Costs of building projects continues to fall
THE costs of building major projects fell by 17pc in 2009 according to the latest figures from the Society of Chartered Surveyors (SCS).
Its construction tender price index fell by 7.5pc for the second half of 2009 and by the end of the year tender prices had fallen 29pc from their peak in the first half of 2007.
The chairman of the Quantity Surveyors Division of the SCS, Micheal O'Connor said the figures showed that the trend in below cost tendering was continuing but he warned that the rate of decline could not be sustained.
"The index records tender prices every six months and this is the fifth straight decline in a row. While there was a need for a correction, the continuous fall in tender prices and the extent of those falls year on year is forcing firms to take on jobs at below cost. This situation is not sustainable for any period and we are seeing that with the amount of firms going out of business and the catastrophic rise in unemployment throughout this sector," he added.
The SCS has been calling on the government to take advantage of the lower prices and invest in public infrastructural projects. The Society also wants the government to appoint a chief adviser to co-ordinate the industry.
O'Connor said that instead of showing leadership and vision the current administration was suffering from myopia and inertia.
"These figures show it is an excellent time to embark on a building project. Unfortunately there is very little private sector investment at the moment and the Government has chosen to cut back on the public capital programme. Unless swift, imaginative action is taken now the sector will continue to haemorrhage jobs and we will lose the skills and expertise we have built up over the last 15 years," O'Connor said.
Meanwhile SCS director general Ciara Murphy has welcomed the announcement by the Minister for Justice, Equality & Law Reform, Dermot Ahern, that he is to establish a working group to look at the issue of commercial rent reviews.
The Society in a submission to the Minister in April 2009 urged the Minister to establish such a working party and to invite all industry representatives who are involved in commercial property to come together to review the practice in commercial real estate leasing in Ireland.
"It is very evident that the property market is in serious difficulty at the present time and in particular, the retail sector. The perspectives of the varying stakeholders give rise to many legitimate concerns. The SCS welcomes the opportunity to participate on such a working group and believes that it is an important step in identifying solutions that will satisfy all parties," she added.