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Published: 21/03/2024
BCIS produces five-year construction industry forecasts, covering projected costs, tender prices and output, and examining the latest construction market trends.
The quarterly BCIS infrastructure briefing is a civil engineering market report and presents our view of water and sewerage, electricity, roads, railways, harbours and flood defences, gas, air and communications, and infrastructure repair and maintenance output against a backdrop of civil engineering costs, including labour and materials, and the wider economic background.
The full briefing is available to subscribers of the BCIS CapX.
BCIS infrastructure forecast – 4Q2023 to 4Q2028
Civil engineering costs are forecast to rise by 16% by the end of 2028, while civil engineering tender prices are predicted to increase by 18% over the same period, according to the latest forecast data from BCIS.
New work infrastructure output rose by 4.0% in 2023 but growth is expected to slow to 0.9% in 2024 as road and railways spending fall. 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.
Summary of forecasts: Civil Engineering Tender Prices, Input Costs and New Work Infrastructure Output
Source: BCIS, ONS
Annual percentage change: Prices and Costs 4Q to 4Q, output whole year on whole year. e.g. 4Q2023 to 4Q2024 is whole year 2023 on 2024
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 a 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 National Infrastructure and Construction Pipeline, there hasn’t been much to allay the industry’s concerns about the current challenges.
‘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 in efforts to decarbonise the built environment, need serious consideration. Decreased demand, particularly in new work, has somewhat masked the skills shortages that have been previously reported in the sector.’
On the input costs side, annual civil engineering materials’ cost inflation has continued to cool from its peak of 30.6% in 2Q2022. BCIS forecasts its Civil Engineering Materials Cost Index to grow slowly in 2024, resulting in a 14% increase by 4Q20208.
Labour costs remain elevated, with the BCIS Civil Engineering Labour Cost Index increasing by 6.3% in the year to 4Q2023. BCIS forecasts annual growth in the index to be 7.1% in 1Q2024, but to then slow, resulting in 18% growth over the forecast period to the end of 2028.
The full details of the forecast are available in the BCIS CapX.
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Quarterly updates to forecasts are published for infrastructure, building, and maintenance, cleaning and energy, while an annual update is published for the economic significance of maintenance.
