BCIS issues five-year civil engineering forecast

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.”