Latest Society of Chartered Surveyors Ireland (SCSI) figures suggest that construction tender prices are set to rise by 7% this year, bringing prices back up to 2008 levels.
After a sharp fall in 2008, tender prices have risen continuously since 2011. In 2017, according to SCSI, tender prices jumped by 6.2%.
Aine Myler, Director General, SCSI, described the increases as unsustainable saying that they may hamper the ability of the present and future Governments to deliver on the objectives outlined in the new National Planning Framework and National Development Plan.
“These are significant rate increases and are simply not sustainable in the medium to long-term,” she said. “The growth in employment and housing that underlies the National Development Plan means we’ve got to deal with pent-up demand in the residential sector while also addressing infrastructure and future commercial needs.
“These demands will stretch the viability and affordability of all projects, both private and public.
“The Government needs to help push the construction industry to be more efficient and look at areas where it could be adding to those costs. Success is measured in what you build, not what you spend.
“These increases are being driven by a strong pipeline of work combined with an acute skills shortage, leading directly to increased costs. Development and construction companies are finding it more and more difficult to recruit skilled and unskilled labour. While specialist sub-contractor prices have been increasingly steadily for some time now, we also see significant rate increases for traditional trades such as concrete installations, reinforcement and formwork.”
She pointed out that one other emerging challenge “is the shortage of sites for the licensed disposal of construction waste. This is a particularly acute problem in Dublin and its immediate surroundings. This is also driving up construction costs and is unlikely to be resolved anytime soon.”