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Soaring costs are undermining industry viability in construction

Paul McNeive


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We have been hearing for some time that rising construction costs are undermining the viability of development, and for a look at the “big picture” and some suggestions on how developers might alleviate cost pressures, I spoke with Stephen Ashe, Senior Director Europe, with global construction consultants Linesight.

The volatility in the market has been extraordinary. Tender prices peaked in the first half of 2007 and by 2011 had dropped by over 30pc. Several building contractors closed down and Mr Ashe told me that many contractors tendered for jobs at below cost prices, simply to maintain staff and cashflow. The subsequent recovery has been dramatic and Linesight are forecasting that rising commodity costs and pent-up demand will mean construction costs by the end of the year will have increased by approximately 65pc from their 2011 low.


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