Civil engineering tender prices rise, infrastructure costs remain under pressure
Civil engineering tender prices increased by an estimated 1% between the second and third quarters of 2026, according to the latest meeting of the BCIS Civil Engineering TPI Panel.
The rise comes as the UK infrastructure market continues to face uncertainty, with input costs and capacity constraints adding pressure to project delivery.
The panel reported strong activity in the water and sewerage and electricity sectors, with investment in energy supported by decarbonisation and changing demand.
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This has helped offset lower levels of spending on roads and rail, although the panel warned that changes to Government priorities could affect infrastructure pipelines in other sectors.
Steel costs rise amid infrastructure market uncertainty
Geopolitical tensions in the Middle East and changes to domestic trade policy have contributed to increases in some construction input costs, including steel.
The panel also highlighted concerns around infrastructure viability and the availability of specialist labour and supply chain capacity.
Dr David Crosthwaite, chief economist at BCIS, said: “Cautious optimism in the infrastructure market is being tempered by current realities, including geopolitical uncertainty, materials price pressures and viability concerns.
“The panel highlighted continued constraints on infrastructure delivery in the UK, particularly compared with more favourable conditions in some European markets.
“There is concern that greater budget certainty and lower-risk opportunities elsewhere could draw suppliers and investors into other sectors, or away from the UK all together.
“This was linked to wider concerns around reduced labour mobility and specialist capacity constraints, which can be compounded when major infrastructure projects are located in remote areas or regions without established supply chains.”
Infrastructure contractors maintain tender appetite
Despite the market pressures, appetite to tender among infrastructure contractors was reported to be stable.
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According to the BCIS panel, 60% of respondents said they were able to secure their desired number of suitable tenderers during the third quarter. The remaining 40% described contractors as eager to tender.
The panel also reported greater transparency between clients and suppliers, with supply chains becoming more open about materials risks.
“There appears to be greater transparency between clients and suppliers in the infrastructure market and, while new work is constrained, the panel remained encouraged by the substantial infrastructure investment the government has committed to,” Dr Crosthwaite added.
“Supply chains are becoming more open about materials risk, supported by earlier planning and wider use of price adjustment mechanisms.
“The Autumn Budget will be an important marker for the sector. It provides an opportunity for the government to reaffirm funding arrangements and give greater certainty over the infrastructure pipeline in a difficult economic climate. That clarity will be important for resource planning and, ultimately, supporting delivery.”
