The increase resulted in 2.3% annual growth in the BCIS All-in Tender Price Index, the same as was reported in the first quarter of 2025, down from a peak of 10.3% observed in 2Q2022.

BCIS chief economist Dr David Crosthwaite said: “The panel described a much cooler market in the second quarter, with fewer tenders coming in than were seen earlier in the year and 2024.

“With the outcome of the Spending Review and the government’s infrastructure and industry strategies yet to feed through to construction activity, alongside volatile global trading conditions, panellists cited a wait-and-see attitude in the market.

“There were reports of clients accepting the ‘new normal’, recognising that prices generally aren’t coming back down to where they were pre-COVID, so they are deciding just to get on and develop.”

Panellists reported that while general contractors are willing to tender, with 64% rating their appetite at four out of five and no respondents indicating complete unwillingness, none described contractors as ‘very eager’. After searching, 21% said they had found their desired number of suitable tenderers.

Just under half (46%) of panellists said their anticipated pipeline of projects going to tender within the next 12 months was unchanged in the second quarter, while 31% said it had increased. And 23% said it had reduced slightly.

Dr Crosthwaite said: “The main logistical challenges flagged by the panel relate to delays in regulation and planning processes, including the Building Safety Act.

Several panellists highlighted Gateway 2 approvals as preventing projects from starting and making it more challenging to manage resources.

 With increases in employers’ national insurance contributions priced into tenders for a few months now, the BCIS Labour Cost Index increased by 2.5% in April, and panellists said contractors and consultants tend to limit recruitment rather than face increased costs.

He added: “This doesn’t bode well when we want growth of the construction workforce to meet demand levels as activity recovers in the sector.”