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BCIS five-year forecast (civil engineering)

Published: 03/01/2023

Despite the dramatic changes in policy over the past quarter, the Government has confirmed its commitment to infrastructure as an investment for growth. However, there is unlikely to be any new money for infrastructure, and existing budgets will be eroded by inflation, resulting in delays for some of the projects towards the end of the forecast period.

Resource costs are expected to stabilise over the next year; while materials cost inflation is expected to recede, there will still be pressure on labour.

The general economic recession will ensure that contractors are keen to fill their forward order books.

Civil engineering demand is not expected to grow significantly over the next five years, but it will remain at historically high levels. Infrastructure new work construction output is forecast to grow by 4.5% in 2022 and 5.5% in 2023, and fall slightly thereafter.

Costs will be affected by supply-side issues in the next two years, which will resolve themselves later in the forecast period, but costs and prices will continue to rise.

Civil engineering materials prices rose by 2.6% in 3Q2022 compared with the previous quarter, and by 27.3% compared with a year earlier. The main risks to materials prices are expected to include volatile energy prices, tariffs on imports, and sterling exchange rates.

Civil engineering costs rose by 2.0% in 3Q2022 compared with the previous quarter, and by 17.0% compared with a year earlier. Costs are forecast to rise by 11% between 3Q2022 and 3Q2027.

Civil engineering tender prices in 3Q2022 rose by 1.3% compared with the previous quarter, and by 7.3% on an annual basis. Civil engineering tender prices will rise by 13.6% over the forecast period (3Q2022 to 3Q2027), with infrastructure output remaining at a historically high level.

Figure 1: Forecast of annual change in Civil Engineering Tender Prices, Input Costs and New Work Infrastructure Output

Source: BCIS Infrastructure briefing (Civil engineering market report) December 2022

(Annual percentage change: Prices and Costs forecast is 3Q to 3Q, output is forecast whole year on whole year*)

The full details of the forecast are available in the BCIS CapX

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The full forecast and commentary are published in the Briefing section of the Civil Engineering Trends and Forecasts online

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