Escalation remains elevated, with no immediate prospect of cost pressures easing. How soon may this change, and how might the outlook vary across markets?
May 2024 highlights
- Escalation forecast to 2026 remains stubbornly elevated, around 4.5-5.5% per annum on average nationally. This is more so in Building, where WT’s escalation view has increased, than Infrastructure.
- Key to this outlook is new analysis which shows investment in new sector capability has been sub-par over many years. This has meant an environment of higher escalation has persisted even with supply chain and COVID-led disruption now largely behind us.
- WT’s analysis not only points to sub-par investment for the sector as a whole, but also specifically for the pipeline of key trades and the manufacture of building materials.
- Elevated escalation more likely to persist to 2026 and beyond, with increased likelihood of recurring escalation spikes as sector activity bumps into capability constraints more regularly.
