Construction tender prices across the Midlands are expected to rise faster than the national average, as contractors become more selective about the schemes on which they want to work.
Single stage tenders and lump sum bids are also an unpopular trend across the region and nationally, as contractors are less willing to take on the risks associated with large scale projects procured in this way.
As a result building tender prices are forecast to rise by five per cent in the Midlands over the year to June 2006, with average prices nationally increasing by 4.5 per cent compared to six per cent in London.
The findings are revealed in the latest economics survey by international consultancy EC Harris, and highlight the continued lack of skills in the industry as contractors have limited management and time resources available to tender and run large schemes.
The actual cost of tendering is also putting contractors off from going for some of the largest schemes.
Orders associated with the 2012 Olympics will also start to impinge on workload and tender prices from 2007.
As a result, over the second year of the forecast, tender prices nationally are expected to rise by 4.5 per cent in the Midlands versus 3.5 per cent nationally and 5.3 per cent in London, in view of its close proximity to the capital.
Doug Roberts, head of infrastructure at EC Harris in Birmingham, said: "There has been a lot of speculation about the Olympics, and its effect in hiking up tender prices.
"However, although there will undoubtedly be an increase in activity, with some knock on effect within the leisure, hotels and associated sectors, the bulk of the Olympic related construction activity will not kick in until 2007."
He added: "This will impact on the whole country including the Midlands, rather than solely affecting London and the South East, as demonstrated by the 'ripple effect' that T5 at Heathrow continues to have on the industry.
"As work builds up for the Olympics, leading contractors are naturally going to be pitching for the high profile Olympic contracts, which could result in a lack of interest - and higher prices - for lower profile schemes."
He added: "The picture we are getting across the region is that most contractors' order books are already filling up and recent contractor interviews do not indicate any shortfall in enquiries. Contractors seem to be bidding, or not bidding, for work dependent on how it fits their portfolio."