The RICS has launched a landmark Infrastructure Information Service. The online service – the first of its kind – provides economic and statistical information on infrastructure costs, trends and benchmarks and allows users to track inflation and manage budgets for projects and programmes.
Uniquely, it includes five-year cost forecasts for a range of infrastructure projects, including road, rail, water and sewerage.
RICS Infrastructure Information Service (IIS)
IIS brings together for the first time publicly available data on construction orders and output, GDP, interest rates, wages and the Retail Price Index, amongst other economic indices;
- all the relevant measures of price and cost movement including new data from BCIS;
- benchmark data for a wide range of infrastructure projects including road, rail, electricity generation, water and sewerage, and flood defences;
- forecasts of demand cost and price; and
- other background economic data such as construction orders and output, GDP, interest rates, wages and RPI.
- Another key feature of the service is its quarterly analysis of the infrastructure market and trends in demand for civil engineering construction work together with a five-year, sector-level forecast of demand, costs and prices.
IIS five-year growth forecast
RICS predicts that the recovery in new infrastructure will continue throughout the forecast period (Q4 2013 to Q4 2018). Strong growth is anticipated with a healthy pipeline of projects coming through.
The main drivers of growth will be the electricity and road sub-sectors, aided by the rail sub-sector in the first half of the forecast period, and the water and sewerage sub-sector in the second half. Overall, civil engineering costs are forecasted to rise by 2.1% over the first year of the forecast, mainly as a result of a subdued increase in materials costs. Stronger increases in costs are expected in the latter half of the forecast period, on the back of higher inflation in wages and materials costs, with annual increases of between 3.5% and 4.0%.
IIS costs forecast
With construction demand picking up across the entire industry, labour bargaining positions should become stronger, providing more leverage to agree higher wage awards. Wage increases of 3.0% have already been agreed for workers in the civil engineering industry in 2014 and 2015, but agreements are expected to rise gradually over the remainder of the forecast period, rising by 4.0% in 2017 and 2018.
IIS price forecast
Price rises are expected to outstrip costs throughout the forecast period. With civil engineering tender prices having already risen to 12% above the pre-recession peak in Q1 2007, price increases are expected to moderate somewhat from the large increases seen over the last few quarters to between 3% and 5% over the forecast period. Drivers will come from increasing cost pressures and strong demand in the new infrastructure sector, backed up by the recovery in new work output as a whole.
For more information on RICS Infrastructure Information Service click here
