McBains’ Summer 2025 Construction Market Report said that confidence was returning to the sector but warned clients remain cautious about pricing risk – making it harder to strike deals on large two-stage contracts.

Colin McCaffrey, director at McBains, said: “Most organisations remain cautious about pricing risk, which is causing hurdles in negotiating deals on large two-stage contracts.

“We forecast an increase in the use of innovative procurement strategies including the possible resurgence of the package-based procurement model, which offers an alternative to traditional lump sum contracts, and larger contractors choosing to self-deliver where possible, such as splitting mechanical and electrical services into smaller, separately procured trades.

The report also says more contractors are seeking to explore co-investment opportunities, seeking higher returns through shared risk and reward.

McBains is forecasting tender price inflation to rise by 2% in both 2025 and 2026, with overall market output reaching nearly £170bn by the end of next year.

Private housing, infrastructure and industrial work are all expected to post growth, but the sector will still face planning logjams, skills shortages and rising wage bills – with labour costs set to climb 19% by 2029.

McCaffrey added: “Despite challenges, the report shows that medium-term confidence is buoyant, with growth in private housing, infrastructure and industrial work predicted.”