FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
One hundred days after the outbreak of conflict in Iran, the UK construction sector is facing mounting pressure from rising energy costs, persistent inflation and weakening demand, according to analysis by the Building Cost Information Service (BCIS).
While the conflict initially impacted commodity markets, its effects are now spreading more widely through the economy, creating challenges for construction firms, clients and investors alike.
Dr David Crosthwaite, BCIS chief economist, said: “The conflict is no longer simply a commodity market story. The longer it continues, the more its effects are spreading.
“Construction is being affected through multiple channels simultaneously. Higher energy costs are increasing pressure on supply chains and materials, while inflationary pressures and uncertainty around interest rates are weighing on confidence, investment decisions and demand.
“What makes the current situation unusual is that the industry is experiencing rising cost pressures at the same time as activity is weakening. Previous shocks have often been characterised either by strong inflationary pressures or weak demand. Today we are seeing both forces at work simultaneously.”
The most immediate impact has been through energy markets. Brent crude oil has remained above $100 per barrel since mid-March, while natural gas prices have also remained elevated. This has increased transport, logistics and manufacturing costs across the construction supply chain.
Dr Crosthwaite added:
“The longer the conflict continues, the greater the risk that higher energy and commodity costs become embedded throughout supply chains. The key question for the industry is not whether rising costs will affect tender prices, but how far those pressures can feed through in a market where demand remains so weak.”
FM teams are having to manage more sites, contracts and client expectations with the same number of people. AI isn’t replacing those people: it’s absorbing the coordination overhead that was stealing their time.
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