Civil engineering costs continue to rise

The latest report from RICS’ Building Cost Information Service (BCIS) has revealed that civil engineering costs increased by 0.7% in the second quarter of 2015 in comparison with the previous quarter but remained unchained from the same period in 2014.

BCIS’ findings forecast civil engineering costs, tender prices and new infrastructure out as a whole is set to increase over the next five years. Costs are expected to increate at around 3.5% to 5.0% per year, with the cost of materials and nationally agreed wage awards growing steadily.

Over a five-year period, this could see costs rising by as much as 25%.

New infrastructure output is anticipated to be extremely strong in 2015 but remain steady in 2016 before beginning to drop in 2017 as the cycle of major projects passes its peak. Moderate growth returns are predicted in 2018 and 2019, before experiencing rapid growth in 2020 due to increased investment in roads and the High Speed 2 project.

Peter Rumble, Head of Forecasting, RICS’ BCIS division, said: “With new infrastructure output set to be very strong in 2015, the annual rate of tender price increases is expected to rise in the second half of 2015 and the first half of 2016, resulting in an increase of 7.6% in the year to 2nd quarter 2016. Over the next few years, tender price rises are anticipated to be driven primarily by increases in input costs, rising by 4% to 5%. as growth moderates and even falls in 2017. Over the final year of the forecast, stronger output growth in 2020, together with increasing input costs, are likely to lead to higher tender price rises in the year to 2nd quarter 2020, with a rise of 6.2%.

“New infrastructure output is anticipated to be at a historically high level over the forecast period compared with pre-2010, with annual average growth of around 3.5% – a real positive for Britain and the economy.”

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