BCIS issues five-year infrastructure forecast - costs set to climb 16% for civil engineering

Civil engineering costs will rise by 16% by the end of 2028, while civil engineering tender prices are expected to increase by 18% over the same period, according to the latest data from the Building Cost Information Service (BCIS).

The five year infrastructure forecast from BCIS also revealed new work infrastructure output rose by 4.0% in 2023 but growth is expected to slow to 0.9% in 2024 as road and railways spending falls.

Output in this sector is then forecast to rise by 11% over the next five years, driven by strong growth in the electricity sub-sector. 

Dr David Crosthwaite, chief economist at BCIS, said: “Infrastructure, unlike other construction sectors, has maintained historically high levels of new work output. Although we’re predicting some slowdown in growth over the forecast period, there is defined pipeline work, which we’re hoping will ensure output levels are maintained – assuming, of course, that the pipeline is realised. 

“We remain optimistic that the government, regardless of whether or not it changes, will continue to see infrastructure investment as a key lever to economic growth. Between the Spring Budget and recent publication of the updated National Infrastructure and Construction Pipeline, there hasn’t been much to allay the industry’s concerns about the current challenges.”

On the input costs side, annual civil engineering materials’ cost inflation has continued to cool from its peak of 30.6% in 2Q 2022.

BCIS forecasts its Civil Engineering Materials Cost Index to continue to grow slowly in 2024, resulting in a 14% increase by 4Q 2028. 

Labour costs remain elevated, with the BCIS Civil Engineering Labour Cost Index increasing by 6.3% in the year to 4Q2023.

BCIS forecasts annual growth in the index to be 7.1% in 1Q 2024, but to then slow, resulting in 18% growth over the forecast period to the end of 2028. 

Dr Crosthwaite said: “On top of committing to a pipeline of infrastructure projects, the new skills and roles that will be required to complete the projects, and especially efforts to decarbonise the built environment, need serious consideration by ministers.

“Decreased demand, particularly in new work, has somewhat masked the skills shortages that have been previously reported in the sector.”

Ends

Editors notes

The Building Cost Information Service (BCIS) is the leading independent provider of construction data to the built environment and insurance sectors. For some 60 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.