Recent analysis from Turner & Townsend's Winter 2025 UK Market Intelligence report suggests that the cost of construction work being bid into the UK market is set to rise over the next two years, placing fresh pressure on project budgets and delivery timelines. The data shows that tender prices the amounts contractors bid to undertake work are expected to grow by around 3.5% annually for real estate contracts, with infrastructure tenders rising by as much as 5% each year through 2026 and 2027.
This anticipated uplift reflects the combination of ongoing cost increases and capacity limitations within the industry. With labour and materials costs continuing to escalate, the industry is facing tighter margins and uncertainty, making it more challenging for clients and contractors alike to commit to new programmes without careful cost management.
Turner & Townsend highlights that the current economic backdrop including fluctuations in wider market conditions and remaining geopolitical pressures has left many clients tentative about launching new projects. At the same time, demand for construction remains present across both the public and private sectors, driven in part by major government spending commitments expected to start in the coming 24 months.
Given this environment, experts stress that organisations should not wait until procurement to address cost and capacity risk. Instead, they recommend continuous monitoring of project viability throughout the lifecycle of schemes and closer collaboration with supply chain partners to identify emerging issues and opportunities early.
The message from cost consultants is clear: while there are significant opportunities ahead for the UK construction industry, success will depend on proactive cost control, well-informed planning, and strong supply chain engagement to navigate rising tender prices and capacity constraints.
