Movement in tender prices in Scotland 

BCIS set up the Scottish Tender Price Assessment Panel to help measure the trend of contractors’ pricing levels in accepted tenders in Scotland.

The panel is comprised of cost consultants from firms involved in multiple construction tenders in Scotland.

As well as reporting on quarterly and annual movement in tender prices, the panel provides commentary on conditions affecting pricing levels on construction projects in Scotland.

The BCIS Scottish Contractors Panel separately reports on quarterly movement in construction input costs based on their experiences working with subcontractors and preparing tenders.

Tender price movement in Scotland

The consensus of the panel was that building tender prices in Scotland rose by 0.9% in 1Q2025 compared with 4Q2024, and by 3.4% in the year from 1Q2024.

This compares with increases of 0.6% and 3.3% reported in 4Q2024 and is based on the findings of the BCIS Scottish Tender Price Assessment Panel (STPAP).

Appetite to tender

Most panellists (80%) reported that the desired number of suitable tenderers were found after searching, while 20% said they were more eager to tender in 1Q2025.

Respondents commented that contractors typically have more availability and need to secure work, but are still selective on what they will price.

Panellist responses suggested a slightly more positive pipeline for the next 12 months in 1Q2025 than was reported in 4Q2024. 40% said their anticipated pipeline of projects going to tender has slightly increased, a further 40% said it is unchanged, and 20% said it had reduced slightly.

Labour challenges

Panellists reported ongoing labour availability issues, highlighting that an increase in energy projects in Scotland, particularly in the Highlands and Islands, is likely to impact on the labour available for traditional building projects. They suggested this will become more of a problem if the vacuum created isn’t backfilled by workers from the central belt. They reiterated there is a skills shortage across the whole industry.

Sharing of risk

Panellists reported that because inflation has calmed considerably in the last couple of years, sharing of risk is not as much of an issue as it was and contractors are generally happy to take on risk and price it into tenders.

Effects of the Autumn and Scottish budgets

Changes to employers’ National Insurance contributions are being reflected in tenders and are also triggering change in law compensation events in contracts for work past April.

Panellists reported that while the Scottish budget provided some clarity, for example healthcare projects notified as being back on track, but was otherwise a mixed picture. Public sector finances are still tight.

Differential price movement

All respondents reported differential movement between M&E (mechanical and electrical) and building work, with labour constraints again cited among the causes. Panellists agreed that it’s still a struggle to get tenders back for M&E packages and there doesn’t seem to be an appetite for smaller contractors to scale up. Because of this, there is still a restricted marketplace in Scotland, with limited capability to take on bigger projects.

The panellists who reported differential price movement between regions (60%) said projects in the Highlands and Islands attract a cost premium due to logistics issues and labour availability.

Panellists who said there is differential movement between projects of different sizes said larger projects will typically attract higher proportions of overheads and profit due to the tier 1 contractors required, while projects below £5 million were said to have slightly higher cost movement.

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Panel members:

• Gordon Ritchie, Gardiner & Theobald
• Iain McLean, Doig+Smith
• John McGuire, Thomas & Adamson
• Ken Wilkie, Arcadis
• Lynsay Turnbull, Thomas & Adamson
• Robert Rankin, AECOM
• Ross Lovatt, Thomson Gray
• Ross McKenzie, AtkinsRéalis
• Simon Brooke, Currie & Brown
• Suzanne Graham, Turner & Townsend