12 Jan 2017
Maintenance costs as measured by the BCIS All-in Maintenance Cost Index rose by 2.1% in the year to 3rd quarter 2016.
The annual rate of growth in costs in the sector is expected to increase steadily over the next five years, to around 3.3% by 3rd quarter 2021. While wage awards in the sector are expected to be in the 2.5% to 3% range, materials costs are forecast to rise somewhat faster at an average of 4% per annum over the forecast period.
Maintenance costs are likely to be affected by exit negotiations from the European Union. BCIS has looked at the likely impact on maintenance costs of three scenarios:
- An 'upside' scenario based on the assumption that we will remain in the European free trade area with freedom of movement of labour.
- A 'downside' scenario based on the assumption that we do not have favourable access to the European Union market and there are restrictions on the movement of labour.
- A 'central' scenario based on some restrictions to trade but a largely unchanged access to labour.
The terms 'central', 'upside' and 'downside' reflect the impact of the scenarios on overall construction demand.
Because of the effect on wages of a strong economy in the upside scenario and labour shortages in the downside scenario both result in costs rising faster than the central scenario.
In the upside scenario general demand pressures push up wages in the first three years of the forecast period, while in the downside scenario a shortage of labour leads to rising wage costs in 2019 and 2020.
Quarterly forecast of maintenance, cleaning and energy
The BCIS maintenance cost forecast is part of the BCIS Quarterly forecast of maintenance, cleaning and energy costs, which includes:
- discussion of the economic background
- forecast of demand for maintenance
- forecast of materials prices
- forecast of labour wage awards in the maintenance sector
- impact of resource cost forecasts on maintenance costs in the local authority, health service and private sectors
- forecast of cleaning costs; and
- forecast of energy prices.
The Maintenance Cost Index and forecast are published as part of the BCIS Building Running Costs Online service
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