The cost consultancy arm of Mace has said construction is increasingly becoming a sellers’ market due to rising demand, forecasting construction firms will be able to increase their margins over the course of 2015.



Mace has raised tender prices for the year by around 1%, both nationally to 4.5% and in London to 5.5% whereas rival cost consultancies EC Harris and Gleeds are suggesting tender prices will rise by 7.5% and 7.0% (respectively) in the London this year.



There has already been some backlash against the price hikes; however the pressures across the whole industry mean the ability of construction companies to charge more for jobs is looking increasingly inevitable and will be positive news to the smaller construction firms who have had their profit margins squeezed since the recession.



Chris Goldthorpe, managing director for Mace Cost Consultancy, said: “The increases are not generally being driven by rising costs, as the cost of materials and labour has remained relatively stable with a small number of exceptions.



“Because of the strength of demand, contractors and subcontractors are able to fill their order books without having to offer cut-throat prices and they are able to increase profit margins, particularly for those projects that they are not particularly keen on winning.



He added: “With overheads and profit margins now regularly exceeding 5% for main contractors, and higher for sub-contractors, the combined effect is to push up tender prices at above the level of general inflation.”



Mace believes that steady inflation will increase tender prices across the board in 2015 and 2016 peaking in 2017 before slowing, whilst arguing the may be some adverse effects of the slowdown of the European economy and uncertainty surrounding the implications of the Greek General Election.



Overall, this should be good news for smaller building firms as the increases in tender prices trickle down through the construction industry. We believe there will be some inflation based on the rising costs of building supplies over the coming year as the construction product manufacturers remain relatively slow to scale up their operations to pre-recession levels and also construction labour costs as the skills shortages in our industry continues to bite.