{
  "query": "UK construction industry contractor cost overrun benchmarks 2024 2025",
  "raw_results": [
    {
      "url": "https://www.arcadis.com/en-gb/insights/perspectives/europe/united-kingdom/uk-construction-market-view-winter-2025",
      "title": "UK construction industry trends and Market View – Winter 2025",
      "content": "Construction material prices remained broadly stable throughout 2025, with few contractors applying inflation allowances in their bids.\n\nLabor availability and costs appear balanced in the short term, but long-term risks of scarcity remain elevated.\n\nSubdued demand means price inflation pressure in 2026 and 2027 is now forecast to be lower than previously expected.\n\nThe market is moving at multiple speeds, with public and regulated sectors showing greater resilience while private-sector buildings face affordability and viability constraints. [...] The report notes that materials prices were broadly stable throughout 2025, with contractors generally avoiding inflation allowances in bids. Labor cost pressures have also eased in the short term. However, the overall picture for 2025 shows relatively low inflation, not a decline. Looking ahead, subdued demand means inflationary pressure in 2026 and 2027 is expected to increase but at a slower rate than previously forecast.\n\n### Budget\n\n How does the 2025 Autumn Budget affect UK construction demand? [...] What is the construction market outlook for the UK?\n\n  The UK construction market is expected to remain subdued heading into 2026. While new orders improved in Q3 2025, many core markets—including housing and infrastructure—have not converted opportunity into workload. The report highlights a multi-speed construction sector, with stronger activity in public and regulated markets but continued weakness in private-sector buildings. Overall, the outlook points to slow growth, tighter viability, and greater reliance on public-sector investment to sustain activity over the next year.\n Will construction costs go down in 2025 in the UK?",
      "score": 0.71829855,
      "raw_content": null
    },
    {
      "url": "https://www.jll.com/en-uk/guides/uk-construction-market-view-h1-2025",
      "title": "UK Construction Market Outlook H1 2025 | JLL",
      "content": "The government's renewed commitment to regional development and green infrastructure has partially offset the impact of the HS2 cancellation. This shift has created new opportunities for contractors, particularly in sustainable construction and urban regeneration projects.\n\nInflation has moderated, with the Bank of England's interest rate sitting at 4.5% from 6 Feb 2025 helping to ease financing costs. This has improved the viability of some construction projects, leading to a modest increase in new project starts compared to late 2024. [...] ## Market View\n\nOverall, the UK construction market for H1 2025 shows signs of resilience and adaptation. While challenges persist, the industry's focus on efficiency, sustainability, and risk management is driving a cautious but steady recovery. Inflationary pressures have stabilised, with material costs now relatively steady following the resolution of supply chain disruptions. However, labour costs remain a significant factor in tender price inflation, as skilled worker demand continues to outpace supply in certain sectors, particularly those aligned with sustainable construction and regional development initiatives. [...] Flag of United States\n\n# UK Construction Market View H1 2025\n\nNavigating change: construction's path forward\n\nAuthors\n\nMatt Handley\n\nHead of Regional Cost Management - UK North, PDS\n\nThe first quarter of 2025 has seen a continuation of the economic stabilisation that began in 2024. Following the peak of the cost-of-living crisis in 2023, inflationary pressures have eased, aided by the new Labour government's economic policies and the Bank of England’s interest rate cuts to 4.5%. While the Ukraine conflict's impact has diminished, tensions in the Middle East continue to influence global energy prices and supply chains.",
      "score": 0.7147281,
      "raw_content": null
    },
    {
      "url": "https://www.tmhcc.com/en/news-and-articles/thought-leadership/uk-construction-sector-report-december-2025",
      "title": "UK Construction Sector Report December 2025 - Tokio Marine HCC",
