Contractors turn down one in three London opportunities

labour shortages are currently the primary driver for tender price inflation according to the survey
labour shortages are currently the primary driver for tender price inflation according to the survey

Growing skills shortage and rising workloads have led the construction industry’s largest contractors to turn down one in three bidding opportunities across London, according to Aecom’s 2014 London Contractors Survey.

 

The survey predicts that electrical engineers will be the next profession to see strong pick up in demand while specialists in concrete and brickwork continue to be required.

 

It also says labour shortages are currently the primary driver for tender price inflation – Aecom forecasts that 2014 will end with 5-6% tender price inflation in the London market, and is predicting inflation of 5.1% in 2015 and 5.3% in 2016.

 

Aecom director Brian Smith said: “Clients are seeing sustained and increased tender prices – what we forecast a year ago has become a reality.

 

“However, it is important to remember that overall price levels are still lower than they were in 2008, and even at the rates of inflation we forecast they will not get back to their previous peak until 2017.”

 

He added: “Contractors are now becoming far more selective, assessing project attractiveness and risks.

 

“Procurement route, work type and the location of work are also increasingly being given as reasons to tender or not to tender, with many contractors now only willing to accept work on a negotiated basis.”

 

The survey polled main contractors with a combined UK turnover of almost £7Bn. The full list of contractors taking part in the survey is Ardmore, Bam, Brookfield Multiplex, Galliford Try, Kier, Laing O’Rourke, Mace, Midgard, Skanska, Walter Lilly, Wates Construction and Willmott Dixon.

 

16 specialist subcontractors also completed the survey.

 

Aecom found that London contractors have on average already secured 71% of their turnover for 2015, compared the 67% secured for 2014 this time last year. However contractors have only secured 26% of their work for 2016 and 9% for 2017.

 

Photo copyright [Duncan] and licenced for reuse under this Creative Commons Licence

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