Geopolitical Unrest Clouds Outlook as Tender Prices Rise

Tender prices increased by an estimated 0.7% between Q4 2025 and Q1 2026, according to the latest data from the Building Cost Information Service (BCIS).

The increase resulted in 2.8% annual growth in the BCIS All-in Tender Price Index (TPI).

The estimate reflects the consensus view of the BCIS TPI Panel, comprising cost consultants from firms involved in multiple tenders each quarter.

Prolonged Conflict Warning

Dr David Crosthwaite, BCIS Chief Economist

BCIS Chief Economist, Dr David Crosthwaite, said: “Panel optimism for a recovery in certain construction markets has been tempered by the escalation of conflict in the Middle East.

“According to the panel, recent energy price volatility and supply chain disruption have not yet been reflected in tender prices, but prolonged unrest is likely to affect market activity.

“Even if conflict resolution is reached fairly swiftly, panel commentary suggested projects could stall, workloads may be reduced and tender prices could face downward pressure.”

Project Pipelines

Project pipelines have been relatively strong in the quarter so far according to the panel.

More than three-quarters (77%) of panellists reported that their pipeline of projects going to tender over the next year had increased slightly in Q1 2026 compared with the previous 12 months. The remaining 23% reported no change.

Contractor appetite to tender also remains robust. More than half (54%) of panellists said contractors were quite eager to tender during the first quarter, while 39% said they were able to secure the desired number of suitable tenderers after searching.

Dr Crosthwaite added: “Commentary on the first half of the quarter was mixed. Purpose-built student accommodation was performing well, the industrial sector saw some growth and there were indications of recovery in commercial and residential markets. However, the panel suggested that overall pipeline growth could be stronger. Challenges with converting projects and tougher contract negotiations were cited as factors constraining progress.

“With geopolitical tensions continuing and the implications for supply chains and input costs still unfolding, it’s unclear how construction activity will fare in the coming months.”

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