UK infrastructure tender costs to climb 5%: risk and pricing notes for project teams
Reviewed by Tom Sullivan
First reported on The Construction Index
30 Second Briefing
Infrastructure tender prices in the UK are forecast by Turner & Townsend’s Winter 2025 UK Market Intelligence report to rise 5.0% annually for infrastructure and 3.5% for real estate through 2026–27, a 0.5 percentage point increase on last year’s tender price inflation. New orders jumped 29.3% year-on-year to Q3 2024, while the sector has lost around 50,000 workers in 12 months, signalling a tightening capacity squeeze just as the Planning and Infrastructure Act accelerates project starts. Turner & Townsend urges earlier supply chain engagement, mutual incentives and continuous viability reviews beyond the initial procurement decision.
Technical Brief
- Turner & Townsend’s Winter 2025 UK Market Intelligence (UKMI) report is the source of the TPI forecasts.
- New work orders recorded their fastest growth since post‑pandemic reopening, driven by logistics, manufacturing and office schemes.
- Government’s Planning and Infrastructure Act is expected to compress pre‑construction timelines, pulling forward procurement and mobilisation.
- Office for National Statistics data indicate a net loss of 50,000 construction workers in the last 12 months.
- Turner & Townsend flags capacity constraints as a compound risk: labour shortages plus accelerated programme starts.
- Recommended commercial response includes mutual incentive mechanisms and more balanced risk allocation in major programme contracts.
- Turner & Townsend advises continuous viability reviews across the delivery lifecycle, not a single procurement-stage “go / no go” decision.
Our Take
With UK infrastructure tender price inflation forecast at 5% through 2026–27 versus 3.5% for real estate, contractors bidding on major programmes are likely to reweight capacity and margin expectations towards infrastructure frameworks where pricing headroom is greater.
The 29.3% year-on-year jump in new work orders, combined with a 24‑month window for major Spending Review programmes to come online, signals a tight delivery market in the UK where Tier 1s may become more selective on risk allocation and programme certainty.
Across our 534 Infrastructure stories and 1,416 tag-matched pieces, few UK items show this degree of forward visibility on tender price indices, so Turner & Townsend’s forecasts are likely to become a reference baseline for escalation clauses in upcoming framework and alliance contracts.
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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