Budget an opportunity to provide clarity for construction industry
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The Building Cost Information Service (BCIS) has urged the government to use October's Autumn Budget to avoid adding cost pressures facing construction businesses.
Construction firms have seen higher materials and fuel costs since the outbreak of the US-Iran war, and changes to fiscal policy could out further pressure on profit margins. If these costs are passed through to tender prices, they could have implications for project viability too.
BCIS also asked for greater clarity over infrastructure and housing investment to protect continuity if funding and prevent stop-start investment cycles. It added that the government should deliver more detailed delivery schedules to enable project stakeholders to plan resources and investment more effectively.
The firm also appealed to the government to continue providing an increasingly granular infrastructure pipeline, whilst investing in resources at NISTA to support improvements in the dashboard, including more detailed procurement dates and workforce projections.
BCIS chief economist Dr David Crosthwaite said: “The most valuable measure the Chancellor could deliver for construction would be a clear commitment to maintaining long-term investment in infrastructure and housing, alongside greater clarity and support around project delivery.
“While the government has outlined ambitious plans, businesses need confidence that schemes will move from policy announcements to construction sites.
“Major programmes present significant opportunities across the supply chain, but firms require a clearer understanding of delivery timescales, procurement routes and project funding mechanisms.
“Greater visibility will help contractors plan resources, while enabling clients to develop more realistic budgets and procurement strategies with confidence.”
Higher employer National Insurance contributions and statutory wage thresholds can add to labour costs, influencing decisions around recruitment and workforce expansion.
BCIS commended the new Construction Jobs Plan and said continued investment in skills development and analysis is necessary for ensuring training and workforce planning are aligned with future industry need.
This is particularly important in specialist areas such as mechanical, electrical and plumbing services where capacity is often more restricted.
Demand from sectors such as data centres is already adding to competition for specialist contractors. Where capacity is stretched, tender prices and projects costs may rise which could restrict viability.
Other asks included providing specific funding commitments and delivery timelines for grid upgrade projects associated with Great British Grid.
BCIS also called for greater support to improve building condition, climate resilience and the reuse of empty or underused properties, as part of the government’s retrofit ambitions.
Dr Crosthwaite added: “Fuel and energy-intensive products continue to drive cost pressures across construction. Although labour cost inflation has moderated, employment-related costs remain a significant proportion of project costs and could increase if demand recovers or becomes more intensely concentrated in certain regions or sectors.
“Against a backdrop of weak demand and ongoing insolvency concerns, the priority should be improving productivity and supporting sustainable growth, rather than adding further cost pressures to businesses.”
For more information about BCIS, please visit: www.bcis.co.uk
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About BCIS:
The Building Cost Information Service (BCIS) is the leading independent provider of construction data to the built environment and insurance sectors.
For 65 years, BCIS has been collecting, collating, analysing, modelling and interpreting cost information to support built environment professionals, helping them provide cost advice, to have confidence in commercial decision-making and to mitigate risk.
BCIS was recognised at the Engineering Matters Awards 2024 with The Net Zero Champion Gold Award for its leading role in the development of the Built Environment Carbon Database.
