Construction tender pricing not rising despite costs increasing for builders: Chart of the week

Increases in materials and labour costs are largely being absorbed by competitive tendering with builders pricing at low or even zero margins, according to the latest Review of Australian Construction Market Conditions report by buidling industry management consultants WT Partnership.

The graph below shows there has been little increase in tender prices submitted by builders despite costs rising. 

However, according to the report authors, with increases in the cost of building rising, "it is only a matter of time until the fierce tender price cutting seen over recent years relents or more contractors hit the wall".

"With the exception of South Australia and Tasmania, each of our offices expects that tender pricing will continue at competitive levels for the immediate future and that cost pressures will eventually come to bear next year and into 2015 when escalation in tender pricing will be trending at levels of around 3% to 4%, " says WT Partnership.