Managing viability amid volatility

The construction market 

Despite a weak end to the year, led by uncertainty around the Autumn Budget, total new construction work in the UK returned to growth in 2025 for the first time since 2022.  

“Public and industrial sectors continued to underpin activity, while private housing improved after a difficult period.” 

In contrast, private commercial construction declined again, particularly for offices and leisure. 

Planned new work orders present a more positive outlook. However, increased costs have placed pressure on schemes. Conversion to work on site has also remained slow, and capacity within the contracting market is limited. 

Input costs 

Material input costs have remained under pressure. Input prices have increased faster than sales volumes for a sustained period, limiting producers’ ability to absorb further increases. 

“Material price growth was limited during 2025, with volatility increasing due to energy, commodity and transport pressures.” 

This is alongside upcoming regulatory changes, including the Carbon Border Adjustment Mechanism and new steel tariffs. Demand has remained insufficient to support broad material price increases. 

Tender price inflation forecast 

While uncertainty around costs has increased, particularly in relation to energy, there’s still no clear evidence of a sustained inflationary impact.

“A measured response remains appropriate, with decisions best guided by live pricing, procurement outcomes and market capacity.”   

Continuing to carefully monitor and assess the market will be important, since cost pressures may be delayed, unevenly transferred and dependent on the duration of the conflict. 

In this environment, the question isn’t whether viability challenges will persist and confidence will remain. Rather, it’s about how projects can be managed in a way that keeps them progressing. This requires creative and pragmatic thinking, a broad evidence base and close collaboration within project teams.