CONSTRUCTION tender prices are set to rise by up to 5% this year, threatening costs for key programmes and challenging project viability, according to new data from Turner & Townsend.
In its Winter 2025 UK Market Intelligence report (UKMI), the business forecasts a rate of tender price inflation (TPI) of 3.5% per year across real estate and 5% for infrastructure through 2026 and 2027.
Turner & Townsend said UK construction output remains ‘subdued’. However, the sector is seeing a fresh wave of demand as government plans for growth through the modern industrial strategy spur on renewed confidence in logistics, manufacturing and office development. Orders of new work made to construction firms were up by 29.3% in the year from Q3 2024, the fastest increase since the easing of pandemic lockdowns.
James Darrie, strategic lead for Scotland at Turner & Townsend, said, “In Scotland, the pressures highlighted in our latest UK Market Intelligence are being felt acutely across both public and private programmes. While demand remains strong, particularly across energy, infrastructure and public assets, constrained capacity, skills shortages and continued inflationary pressure are already testing viability.
“At the same time, there is a growing need for clients to be more realistic about risk allocation; contractors are no longer willing or able to absorb all risk in an increasingly volatile market. With a significant pipeline of major projects coming forward, the focus must be on early engagement with supply chains, realistic cost planning, equitable risk-sharing and robust delivery strategies to ensure Scotland can convert ambition into projects that are deliverable and economically sound.”
