BT : Tender prices for building works ease 15% last year

Business Times - 14 Jan 2010

Tender prices for building works ease 15% last year

By KALPANA RASHIWALA

(SINGAPORE) Building & Construction Authority's official tender price index for building works eased about 15 per cent last year.

Quantity surveyor Davis Langdon & Seah's overall tender price index declined by 20 per cent last year and it predicts a possible increase of 3-5 per cent this year, likely in the second half.

The firm's director Seah Choo Meng says: 'Construction material prices are generally stable (for example granite and sand); the exceptions are copper and aluminium prices, which have escalated. Oil prices remain a question mark. Prices of building materials may escalate moderately. However, no major upheaval in material price and construction costs is anticipated in 2010.'

This is because overall construction demand from the private sector is expected to increase only modestly this year, and that too from a very low level last year; hence competitive and realistic pricing in tenders is expected, he added.

Construction costs are now levelling off following last year's decline, and they will be stable for the first two quarters of this year. 'But when public and private sector construction jobs, which are now in the pipeline, go up for tender towards the second half, most of us anticipate a 3-5 per cent cost increase in tender prices,' he added.

'Following the Dubai fiasco, some contractors are also returning from the Middle East to Asia including Singapore, looking for work,' Mr Seah said.

Davis Langdon & Seah's forecast of a 3-5 per cent hike in its tender price index is in line with figures that Mr Seah cited from two other quantity surveying firms at the BCA-Redas Construction and Property Prospects 2010 Seminar yesterday.

Rider Levett Bucknall has forecast a tender price escalation of about 3 per cent for full year while KPK Quantity Surveyors envisages an average rise in tender prices of 2-5 per cent this year.

The Building & Construction Authority noted that last year's decline in tender prices in the aftermath of the global finanical crisis was largely contributed by the declines in prices of major construction materials, including concrete, reinforcement bars, structural steel as well as mechanical and electrical components. However, the decline in construction costs moderated towards the second half of 2009 as the prices for concrete and reinforcement bar stabilised.

Lim Yew Soon, project director at Evan Lim & Co, reckons that construction material prices may go up this year because of higher oil prices and that would neutralise any decline in labour costs arising from weaker demand last year.