Civil engineering costs will rise by 14 per cent over the next five years, according to forecast data from the Building Cost Information Service (BCIS).
The data company said tender prices for civil jobs will also increase by 22 per cent over the same period – which stretches to the first quarter of 2029 – while output will increase by 16 per cent, driven by strong growth in electricity work.
Work on new infrastructure increased by 4 per cent last year but is expected to drop slightly by 1.4 per cent this year before recovering in 2025.
BCIS predicts labour costs to increase by 18 per cent over the next five years, while materials costs will increase by 14 per cent over the period.
The company said labour costs inflation is slowing, while steel prices are also falling. In the first quarter of 2024 the highest material price increases were for ready-mix concrete, cast and spun iron products, bricks and gas oil fuel.
David Crosthwaite, chief economist at BCIS, said: “Despite an anticipated decline in output in 2024 as some funding rounds in regulated sub-sectors enter their final stages, there is a strong pipeline of infrastructure work.
“Output growth is likely to be driven by work to enhance the UK’s electricity distribution network and water companies mobilising their biggest-ever capital investment programmes.
“The biggest threat to the sector is ensuring there is capacity to deliver. In publishing the National Infrastructure and Construction Pipeline earlier this year, the Infrastructure and Projects Authority estimated an annual average of 543,000 to 600,000 workers are required to deliver planned investment over the next two years.
“With widely reported skills shortages, it’s going to be a massive challenge for the next government to ensure the necessary workforce is available.”
Last week, following the election of a new Labour administration, civil engineering contractors called on the government to “unblock” projects and invest in infrastructure.
Marie-Claude Hemming, director of operations at the Civil Engineering Contractors Association, said: “Now that the dust has settled from the 2024 general election, it is imperative that the new UK government moves swiftly to unblock delayed projects and leave no stone unturned in pursuit of growth.
“Our membership includes companies of all sizes in all parts of England, Scotland and Wales – all of which are ready to work with government at all levels to drive growth in the economy, boost connectivity, and create well-paid, highly skilled jobs.
“A booming infrastructure sector is the backbone of any successful economy, and we are heartened that the Labour Party has recognised the UK’s civil engineering industry as a cornerstone of its vision for delivering growth for the benefit of businesses and communities across the UK.”
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