ABSTRACT
Cost and tender price indices measure different types of inflation which occur within the construction industry. Building costs are the costs actually incurred by a contractor in the course of his business, the major ones being labour and materials; tender prices are the prices for which a contractor offers to erect a building. Tender prices include building costs but also take into account the prevailing market situation. When there is plenty of construction work tender prices may increase at a greater rate than building costs while, when work is scarce, tender prices may actually fall even if building costs are rising.
