Construction Costs to rise by up to 7% in 2025
The construction industry is bracing for cost increases of up to 7% in 2025, as economic and geopolitical uncertainty continues to disrupt supply chains and inflate material and labour costs. These findings come from Building a Resilient Future: Adapting to Uncertainty in 2025, a new report from Currie & Brown, the cost and project management consultant.
Despite ongoing challenges, booming sectors such as digital infrastructure and renewable energy present opportunities for growth. However, navigating these opportunities will require resilience and adaptability. The report identifies three key factors driving cost inflation:
Economic Uncertainty Persists
While inflation has leveled off and interest rates have stabilised, political volatility, trade protectionism, and conflicts worldwide continue to make the economic outlook unpredictable. These pressures will affect the cost and availability of materials and labour, adding to overall construction costs.
The Digital Revolution Drives Competition
The rapid evolution of AI and digital technology is reshaping industries globally. While this transformation fuels demand, it also intensifies competition for specialised materials needed for tech-sector projects, further escalating costs.
Labour Shortages Intensify
The construction industry is facing a chronic shortage of skilled workers, a challenge set to deepen in 2025. Sectors experiencing rapid growth—such as renewable energy, digital infrastructure, and housing—are expected to see labour costs rise as companies compete for talent.
Alan Manuel, Group CEO of Currie & Brown, warns that cost inflation has become an unavoidable reality for the industry. “Year-on-year price increases are expected, but the real challenge is uncertainty. Macro-economic and geopolitical instability will continue to create volatility. Resilience will be the key to success in 2025 and beyond.”
Strategies for Navigating Cost Increases
The report outlines three crucial strategies for construction firms to mitigate risks and capitalise on opportunities:
- Adaptability: Diversifying supplier networks and fostering collaboration can help companies spread risk and shield themselves from unforeseen economic turbulence.
- Addressing Skills Shortages: Investing in training, planning for workforce availability, and recruiting from adjacent industries (such as technology and healthcare) can help alleviate the skilled labour gap.
- Leveraging Data: More precise data analysis will allow companies to stress-test projects, improve cost forecasting, and adjust quickly in response to unexpected challenges.
“There is clear potential for growth in 2025,” concludes Manuel. “However, success will require pragmatism, collaboration, and careful planning to absorb potential future shocks.”
