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BCIS forecasts 16% rise in civil engineering costs

by Mark Cantrell
Esri’s GIS software deployed on Rail Baltica megaproject

Civil engineering costs –and tender prices – are forecast to rise by 16% and 18% respectively by the end of 2028, according to the latest data from the Building Cost Information Service (BCIS).

The five year infrastructure forecast from BCIS also reveals new work infrastructure output rose by 4% 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 the fourth quarter of 2028.

Labour costs remain “elevated”, with the BCIS Civil Engineering Labour Cost Index increasing by 6.3% in the year to fourth quarter 2023.

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

Crosthwaite added: “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.”

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