The Building Cost Information Service (BCIS) forecasts a substantial increase in civil engineering costs over the next five years.
- Tender prices for civil jobs are expected to rise by 22% within the same timeframe.
- Labour and materials costs are projected to increase significantly, with labour inflation slowing but materials costs steady.
- Infrastructure output shows a complex pattern with an initial decline followed by a recovery, particularly driven by electricity distribution work.
- Industry experts call for decisive government action to address skills shortages and unlock delayed projects.
The Building Cost Information Service (BCIS) has released a forecast indicating a 14% rise in civil engineering costs over the next five years. This projection includes a notable 22% increase in tender prices for civil projects up to the first quarter of 2029. This comprehensive analysis highlights various factors contributing to these trends, central among them being the strong growth anticipated in electricity-related work.
According to the BCIS, labour costs are predicted to rise by 18%, with a concurrent 14% increase in materials costs anticipated over the same period. Although labour cost inflation is reportedly slowing, the prices of materials such as ready-mix concrete, cast and spun iron products, bricks, and gas oil fuel have seen significant spikes, particularly in early 2024.
Despite an expected dip in infrastructure output in 2024 due to the conclusion of funding rounds in regulated subsectors, there remains a robust pipeline of future projects. The sector’s growth is likely to be buoyed by efforts to upgrade the UK’s electricity distribution network alongside substantial investment programmes by water companies.
David Crosthwaite, BCIS’s chief economist, notes that while output is predicted to decline in 2024, strong future activity is expected. Crosthwaite mentions that key risks to the sector include ensuring delivery capacity amidst a looming skills shortage. The Infrastructure and Projects Authority estimates that up to 600,000 workers will be needed annually to meet planned investments, underpinning the significant challenge facing the upcoming government.
Marie-Claude Hemming from the Civil Engineering Contractors Association urges the newly elected government to act swiftly in addressing backlogs and fostering growth. Following the 2024 general election, there’s a renewed call for the government to facilitate the unlocking of delayed projects, with an emphasis on stimulating economic growth and creating high-skilled employment opportunities across the UK.
The projected rise in civil engineering costs underscores the urgent need for strategic action to ensure the sector can meet future demands.