      "content": "This concerning development is backed up by consultancy’s EY-Parthenon latest UK Profit Warnings Report22. According to the publication, 14 UK stock-listed construction and material firms issued profit warnings in Q1-Q3 2025, almost three times the level recorded in the whole of 2024. Companies often cited residential market weakness, commercial uncertainty, budget constraints and delays caused by new safety regulations as the reasons for lower-than-expected profits23. Worryingly, the EY publication indicates that even large construction sector companies (which tend to have bigger buffers and higher resilience) are under increasing financial stress, thereby potentially causing issues for smaller contractors in their supply chain. [...] However, UK construction continues to display an above-average insolvency risk. While the sector accounts for around 6%-7% of gross value added in the country, it is responsible for almost 17% of all insolvencies (4,032 out of 23,879 in 2024). This is due to small profit margins, usually around 2%-4%, and the inability to pass on unexpected cost increases to customers due to fixedprice contracts20. [...] Worryingly, while material price inflation has moderated in recent years, construction companies’ operating costs are still under pressure because of rising wages (see Labour Market chapter below). In addition, in absolute terms, the early 2025 “all work” construction price index reading of 151.8 points compares very unfavourably with the 2020-value of 110.6 points, highlighting a persistent rise in building costs since Covid2 .\n\nUK Construction Materials Price Indices (y/y change)\n\nSource: ONS",
      "score": 0.70702106,
      "raw_content": null
    },
    {
      "url": "https://www.munichre.com/hsbeil/en/insights/construction/2025-uk-construction-trends/report.html",
      "title": "Report: 2025 UK construction trends | UK & Ireland | HSB - Munich Re",
      "content": "## Skills shortages driving soaring tender costs\n\nHard hat\n\nThe construction industry’s shortage of skilled workers will continue to be the catalyst for wage inflation and a rise in tender prices, creating ongoing financial challenges for contractors and threatening the viability and affordability of future projects. The Building Cost Information Service (BCIS) forecasts that as cost inflation eases and market activity revives, tender prices are anticipated to rise  faster than building costs next year, and by 20% and 15% respectively over the next five years.1 [...] The skills gap has created a candidate-driven market that has made skilled labour significantly more expensive, further compounding the challenges contractors face on top of fluctuating materials costs and supply chain pressures. This is reflected in the rocketing wages commanded by workers with “green skills\", where costs for insulation specialists and solar and heat pump installers in London have increased by 22% in the past 12 months.3\n\n### Construction wages increases4\n\nConstruction wages increases\n\n##### Tips\n\n## Small tool theft is continuing to rise\n\nPower tool\n\nSmall tool theft has been a longstanding challenge in the construction industry and is set to intensify as the UK battles against inflation and other economic pressures. [...] Explore Munich Re Group\n\nGet to know our Group companies, branches and subsidiaries worldwide.\n\nModern building\n\n# 2025 UK construction trends\n\n### Industry report\n\nKey trends that are reshaping the future of the UK construction market, and impacting construction insurance risks\n\nShare\n\nalt txt\n\n### properties.trackTitle\n\nproperties.trackSubtitle\n\nDespite exceeding expectations with encouraging levels of activity in recent years, the UK construction sector has arguably faced its toughest period yet during a turbulent 2024. New build output across residential, commercial and industrial settings have been stifled by weak economic growth, high interest rates and labour cost inflation which has impacted short-term growth.",
      "score": 0.6862234,
      "raw_content": null
    },
    {
      "url": "https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/articles/constructionstatistics/2024",
      "title": "Construction statistics, Great Britain - Office for National Statistics",
      "content": "In the 12 months to December 2024, there was growth in the all-Construction Output Price Index of 3.4%.\n\nAt the lower level, repair and maintenance, and new work output prices increased across the 12 months to December 2024 by 2.7% and 3.7%, respectively.\n\nMethodology improvements were made to a range of deflators used in the national accounts in Blue Book 2025, including changes to the repair and maintenance deflator. More information can be found in our Deflator improvements to the UK National Accounts: Blue Book 2025 article.\n\n## 6. Trends in the construction industry [...] ## 6. Trends in the construction industry\n\nIn 2024, the construction industry increased focus on sustainability following regulatory changes introduced early in the year, including enhanced energy efficiency requirements for new buildings and overheating mitigation standards. The sector saw greater adoption of low carbon technologies and sustainable materials, prompting a need for specialised skills. Consequently, industry-wide efforts were made to address the skill gap in low carbon construction. These developments have influenced project planning, procurement and costs, reflecting a broader transition toward environmentally responsible building practices (UK GBC, 2025 Trends in Sustainable Solutions for the Built Environment 2024).",
