Tender price inflation forecasts: risk signals for UK infrastructure teams
Reviewed by Joe Ashwell
First reported on The Construction Index
30 Second Briefing
UK construction tender price inflation forecasts have turned more cautious, with Rider Levett Bucknall lifting its 2026 forecast to 3.45% (from 3.27%) as the Middle East conflict threatens fuel costs, trade routes such as the Strait of Hormuz, and key structural material supplies. RLB reports concurrent input cost pressures and weakening pipelines, with contractors pricing selectively and risk allowances diverging by sector and project type. Glenigan’s latest Index shows project starts under £100m down 15% year on year and overall market value 26% lower, leaving private residential and fragile major-infrastructure pipelines particularly exposed.
Technical Brief
- Office for National Statistics data showed total new construction orders up 12.6% year on year.
- Infrastructure new orders increased by more than 46%, materially skewing workload forecasts towards civils-heavy pipelines.
- New public housing orders rose nearly 41%, signalling near-term demand for groundworks and low- to mid-rise structures.
- RLB notes tender pricing now more driven by geopolitical risk than domestic economic cycles or demand.
- RLB expects risk allowances to diverge by sector and project type rather than move as a uniform market uplift.
Our Take
With UK infrastructure new orders up strongly but the market for projects over £100m contracting by 26% year-on-year, contractors are likely to face a barbell pipeline where mid-sized schemes dominate workload while mega-project capacity sits underutilised, complicating resource planning and framework bidding strategies.
The 15–24% decline in the value of sub-£100m projects starting on site suggests that, despite higher public housing and infrastructure order books, many schemes are stalling at the conversion stage, which will matter for tier 2 and regional contractors that rely on steady flow rather than a few large wins.
Across our 711 Infrastructure stories, the UK has featured frequently in pieces about squeezed contractor margins, and the modest upward revision of RLB’s 2026 tender price inflation forecast reinforces the likelihood that cost risk will continue to sit more with contractors than clients on fixed-price or design-and-build forms.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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