Civil
engineering costs are forecast to rise by 14% in the next five years, while
tender prices are expected to increase by 16% in the same period, according to
the latest five-year forecast from the Building Cost Information Service
(BCIS).
In
its projections published as at the end of 2Q 2023, BCIS outlines its
expectations for the infrastructure sector, set against the impact of inflation
and economic headwinds, which are expected to lead to muted growth over the
next few years.
New
work infrastructure output is expected to increase by 0.7% in 2023 and by 1.8%
next year, mainly driven by increased output in the water, electricity and gas,
air and communications subsectors. Overall, output is forecast to rise by 12%
over the next five years.
The
largest three sub-sectors - roads, repair and maintenance, and railways, have
been growing strongly since 2013 and are set to dominate the sector over the
forecast period.
Within
civil engineering, as across construction, materials cost inflation has cooled,
though prices remain high, but labour costs have become the main driver in
project costs.
Karl
Horton, chief data officer at BCIS, said: “Our forecast considers published
spending plans and what we know is in the project pipeline. However, the
government’s shifting priorities and a continued lack of clarity around the
infrastructure pipeline, combined with the effect of inflation on fixed
budgets, mean the risks to our forecast are all on the downside.
“Because of muted appetite for investment from
the private sector, we may see further delays in infrastructure projects.
Confidence has been really knocked by the cancellation of HS2 and the effects
of that, as well as how plans unfold for ‘Network North’, will play a
significant role in how the sector performs in coming months and years.”