      "score": 0.683948,
      "raw_content": null
    }
  ],
  "formatted": "Source: UK construction industry trends and Market View – Winter 2025\nURL: https://www.arcadis.com/en-gb/insights/perspectives/europe/united-kingdom/uk-construction-market-view-winter-2025\nConstruction material prices remained broadly stable throughout 2025, with few contractors applying inflation allowances in their bids. Labor availability and costs appear balanced in the short term, but long-term risks of scarcity remain elevated. Subdued demand means price inflation pressure in 2026 and 2027 is now forecast to be lower than previously expected. The market is moving at multiple speeds, with public and regulated sectors showing greater resilience while private-sector buildings face affordability and viability constraints. [...] The report notes that materials prices were broadly stable throughout 2025, with contractors generally avoiding inflation allowances in bids. Labor cost pressures have also eased in the short term. However, the overall picture for 2025 shows relatively low inflation, not a decline. Looking ahead, subdued demand means inflationary pressure in 2026 and 2027 is expected to increase but at a slower rate than previously forecast. ### Budget How does the 2025 Autumn Budget affect UK construction demand? [...] What is the construction market outlook for the UK? The UK construction market is expected to remain subdued heading into 2026. While new orders improved in Q3 2025, many core markets—including housing and infrastructure—have not converted opportunity into workload. The report highlights a multi-speed construction sector, with stronger activity in public and regulated markets but continued weakness in private-sector buildings. Overall, the outlook points to slow growth, tighter viability, and greater reliance on public-sector investment to sustain activity over the next year. Will construction costs go down in 2025 in the UK?\n\n---\n\nSource: UK Construction Market Outlook H1 2025 | JLL\nURL: https://www.jll.com/en-uk/guides/uk-construction-market-view-h1-2025\nThe government's renewed commitment to regional development and green infrastructure has partially offset the impact of the HS2 cancellation. This shift has created new opportunities for contractors, particularly in sustainable construction and urban regeneration projects. Inflation has moderated, with the Bank of England's interest rate sitting at 4.5% from 6 Feb 2025 helping to ease financing costs. This has improved the viability of some construction projects, leading to a modest increase in new project starts compared to late 2024. [...] ## Market View Overall, the UK construction market for H1 2025 shows signs of resilience and adaptation. While challenges persist, the industry's focus on efficiency, sustainability, and risk management is driving a cautious but steady recovery. Inflationary pressures have stabilised, with material costs now relatively steady following the resolution of supply chain disruptions. However, labour costs remain a significant factor in tender price inflation, as skilled worker demand continues to outpace supply in certain sectors, particularly those aligned with sustainable construction and regional development initiatives. [...] Flag of United States # UK Construction Market View H1 2025 Navigating change: construction's path forward Authors Matt Handley Head of Regional Cost Management - UK North, PDS The first quarter of 2025 has seen a continuation of the economic stabilisation that began in 2024. Following the peak of the cost-of-living crisis in 2023, inflationary pressures have eased, aided by the new Labour government's economic policies and the Bank of England’s interest rate cuts to 4.5%. While the Ukraine conflict's impact has diminished, tensions in the Middle East continue to influence global energy prices and supply chains.