A slowdown in new project orders is intensifying the squeeze on tender prices across the UK construction sector according to the latest intelligence from Rider Levett Bucknall (RLB UK).
The consultancy’s weighted average tender price index (TPI) forecasts a 3.03% uplift for 2025, a small downgrade from last quarter’s 3.22% forecast.
While ONS data shows overall construction output up just over 1% year-on-year to June and 1.7% over the past six months, growth is being carried by repair and maintenance work and a tentative housing recovery (+1.3%).
New orders remain subdued outside infrastructure, which has been the one bright spot in recent months.
COMPETITIVE BIDDING
That shortage of new work is forcing contractors into tighter, more competitive bidding, raising questions about project viability and delivery. Input costs are also being squeezed, with BCIS data showing similar downward adjustments.
Regionally, activity varies depending on the balance of public and private sector projects, but across the board the outlook is cautious.
Looking ahead, labour remains a critical pressure point. The CITB estimates the sector will need an additional 48,000 workers every year for the next five years. Any rebound in workloads could quickly worsen skills shortages and push costs up again.
STAGNANT SECTOR
Roger Hogg, Chair of RLB’s Global Research Committee, says: “Our 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 – 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.”
