We might be heading into a recession with less demand for construction, but cost consultancy Rider Levitt Bucknall doesn’t expect this to translate simply into lower costs across the board.
RLB issued its regular update on construction costs 6 weeks ago, and issued an update yesterday.
In its summary, RLB said it expected costs to slip in the near term in residential & commercial: “This may be a decrease in the region of 4-6% in the next 12 months.”
For horizontal infrastructure & complex large vertical projects, RLB anticipates an increase of 2-4% because of the lack of large project capacity from tier 1 contractors, the potential Covid-19 productivity & delivery risks in the near term, the increasingly fragmented subcontract layers beneath them, and the less price-focused forms of Government procurement.
Given the Government-driven vertical & horizontal social infrastructure sectors may only make up 25-30% of the construction industry, and the amount of assistance to “hammer ready” vertical projects unclear, this may mean an overall average fall in pricing over the next 12 months. However, the complexity & delivery model of every project, together with the state of the local regional market, needs to be well understood before applying any escalation factor.”
Attribution: Company release.