Tender Prices Could Rise Over 20% by 2029 - What It Means for Your Supply Chain

What the Forecasts Actually Say

According to the Arcadis market report covered by Construction News, tender-price inflation could rise by more than 20% between now and 2029, with the supply chain bearing much of the impact.

The shorter-term picture for 2026 is more modest: the consultancy forecasts tender-price rises of roughly 1–4% in the private sector and 2–5% in the public sector this year. It's the medium-term outlook that's stark. By 2029, the report projects:

• Private sector tender prices up by around 10.5–18%
• Public sector tender prices up by around 14.5–22%
• National infrastructure up by around 14.5–24%
• Nationally significant road and rail schemes up by around 17.5–32%

A separate report from the Building Cost Information Service (BCIS), also covered by Construction News, found that civil tender prices had already risen by about 2% across the first half of 2026, so the trend is underway, not hypothetical.

(All figures above are as reported by Construction News, drawn from the Arcadis and BCIS reports.)

Why the Supply Chain Bears the Brunt

The most important point for anyone running a supply chain is not the headline number, it's who carries the risk. The Arcadis analysis suggests that competitive pressure will keep much of the inflation risk sitting with the supply chain. In other words, while some increased costs get passed on, fierce competition for work means suppliers and subcontractors are likely to absorb a large share rather than recover it.

The report singles out residential and commercial development as the most exposed, because both depend on demand strong enough to lift values in line with rising costs and the private sector is identified as being under the greatest pressure. For suppliers, that means tighter margins on work that's already hard-won. This is exactly the environment where weak supplier financial health turns into project risk, a theme we explore in how to score supplier risk.

What's Driving the Increases

Several forces are stacking up, according to the report:

• Steel tariffs. Construction News reports the tariffs will add roughly £75–150 per tonne to imported steel, with the gap potentially exceeding £300 per tonne compared with tariff-free steel.
• Geopolitical instability. The report links upward pressure to the Gulf crisis and wider conflict in the region, a particular challenge for firms sensitive to cost and interest-rate movements.
• The Carbon Border Adjustment Mechanism (CBAM). From 2027, this EU-style measure will raise prices on imported carbon-intensive products such as steel and cement where carbon taxes haven't been applied. Arcadis estimates its overall effect at under 0.5% of total construction cost on a typical project, smaller, but another upward nudge.
• Infrastructure exposure. Infrastructure projects are flagged as most exposed, given their heavy reliance on fuel, haulage and energy-intensive materials. That's directly relevant to the major framework programmes now being procured, see what Gatwick's £2bn upgrade means for construction supply chains.

The Hidden Squeeze: The Cost of Bidding Itself

There's a second, quieter cost pressure in the BCIS findings. Its panel highlighted that projects are taking longer to move forward and that prolonged delays during development tend to push costs up, not down, undermining the very caution meant to control them.

At the same time, BCIS chief economist David Crosthwaite noted that the cost of tendering is rising, pushing contractors to be more selective about which opportunities they pursue and to favour routes that demand less resource at bid stage. More expensive performance bonds are reinforcing that caution.

The takeaway: it's not only the price of materials going up, it's the cost of competing for work and the cost of delay. Both are areas where how you run your supply chain has a direct effect.

What Contractors and Suppliers Can Do

You can't control steel tariffs or geopolitics. But inflation of this kind rewards operational discipline and there are levers within reach:

1. Cut the cost of pre-qualification and tendering. If bidding is getting more expensive, reducing the admin burden of every submission matters. A standardised, reusable approach to pre-qualification, completing the Common Assessment Standard once and sharing it, rather than re-answering a different PQQ for every client, directly lowers the resource cost of chasing work.
2. See supplier financial risk before it becomes project risk. Margin squeeze raises the chance of supplier distress and insolvency mid-project. Monitoring financial standing and scoring supplier risk lets you act early. See how to review a supplier's insurance and financial standing.
3. Remove delay from onboarding. With delay itself now a cost driver, slow supplier onboarding is money lost. Streamlining it protects programme and budget, see how to reduce supplier onboarding time.
4. Build resilience and reduce concentration risk. Heavy exposure to a single material or a small group of suppliers is dangerous when prices spike. Visibility across your supply base lets you qualify alternatives in advance, the focus of building a resilient supply chain.

How a Supply Chain Management System Reduces the Impact

To be clear: no software stops material-price inflation. What a supply chain management platform does is cut the operational and risk costs that surround it and in a margin-squeezed market, those are exactly the costs you can still control.

Our platform, Mobilize, helps on each of the pressure points above:

• Lower tendering and compliance overhead. Mobilize digitises pre-qualification and supplier compliance, so a single, well-maintained set of evidence serves every client rather than being rebuilt for each bid. As tendering costs rise, that reclaimed time goes straight back into margin.
• Early warning on supplier financial health. It centralises supplier data, including financial and credit indicators and supports risk scoring so fragile suppliers are flagged before they fail, not after they've stalled your project.
• Faster, delay-free onboarding. Automated capture, validation and document tracking remove the manual bottlenecks that slow suppliers down, addressing the delay-driven cost the BCIS panel warned about.
• Visibility and resilience. A single, accurate view of your whole supply chain exposes concentration risk and keeps qualified alternatives ready, so a price shock in one material doesn't become a programme crisis. Reliable data underpins all of it, see the hidden risks of inaccurate supplier data.

Put simply: if the market is going to push cost risk down onto the supply chain, the firms that manage their supply chain tightly, with less wasted effort, fewer surprises and faster decisions, are the ones best placed to absorb it.