The figures are based on the findings of the newly-formed panel set up by the Building Cost Information Service (BCIS).
The purpose of the new Scottish Tender Price Assessment Panel (TPAP) is to provide an estimate of tender price movements in Scotland. The panel is made up of cost consultants from firms involved in multiple construction tenders across the country.
The panel reported that tender prices in Scotland increased by an average of 1% between 2Q 2023 and 3Q 2023 with a range of responses between 0.5% and 1.5%.
On an annual basis (3Q 2022 to 3Q 2023), panellists agreed a consensus increase of 5% with a range between 3% and 8.5%.
In 3Q 2023, underlying costs of labour and materials, as measured by the BCIS General Building Cost Index, rose by 2% compared with the previous quarter and by 2.7% compared with 3Q 2022.
The TPAP reported average overheads and profit, as a percentage of contract sums, of 7% in 3Q 2023, with the range of responses between 5% and 10%.
The panel also reported on factors that are impacting on tender prices in Scotland, including differential movement between regions, between building and mechanical and electrical (M&E) work, and on the sharing of risk between clients and contractors.
Karl Horton, chief data officer at BCIS, said: “After requests from subscribers to set up a Scottish panel, I’m delighted that we have the first set of results, which will help us to understand the economic factors that are currently affecting tender prices in Scotland.
“While there are issues that are UK-wide, and in some cases global, with the supply of materials, energy prices, and shifting legislation and regulations around safety and decarbonisation of the built environment, there are also factors that are particularly pertinent to projects going out to tender in Scotland.
“We are hugely grateful to the members of the panel, who are sharing their time and experiences with us, and hope that the knowledge and data coming out of the survey and panel discussions will be informative and useful for all of our subscribers who are working on projects in Scotland.”
The formation of the STPAP was welcomed by Scottish Futures Trust. Senior associate director Paul Dodd said: “Inflation continues to provide a significant challenge to industry and clients within Scotland’s construction sector.
“We welcome BCIS’s commitment to organise the Tender Price Assessment Panel for Scotland, that will support greater collaboration, insights and consensus on tender price inflation. The panel’s ability to develop greater insights and knowledge sharing on the factors affecting inflation will support the construction sector to manage the impact of inflation and deliver improved outcomes.”