The latest tender price forecast from Mace suggests as the recovery really kicks in, order books are filling up, meaning the UK’s major contractors are now being forced to turn down work.

The shortage of contractors, especially in London is driving up the tender price according to the report by Mace has upwardly revised their projection that price inflation will approach 4.5% in the next year.

Commenting on the upward revisions in London, Mace said: “The upward revision is driven by a capacity shortage among contractors which is leading to significantly reduced competition and rising margins.”

Chris Goldthorpe, managing director of Mace’s cost consultancy division, said: “It is now a regular occurrence for contractors to turn down tender opportunities, particularly if they involve single stage tendering, incomplete design information or significant construction risks.

“We are also seeing overheads and profit allowances increasing to levels that have not been seen for the last five years as competition is reduced.”

Mace went on to say that this was mainly being seen in London and there is still capacity in the rest of the country with competition keeping down prices, however it’s likely the rest of the UK’s contractors will follow similar pricing increases.