Over the past year, the UK economic outlook has deteriorated sharply. As such, the chances of the government meeting its housing targets look slim.The delivery of public housing depends largely on private developers providing affordable homes through section 106 agreements, and private housing starts are predicted to fall 27% in 2008. Furthermore, the government will be tighter with its funds, which will also impede progress.

Over the past two years the affordable housing sector has delivered housing to higher design and specification levels with only a limited increase in costs. In contrast, the nursing homes and extra-care homes models, published just prior to the slowdown, now show falls in prices of about 2%.

To remain competitive contractors have been forced to drive cost reductions through their supply chain, accommodate material price increases where these cannot be avoided and reduce preliminaries and overheads. Preliminaries percentages peaked in mid-2007 and have been falling since then with a typical drop of 1.5–2.5% last year.

While design and build remains the favoured procurement route, clients are increasingly re-examining the traditional route, which offers more competitive tendering, better cost control and certainty.