NEWS

Construction companies ‘holding prices’

Construction companies are not putting up prices despite a rise in the cost of materials and labour, it has been found.

The Tender Price Index put together by the Royal Institution of Chartered Surveyors' Building Cost Information Service (BCIS) shows that the price of new construction work in the first three months of 2008 fell by 2.4 per cent compared with the previous quarter, whilst costs rose by 1.1 per cent in the same period, reports SME Web.

This was attributed to companies fearing a loss of business due to the credit crunch if they pass on their increased costs to consumers.

BCIS information services manager Peter Rumble commented: "Contractors appear to be a little nervous about future workloads currently and with new work output expected to fall slightly this year, input cost rises are likely to be the key driver of tender price rises.

"Input cost rises are currently quite strong and are expected to remain so over the coming year."

Figures released in June by the Chartered Institute of Purchasing and Supply (CIPS) showed a continuing decline in the construction industry.

CIPS director of professional practice Roy Ayliffe said that the economic conditions were to blame for the downturn.