Movement in contractors’ construction costs in Scotland

The BCIS Scottish Contractors Panel comprises representatives from major contractors across Scotland and monitors quarterly cost movements and market conditions. The panel also provides insight into factors affecting construction project costs and procurement activity.

Commentary in 3Q2026 was collected through a Delphi survey and a panel meeting.

Scottish contractors report softer cost pressures as subcontractor tendering barriers remain

Construction input costs in Scotland increased by an average of 5% in the year to 3Q2026 and by 1.75% compared with the previous quarter, according to the BCIS Scottish Contractors Panel.

Annual growth was unchanged in 3Q2026, while quarterly growth slowed more markedly from 4.5%. The findings reflect pricing agreed between main contractors, suppliers and subcontractors across the Scottish construction supply chain.

Despite the easing in overall cost growth, panellists reported greater cost pressures in some parts of northern Scotland and the Scottish islands, as well as areas outside the central belt. Travel costs were cited as one factor, with panellists reporting that supply chains in the central belt had sufficient pipelines of work and therefore less need to travel further afield.

Expectations for future workloads remained subdued. Two-thirds of the panel reported a slight reduction in the volume of projects expected to go to tender over the next 12 months, up from half in 2Q2026. The remaining third expected pipelines to stay the same.

Panel commentary suggested that uncertainty over project progression, multiple re-pricing exercises and limited subcontractor estimating resources were among the main factors discouraging subcontractors from tendering in the third quarter. The location and timing of work were also cited as barriers.

More developed pricing documents, longer tender periods and greater visibility of the project pipeline were among the measures suggested by panellists to support tendering.

Cost pressures were reported in trades and materials packages linked to steel, as well as those with significant fuel costs.

On procurement, panellists reported limited appetite for single-stage tendering, with frameworks and two-stage tendering preferred. Public funding was identified as a key challenge.

The panel also raised concerns that initial, client-side cost planning can be too optimistic, contributing to affordability challenges when projects reach the market. Panellists suggested this can result in pre-construction periods being extended.

Poor visibility of future opportunities was also highlighted, with uncertainty over client funding cited as one contributing factor.

Dr David Crosthwaite, chief economist at BCIS, said: ‘The latest panel insights point to a challenging market for contractors overall. While quarterly input cost growth eased from the previous three-month period, pressures remain more pronounced in remote parts of Scotland and outside the central belt. At the same time, expectations for project pipelines have weakened.

‘There is also continued tension around client budgeting. The panel emphasised how repeated re-pricing can place pressure on subcontractors.

‘From the panel’s perspective, more realistic early cost planning and greater certainty over the pipeline of upcoming work could help contractors and the wider supply chain plan and tender more effectively. Public funding reportedly remains a key source of uncertainty, with greater clarity likely to support decision making across the market.’

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.

Panel members:

• Alan Wilson, SELECT
• Brian McQuade, Robertson Construction
• Garry Shand, Hutcheon Services
• Iain Tosh, Morrison Construction
• Martin Poole, Ogilvie Construction Ltd
• Paul Dodd, Scottish Futures Trust
• Steven Brady, Robertson Construction
• Steven Hope, Balfour Beatty
• Steven Ramage, Morgan Sindall
• Stuart Parker, Morgan Sindall