BCIS expects tender prices up 15.5% by 2031. That is not a contingency, and it should not be sitting in one

Forecast inflation and risk are two different things and putting them in the same line of an appraisal is how a scheme ends up under-funded while looking prudent on paper.

The BCIS five-year forecast published at the end of June puts the All-in Tender Price Index up 15.5% to the second quarter of 2031, with the General Building Cost Index up 13.1% over the same period. Construction output is forecast to contract by 2.7% this year before returning to modest growth from 2027.

The gap between the two indices is the story

Tender prices are forecast to rise faster than building costs. That gap is contractors rebuilding margin as the market tightens, and it is the part that as a cost estimate built from first principles will miss. Your subcontract prices can behave themselves while the tender total still moves.

BCIS attribute the renewed pressure to energy and materials, with weak demand still the dominant force in the market. In plain terms, costs are rising but contractors are not yet able to pass all of it on. When demand recovers, they will.

Where inflation belongs in an estimate

An estimate has a base date. Ours is stated on the front of every one we issue, and it is the date the rates were current, not the date we sent it to you. From that base date there are two separate movements, and they are not the same thing.

• Inflation to tender. A calculable allowance from the base date to the anticipated tender date, taken from a published index and stated as its own line so you can see it and challenge it.

• Contingency. Cover for what is not yet known about the scheme itself. Design development, ground conditions, the things that emerge.

Merge the two and you get a single percentage that nobody can interrogate. Split them and a client can see exactly what a six-month delay costs, which is usually the decision they are trying to make.

Why we do not rely on the index alone

A published index is a national average that reports in the past. We also price from our own tender returns, on schemes we have taken to market ourselves, which is the only way to see what is happening in a specific trade in a specific region before the index catches up.

QSetc tendered a £12m project in October 2025, which was recently retendered on the same information. This showed an increase of 3.6% in the last eight months. This is our own tender evidence, not a movement in the published index.

What this means for your scheme

• Check the base date on any estimate you are holding. If it is more than six months old, it is not a current number.

• Ask for inflation and contingency as two separate lines. If they arrive as one, ask why.

• On a scheme tendering in 2028 or later, the inflation allowance is likely to be the largest single judgement in the appraisal.

• Tender prices and build costs are not the same series, and the forecast gap between them is widening.

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Sources. BCIS five-year construction industry forecast, published 30 June 2026, and BCIS commentary accompanying it.