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Large scale infrastructure work suffering from steep rise in costs

12 August 2008

Large scale public sector projects such as Crossrail and those linked to the 2012 Olympic Games, including the East London Line and Thameslink, are in danger of dipping further into the public purse due to significant increases in costs, according to the Civil Engineering Market report from RICS’ Building Cost Information Service (BCIS).

Civil Engineering and Building Costs (Year on Year % change)

Raw materials and labour costs have risen by 12.2 percent over the past year and, with costs forecast to rise by a further 12 percent over the next two years, public sector project contingency plans will come under increasing pressure to stay out of the red.

With infrastructure output rising by eight percent and new orders growing at a rate of 26 percent in Q1 2008, this sector is expected to be one of the few growth areas in UK construction over the next few years, offering some firms an antidote to the current downturn in the market. However, the rises in the costs of cement, steel piling and fuel are having a dramatic impact on civil engineering construction costs.

Overall infrastructure output is predicted to rise by nine percent in 2008 and seven percent in 2009, while BCIS forecasts costs to continue to rise at a rate of 6.5 percent in 2008 and 6 percent in 2009.

Joe Martin, Executive Director of BCIS comments: “With large projects in rail, roads, electricity, water and sewerage all scheduled over the next two years, the civil engineering sector seems well placed to ride out the current economic downturn. However, the industry is facing the possibility of a serious threat caused by a combination of rising costs and the economic downturn, that could result in delays and, at worst, cancellation of some of these schemes.”

The BCIS Civil Engineering Market Report has been published in conjunction with the BCIS Civil Engineering Price Book 2008. The full report is available for download from www.bcis.co.uk

The BCIS Civil Engineering Price Book 2008 aims to help estimators and quantity surveyors save time and money by making the estimating process faster with better accuracy. The book presents a unique audit trail that enables the user to see the complete build up of every rate making it invaluable when preparing early cost estimates and developing cost plans.

The price book covers the 26 classes in CESMM3. Class A contains the general items which would be included in a typical build up of costs. Classes B-Z provide the reader with a complete audit trail for pricing and set out labour material and plant costs.

The BCIS Civil Engineering Price Book is priced £185 and can be ordered online
www.bcis.co.uk
or by calling T +44 (0)870 333 1600 (select option 2 for BCIS sales and quote item code 17379).ISBN: 978 1 90482 978 2


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