Industry forecasts in the UK predict a 23% rise in cost of infrastructure projects

The cost of infrastructure construction is set to rise 23% over the next five years, according to latest industry forecasts in the UK.
Arcadis’ latest Spring 2021 Market View, entitled Window of Opportunity, makes the case that with build inflation on the rise, now is the time to get digging.
Recovering demand and rising materials costs mean that inflation could become a defining feature of the market over the next few years.
Construction consultant Arcadis produces a quarterly analysis of the UK construction market to deliver tender price forecasts, to inform clients about what is going on in UK construction, helping financial decision. Its latest paper suggests that there may be less spare capacity in the supply chain than previously thought, with increasing pressure around the availability of construction materials emerging.
As a result Arcadis has upgraded its overall forecast, with a major acceleration in price increases for infrastructure, and a slightly more modest expansion in the buildings sector in 2022. Infrastructure in particular is susceptible to pressures around materials availability and a shortage of specialist skills, it says, hence price increases of 3% and 5% being forecast for 2021 and 2022 respectively.
For the buildings sector, growth in the regions will be higher than in London. However, many projects are taking longer to get to the ‘shovel ready’ stage, so while Arcadis has maintained its forecast at 1% for 2021, delays are likely to translate into a steeper pace of growth from 2022 onwards, reaching 5% by 2025 as the market recovers.