The consultant has revised down its forecast since the start of the year after reporting a reduction in tendering activity since Q1.

Materials prices have recorded an increase; steel in particular has shown signs of rebounding in the first half of the year, with double-digit price increases reported.

Overall, materials prices have seen a 3 per cent increase over the last quarter, putting additional cost pressure on tender pricing. However, labour will remain the main driver of price pressure over the next few years.

The consultant reported that contractors are still being selective when bidding for projects, and forecast a downturn in tender prices beyond 2017 as a number of major infrastructure schemes come to an end and activity begins to slow. It also predicted that growth in construction activity would show signs of tempering beyond 2017.