Tender Prices Expected to Rise by Up to 5%
According to the latest findings from Turner & Townsend, tender prices are projected to increase by up to 5% for infrastructure projects and 3.5% for real estate annually. This update was revealed in their Winter 2025 UK Market Intelligence report, highlighting ongoing economic pressures.
Tender Price Inflation: Forecast and Implications
The report indicates that the pressure of sustained cost increases is significantly impacting the feasibility of new developments. It warns that the tender price inflation (TPI) rate could accelerate, particularly as the UK government pushes for quicker project initiations under the Planning and Infrastructure Act.
Economic Uncertainty and Sector Challenges
Amid these challenges, the construction sector is facing a concerning loss of workforce. Stephanie Marshall, UK managing director of real estate cost management at Turner & Townsend, emphasized the uncertainty prevailing in the market. She noted that factors such as the chancellor’s budget changes and ongoing geopolitical tensions contribute to clients’ hesitance in committing to new projects.
Importance of Strategic Planning
Despite the challenges, demand from both public and private sectors remains strong. The expectation is that several major programs will launch within the next two years, which could stimulate economic growth. Marshall urges industry clients to act promptly to ensure project deliveries remain on track and avoid delays caused by capacity shortages.
Industry Recommendations
- Constantly review project viability beyond just the procurement phase.
- Engage with the supply chain early and foster true partnerships.
- Address potential challenges proactively to maintain project momentum.
To navigate the complexities of cost inflation and regulatory changes, it is crucial for industry stakeholders to prepare adequately. Investing in the right business models and skillsets will be essential for leveraging growth opportunities in the construction sector.
