Rider Levett Bucknall UK (RLB) has lowered its tender price index (TPI) forecasts for 2025 from a weighted average of 3.03% from 3.22% three months ago.
Despite Office for National Statistics (ONS) data showing overall construction output up by more than 1% year-on-year to June 2025, and by nearly 1.7% over the last six months, growth remains patchy, says RLB. Gains are largely driven by repair and maintenance work activity and a slight recovery of house-building, which is up 1.3%, but new orders show only limited expansion outside of infrastructure, which has surged in recent months.
The volumes of work across different sectors continue to be mixed in regional markets, depending on proportions of public and private sector work, as well as local economic market development.
The lack of new orders is forcing contractors into tighter, more competitive bidding, with downstream risks for project delivery, RLB says in its latest quarterly Construction Market Intelligence report.
Input costs are also under pressure, with Building Cost Information Service (BCIS) data reflecting similar downward adjustments. This mirrors the wider UK economy, which continues to show subdued growth.
Looking ahead, labour constraints remain a concern, according to RLB. The Construction Industry Training Board (CITB) reckons that the sector will need 48,000 additional workers annually for the next five years to meet future demand. Any significant rise in workload could therefore exacerbate existing shortages, creating bottlenecks and driving costs up.
Roger Hogg, chair of RLB鈥檚 global research committee, said: 鈥淥ur construction market intelligence points to a sector that remains largely stagnant, with growth driven by public sector projects while private investment stays cautious in light of ongoing macro-economic uncertainty. The pipeline of government work could act as a double-edged sword 鈥� stimulating demand but also triggering cost pressures that risk driving tender price inflation. At the same time, skills shortages remain a key pressure point and could intensify quickly if workloads rise. Looking ahead, we expect tender prices in 2026 to stay broadly in line with 2025, even in the face of potential government-driven work coming to the market.鈥�
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