BCIS tender price index – estimate of tender price inflation

Tender price index, estimate of tender price inflation, 2Q2025

Tender prices increased by an estimated average of 0.5% between 1Q2025 and 2Q2025, resulting in annual growth of 2.3% in the BCIS All-in Tender Price Index (TPI)¹.

This is down from a peak of 10.3% observed in 2Q2022 but is the same movement as was registered in the first quarter of 2025.

The estimate is the consensus of the BCIS TPI Panel², based on analysed Delphi survey results, and does not necessarily represent the views of individual participants.

Through their survey responses and in discussion, panellists pointed to various pertinent factors in the industry and wider financial climate impacting on tender pricing.

Quarterly movement

The TPI Panel commented on a much cooler market in the second quarter of 2025, with fewer tenders coming in than earlier in the year and in 2024. With the outcome of the Spending Review and the government’s Infrastructure and Industry Strategies yet to feed through to construction activity, alongside volatile global trading conditions, panellists described a ‘wait and see’ attitude.

Appetite to tender

Nearly two-thirds (64%) of panellists reported eager contractor willingness to tender, while 21% said they had found their desired number of suitable tenderers after searching. No respondents indicated very eager or completely unwilling contractors.

Appetite to tender is mainly driven by the need to secure longer-term income, but selectiveness is increasing; panellists suggested contractors are limiting workloads or focusing on lower-risk sectors with better margins.

Project pipeline

Just under half (46%) of panellists said their anticipated pipeline of projects going to tender within the next 12 months was unchanged in the second quarter, while 31% said it had increased. 23% said it had reduced slightly.

With no significant change in pipeline expectations from the previous quarter, panellists expressed some optimism and some did note a shift in sentiment: despite ongoing economic challenges, some clients appear to be accepting the ‘new normal’, acknowledging that prices aren’t coming down and deciding they simply need to get on with development.

Logistical challenges

Delays in regulation and planning processes, including the Building Safety Act, were flagged by several panellists as affecting projects.

Panellists reported Gateway 2 approval delays in particular are preventing projects from starting, which makes it difficult to manage resources. It will also have an impact on the ability to meet the government’s housing target.

Input Costs

Panellists reported keen pricing across demolitions, piling and concrete. There were also reports of increased costs in sprinklers, security, fire alarms, brickwork and for M&E fitters, and long lead-in times for some M&E equipment. While there haven’t yet been direct cost impacts from Trump’s tariffs and global trade tensions, there was one reported instance of uncertainty being priced in as a high-risk premium where the project involved importing resources from the US. Panellists commented that better communication from government would help alleviate some of the uncertainty.

With increases to employers’ National Insurance Contributions priced into tenders for a few months now, panellists said contractors and consultants are tending to reduce recruitment rather than increase costs.

Differential movement in prices

The majority of the panel (64%) again reported differential movement between general building work and mechanical and electrical (M&E) work (for the ninth consecutive quarter), with M&E costs reportedly outpacing general construction inflation over the last 12-18 months and large government schemes reporting annual M&E cost inflation of 15-20%. MEP remains particularly hot due to skilled labour shortages (especially green-collar workers), high demand, and long lead times, especially for key equipment. Labour cost increases are the main driver, though material costs are still rising, albeit more steadily.

Panellists who reported differential movement between regions (43%) said mega projects, for example stadia and data centres in Wales, and the growing life sciences sector in Cambridge and Oxford are putting a strain on other sectors there. There were also reports of London and the south east being flooded with building safety remediation work, in contrast to other regions like the south west.

The panellists who had experienced differential movement between project sizes (46%) said that attitude to risk affects the pricing in projects of different sizes.

They also reported cautiousness within the supply chain is leading to a reluctance to overstretch and take on risk that historically they may have done. Contractors are now more inclined to bid for simpler projects, aiming to mitigate cash flow exposure, and it is becoming more difficult to procure very large projects. There is also a reluctance to go to lump-sum or design and build models, with a shift towards target cost or cost reimbursable models where the client is in control of the design. For new clients and riskier projects, contractors are accounting for the unknowns involved.

The next update to the BCIS All-in Tender Price Index is due to be published on 12 September 2025.

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Panel members

The current BCIS TPI Panel members are:

• Alexander Bill, Gleeds
• Don Patterson, Equals Consulting
• Gavin Murgatroyd, Gardiner & Theobald
• Samuel Hughes, Mace Group
• James Garner, Gleeds
• David Happell, Exigere
• Pablo Cristi Worm, AECOM
• Mark Lacey, Alinea
• Max Wilkes, AtkinsRéalis
• Nigel Hawes, Exigere
• Nitesh Patel, Turner & Townsend
• Peter Maguire, WT Partnership
• Rachel Coleman, Alinea
• Richard Hill, Currie and Brown
• Robert Ray, Frankham Consultancy Group
• Roger Hogg, Rider Levett Bucknall
• Simon Cash, Artelia
• Simon Rawlinson, Arcadis
• Steve Waltho, Turner & Townsend
• Stuart Wigley, Baily Garner

Notes

¹ The BCIS TPI Panel estimate has been applied to the previous quarter index and rounded to the nearest whole number for publication.

² BCIS has recruited a panel of practising cost consultants from firms involved in multiple tenders to, in each quarter, provide an early estimate of tender price movement in the latest quarter based on a panel (Delphi) survey approach. For further details see: BCIS Tender Price Index Panel.

Basis of the All-in BCIS Tender Price Index

TPI figures prior to 4th quarter 2018 are based on project indices, generally single stage, traditional procurement, average value < £5million, (minimum £100,000, no maximum).

Excludes M+E and other specialist trades, e.g. facades. BCIS has assumed this reflects market projects let on single-stage Design and Build and Specification and Drawings.

Indices are normalised for location, size and procurement. Percentage changes are mid-quarter to mid-quarter.