RLB Managing Director Matt Long provides DMA with an insight into rising construction costs and how DMA can help mitigate the risk on your project.
“Pressure on contractor tender pricing in Q1 and Q2 2022 continues across South East Queensland. Factors that influenced pricing in 2021 remained prevalent in the first quarter of 2022. With strong levels of activity across most sectors, material price increases for cement, steel, PVC based products and metal based products are expected to rise again through 2022. Supply chain instability, shipping costs and the battle to secure appropriate levels of skilled labour are all set to remain constant obstacles to the industry over the next 6 to 12 months. Additionally, the flood recovery efforts, while not a significant increase in total market activity, will further test an already stretched market for the next 6 to 12 months”
“Significant surges in tender pricing have been experienced in Queensland where escalation uplifts for 2021 and 2022 are well above levels forecast in June 2021. In Brisbane, the RLB Tender Price Index (TPI) rose by 9.6% in 2021 and the Gold Coast by 14.5%. Forecasts for 2022 at this stage are expected to be circa 10% for South East Queensland”
“Market expectations indicate that material cost increases will continue through 2022. This has prompted some trades to specify supply rates as a condition of tender pricing, resulting in a price adjustment should supply rates increase. This has given rise to discussions of more equitable sharing of risk, although such measures may not be palatable to some clients or financiers”
DMA Partners is working closely with our clients and partners to navigate through the current rise in construction pricing to develop strategies that will continue to deliver successful projects.
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