\n\n---\n\nSource: UK Construction Sector Report December 2025 - Tokio Marine HCC\nURL: https://www.tmhcc.com/en/news-and-articles/thought-leadership/uk-construction-sector-report-december-2025\nThis concerning development is backed up by consultancy’s EY-Parthenon latest UK Profit Warnings Report22. According to the publication, 14 UK stock-listed construction and material firms issued profit warnings in Q1-Q3 2025, almost three times the level recorded in the whole of 2024. Companies often cited residential market weakness, commercial uncertainty, budget constraints and delays caused by new safety regulations as the reasons for lower-than-expected profits23. Worryingly, the EY publication indicates that even large construction sector companies (which tend to have bigger buffers and higher resilience) are under increasing financial stress, thereby potentially causing issues for smaller contractors in their supply chain. [...] However, UK construction continues to display an above-average insolvency risk. While the sector accounts for around 6%-7% of gross value added in the country, it is responsible for almost 17% of all insolvencies (4,032 out of 23,879 in 2024). This is due to small profit margins, usually around 2%-4%, and the inability to pass on unexpected cost increases to customers due to fixedprice contracts20. [...] Worryingly, while material price inflation has moderated in recent years, construction companies’ operating costs are still under pressure because of rising wages (see Labour Market chapter below). In addition, in absolute terms, the early 2025 “all work” construction price index reading of 151.8 points compares very unfavourably with the 2020-value of 110.6 points, highlighting a persistent rise in building costs since Covid2 . UK Construction Materials Price Indices (y/y change) Source: ONS\n\n---\n\nSource: Report: 2025 UK construction trends | UK & Ireland | HSB - Munich Re\nURL: https://www.munichre.com/hsbeil/en/insights/construction/2025-uk-construction-trends/report.html\n## Skills shortages driving soaring tender costs Hard hat The construction industry’s shortage of skilled workers will continue to be the catalyst for wage inflation and a rise in tender prices, creating ongoing financial challenges for contractors and threatening the viability and affordability of future projects. The Building Cost Information Service (BCIS) forecasts that as cost inflation eases and market activity revives, tender prices are anticipated to rise faster than building costs next year, and by 20% and 15% respectively over the next five years.1 [...] The skills gap has created a candidate-driven market that has made skilled labour significantly more expensive, further compounding the challenges contractors face on top of fluctuating materials costs and supply chain pressures. This is reflected in the rocketing wages commanded by workers with “green skills\", where costs for insulation specialists and solar and heat pump installers in London have increased by 22% in the past 12 months.3 ### Construction wages increases4 Construction wages increases ##### Tips ## Small tool theft is continuing to rise Power tool Small tool theft has been a longstanding challenge in the construction industry and is set to intensify as the UK battles against inflation and other economic pressures. [...] Explore Munich Re Group Get to know our Group companies, branches and subsidiaries worldwide. Modern building # 2025 UK construction trends ### Industry report Key trends that are reshaping the future of the UK construction market, and impacting construction insurance risks Share alt txt ### properties.trackTitle properties.trackSubtitle Despite exceeding expectations with encouraging levels of activity in recent years, the UK construction sector has arguably faced its toughest \n\n---\n\nSource: Construction statistics, Great Britain - Office for National Statistics\nURL: https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/articles/constructionstatistics/2024\nIn the 12 months to December 2024, there was growth in the all-Construction Output Price Index of 3.4%. At the lower level, repair and maintenance, and new work output prices increased across the 12 months to December 2024 by 2.7% and 3.7%, respectively. Methodology improvements were made to a range of deflators used in the national accounts in Blue Book 2025, including changes to the repair and maintenance deflator. More information can be found in our Deflator improvements to the UK National Accounts: Blue Book 2025 article. ## 6. Trends in the construction industry [...] ## 6. Trends in the construction industry In 2024, the construction industry increased focus on sustainability following regulatory changes introduced early in the year, including enhanced energy efficiency requirements for new buildings and overheating mitigation standards. The sector saw greater adoption of low carbon technologies and sustainable materials, prompting a need for specialised skills. Consequently, industry-wide efforts were made to address the skill gap in low carbon construction. These developments have influenced project planning, procurement and costs, reflecting a broader transition toward environmentally responsible building practices (UK GBC, 2025 Trends in Sustainable Solutions for the Built Environment 2024)."
}