience in the construction sector as the industry heads into what the firm predicts will be a prolonged period of tender price deflation.
In its latest UK Market Intelligence Report, T&T warned tender prices will slump during the remainder of 2020, with prices for real estate projects expected to go into reverse by 1% this year due to flagging confidence among private sector investors.
The report cautioned clients to be wary of low or suicidal tendering in the current deflationary climate, warning that unsustainable pricing will hit contractor margins and possibly lead to a wave of insolvencies which would maim the capacity of the industry to build projects in the future.
Although it found that robust demand in the infrastructure sector had resulted in tender price inflation of 1% across 2020, and sectors such as health and social care, life sciences and data centres had seen some optimism, it said that these positives would not be enough to offset deflation across the construction in