AtkinsRéalis Construction Intelligence Report points to rise in output and investment in 2025

AtkinsRéalis, a world-class engineering services and nuclear company with offices around the world, has released its latest Construction Intelligence Report for Q4 2024, which points towards a more stable and productive period for the sector going into 2025. However it cautions that output may still be limited due to inflationary pressures and delays in planning impacting schemes.

Analysis of the sector by the professional services experts suggests there is growing optimism that output and investment will continue to rise in 2025, due to a more construction-friendly government with plans for reform of the planning system and a longer-term strategy for infrastructure driving activity.

As a result AtkinsRéalis has issued its forecast for Tender Price Inflation* - the measure used to demonstrate the trend of contractors' pricing levels in accepted tenders, which includes allowances for output cost rises caused by materials, plant and labour.

Following a lull in costs over the past year, AtkinsRéalis is forecasting a TPI* of 3% for the next 12 months (up from 2.25% for 2024), as increased activity will drive up tender prices.

Max Wilkes, associate director for AtkinsRéalis’ project and programme services division, said: “The upturn in activity will push tender prices up as consultants and contractors look to secure construction professionals and materials. Suppliers are looking to ramp up production which has been reined back in the last 12 months as we are now witnessing increases in costs after a 12 – 15 month lull. 

“It is expected that the recovery cycle will be led by private investment which means that viability issues remain key for investment and, as a result, developers are looking for the rent and housing demand to make return worthwhile. 

“So our forecast remains positive, it includes for a steady increase in output, along the lines forecast by the industry and accommodating a degree of planning reforms as well as a slight increase in the labour force. 

“As such, our advice continues to be to avoid additional costs and delays, be sure to provide early and detailed information, with early and good communication through the supply chain to achieve the best results.”

The report recognises many of the issues affecting the construction sector currently, particularly in the planning system, where the procurement of more resources will take time. In addition other supply chain constraints through labour shortages and a reduction in suitable contractors will also act as a block on construction output. 

However, with the Government’s impetus on growth with infrastructure and housing at the heart of its agenda, the report points to the prospect of new opportunities for the sector to counter the current downward pressures.

Wilkes adds: “Looking at the bigger picture most analysts agree that wise government investment in improved public services, green industries, energy and infrastructure to increase productivity is needed to sustain growth.”

Click here to see the full report

What is TPI?

*The TPI or tender price inflation is a measure intended to show the trend of contractors' pricing levels in accepted tenders, i.e. cost to the client. It includes allowances for output cost rises caused by materials, plant and labour. It also reflects commercial decisions made by the contractor such as level of preliminaries, discounting obtained, profit and overheads margins, allowance for risk, directors adjustments indicating their desire to win the work.

About AtkinsRéalis 

Created by the integration of long-standing organizations dating back to 1911, AtkinsRéalis is a world-class engineering services and nuclear company dedicated to engineering a better future for our planet and its people. We create sustainable solutions that connect people, data and technology to transform the world's infrastructure and energy systems. We deploy global capabilities locally to our clients and deliver unique end-to-end services across the whole life cycle of an asset including consulting, advisory & environmental services, intelligent networks & cybersecurity, design & engineering, procurement, project & construction management, operations & maintenance, decommissioning and capital. The breadth and depth of our capabilities are delivered to clients in strategic sectors such as Engineering Services, Nuclear and Capital.  News and information are available at www.atkinsrealis.com or follow us on LinkedIn.