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Published: 29/06/2026
Civil engineering tender prices rise as sub-sector activity remains mixed
Civil engineering tender prices increased by an estimated 2% between 1Q2026 and 2Q2026, according to the latest meeting of the BCIS Civil Engineering TPI Panel(1).
Panel members cited stability in infrastructure demand, supported by the government’s commitment to increase investment in infrastructure through its 10-year plan.
However, activity levels remain uneven across subsectors. Aviation and defence remain among the strongest-performing markets, although there is reported uncertainty around the allocation of defence funding following delays.
The panel further highlighted sustained demand for data centre projects but noted that grid instability and the cost of energy are constraining development.
More broadly, the panel reported slow progress in bringing projects to market. Extended cost planning and value engineering exercises are delaying schemes as clients spend longer exploring opportunities to reduce costs.
Dr David Crosthwaite, chief economist at BCIS, said: ‘The key concern raised at the latest Civil Engineering TPI Panel meeting was the length of time it is taking for projects to move forward. Significant effort is reportedly devoted to reducing costs during the early stages of project development, before procurement begins. While that caution is understandable in the current economic climate, panel members noted that prolonged delays are likely to have the opposite effect, with project costs increasing the longer schemes are held back.
‘At the same time, the panel highlighted the rising cost of tendering for contractors. As a result, contractors are reportedly becoming more selective about the opportunities they pursue, often favouring routes that require a lower investment of resources during tendering. This trend has been reinforced by performance bonds becoming both more restrictive and more expensive, further discouraging participation across a range of procurements.’
Elsewhere, the panel noted that contractors are less concerned about retaining skilled labour than in previous years due to softer demand conditions in parts of the market.
Capacity constraints nevertheless remain a concern in several areas. For example, consultancies continue to face challenges attracting white-collar professionals. While current demand levels mean these pressures remain manageable, the panel warned that specialist roles, such as cost managers, could come under increasing strain if activity accelerates.
Labour shortages on site were reported to be most acute during project fit-out stages, with trades such as dry liners and plasterers in short supply. Mechanical, electrical and plumbing (MEP) capacity also remains constrained.
Further, the panel discussed potential increases in steel package costs. Members noted that identifying a single cost driver is difficult given the range of factors influencing the market. These include the continuing effects of the war in Ukraine, proposed changes to UK tariff policies, the conflict involving Iran and the potential impact of the Carbon Border Adjustment Mechanisms in the EU and UK.
Despite these pressures, the panel indicated that contractors are not stockpiling steel beyond normal purchasing patterns.
‘Construction remains a challenging market, but there are encouraging signs of momentum in several infrastructure subsectors. The critical issue now is ensuring that public sector clients continue to bring projects forward and maintain that momentum. We are already seeing weaker output in other sectors of the construction industry, mainly in housing. Infrastructure investment and progress remain essential to driving growth across the wider industry and supporting the resilience of its supply chains.’
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(1) The panel, comprised of cost consultants from firms involved in multiple civil engineering tenders in the UK, advises on the latest movement in tender prices, i.e. prices agreed between client and constructor at commit to construct, as well as providing commentary on conditions affecting pricing levels. This insight helps to inform quarterly updates to the BCIS Civil Engineering Tender Price Index.
