The pandemic has understandably caused a significant impact on our industry and cast significant uncertainty on the forecasting of construction and tender price inflation. Consensus across the industry is that if we do see inflation during the remainder of 2020, it will remain at very low rates, with some of the opinion that we will enter a period of deflation.
Regions will be impacted differently across the UK, with regional market pressures and the decline in some sectors worst hit by the pandemic. Contractors will be keen to secure their order books over this period of uncertainty, whilst at the same time being challenged with how to work responsibly and efficiently under the safe distancing guidelines.
Our recent intelligence across our five UK offices suggests that we could be entering a tendering ‘sweet spot’ during the remainder of 2020. We are already seeing some Contractors and their supply chains being very competitive in their pursuit to secure their order book during the period of uncertainty. However, with some client organisations nervous of impact of the pandemic on their balance sheet and wary of the heightened risk of Contractor insolvency, the need to scrutinise Contractor and supply chain stability has perhaps never been more important.
Where clients are well positioned to continue development there is an opportunity to capitalise on market conditions, but this should be assessed with a considered review of how this is to be achieved. Analysis of the most appropriate procurement route will be vital in achieving construction costs which present best value rather than just lowest price. It will be a case of achieving the right balance on each project between cost, quality, programme and risk.
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