The full forecast and commentary are published in the Briefing section of BCIS CapX
Published: 20/06/2023
The industry, like the country, is in a state of flux with the future looking tenuous. If we avoid a recession, if inflation starts to come down, if interest rates don’t rise more than another percent, if there isn’t another global shock – we should be alright!
Spending plans should see demand rising steadily from its current historically high level. There are threats to the plans – cost inflation eroding the budgets and the government’s irresolution over its commitment to the pipeline. But the political pressures to do something about energy, water and sewerage should see projects realised.
Construction costs inflation has been easing since the second half of 2022 and overall, the availability of materials is now at pre-Covid levels. Availability and the increasing costs of labour, on the other hand, remain hot topics for the construction industry, with labour replacing materials as the main driver of growth in costs. Civil engineering costs as measured by the BCIS General Civil Engineering Cost Index dropped by 1.0% in 1Q2023 compared with the previous quarter, representing a 10.3% increase when compared with a year earlier. Costs are forecast to rise by 13.8% between 1Q2023 and 1Q2028.
Civil engineering tender prices in 1Q2023 rose by 1.1% compared with the previous quarter, and by 13.5% on an annual basis. BCIS forecasts civil engineering tender prices to rise by 16.4% over the forecast period (1Q2023 to 1Q2028).
New work infrastructure output is expected to increase by 0.7% in 2023 and by 1.8% next year, mainly driven by an increased output in Water, Electricity, and Gas, communications and air subsectors. BCIS forecasts output to rise by 12% over the next five years.
Figure 1: Summary of BCIS forecasts: Civil Engineering Tender Prices, Input Costs and New Work Infrastructure Output – annual growth
Source: BCIS Infrastructure briefing (Civil engineering market report) June 2023 (Annual percentage change: Prices and Costs 1Q to 1Q, output whole year on whole year)
The full details of the forecast are available in the BCIS CapX.
To keep up to date with the latest industry news and insights from BCIS register for our newsletter here.
