Scottish construction costs rise as tendering slows

By Danny BallPublished On: September 3rd, 2026Categories: News, Top Stories

Scottish Construction input costs have increased by 5% in the year to the third quarter of 2026, while quarterly cost growth slowed to 1.75%, according to the BCIS Scottish Contractors Panel.

The latest figures show annual cost growth was unchanged from the previous quarter, while quarterly growth fell from 4.5% in Q2 2026.

The BCIS Scottish Contractors Panel comprises representatives from major contractors operating across Scotland and monitors quarterly changes in construction costs, market conditions, procurement activity and project workloads.

The latest commentary was gathered through a Delphi survey and panel meeting.

Cost pressures remain outside central belt

While overall cost growth eased, contractors reported stronger pressures in northern Scotland, the Scottish islands and areas outside the central belt.

Travel costs were identified as one factor, with contractors reporting that supply chains in the central belt have sufficient workloads and therefore less incentive to travel to projects further afield.

Cost pressures were also reported in steel-related trades and materials packages, alongside packages with significant fuel costs.

The outlook for workloads also weakened during the quarter. Two-thirds of panellists reported a slight reduction in the volume of projects expected to reach tender over the next 12 months, compared with half in Q2.

The remaining third expected project pipelines to remain unchanged.

Subcontractor tendering remains challenging

Panellists identified uncertainty over project progression, repeated re-pricing exercises and limited estimating resources among the factors discouraging subcontractors from tendering.

The location and timing of projects were also cited as barriers.

Contractors suggested that more developed pricing information, longer tender periods and greater visibility of future project pipelines could help improve tendering conditions.

There was limited appetite for single-stage tendering, with frameworks and two-stage procurement reported as preferred approaches.

Public funding was also identified as a key challenge for project delivery.

The panel raised concerns that early client-side cost plans can be overly optimistic, creating affordability problems when projects reach the market and potentially extending pre-construction periods.

Uncertainty over client funding and limited visibility of future opportunities were also highlighted as factors affecting procurement.

Contractors call for greater cost certainty

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.”