Cost increases threaten infrastructure work

A series of large-scale public sector projects including Crossrail, East London Line and Thameslink could hoover up more public money because of rising construction costs.

The Royal Institute of Chartered Surveyors' (RICS) Building Cost Information Service (BCIS) warned in its Civil Engineering Market report that raw materials and labour costs have risen by 12.2% over the past year, with costs expected to rise another 12% in the next two years.

The further rises could put further pressure on public sector project contingency plans.

BCIS executive director Joe Martin said: "With large projects in rail, roads, electricity, water and sewerage all scheduled over the next two years, the civil engineering sector seems well placed to ride out the current economic downturn.

"However, the industry is facing the possibility of a serious threat caused by a combination of rising costs and the economic downturn, that could result in delays and, at worst, cancellation of some of these schemes."