Irish construction market faces rising costs and greater procurement pressure

Ireland’s construction sector continues to maintain strong levels of activity, but growing cost pressures, increasing competition and supply chain uncertainty are creating a more challenging environment for project delivery and procurement planning.

A new report from Turner & Townsend found that construction output remains supported by sustained housing demand and continued public sector investment. Housing currently accounts for approximately 62% of overall market activity, with public housing delivery continuing to outperform private sector output and helping maintain momentum across the industry.

However, despite stable project pipelines in the near term, market conditions are becoming more competitive. According to the report, 76.9% of contractors described current tendering conditions as “lukewarm”, while 30.8% identified signs of a cooling market. This reflects increasing competition for available opportunities and growing pressure on contractor pricing and commercial margins.

At the same time, cost escalation is re-emerging as a major concern. The report highlighted that geopolitical uncertainty in the Middle East is contributing to wider supply chain disruption, increasing transport and energy costs and reducing supplier willingness to offer fixed-price commitments.

Several key construction inputs are forecast to rise significantly in cost, including reinforcement bar (14.7%), structural steel (13.0%) and concrete (10.9%). Labour costs are also expected to increase by approximately 3–4%, placing additional pressure on project budgets and creating a widening gap between tender pricing and underlying delivery costs.

Looking ahead, order book visibility remains relatively strong, with average coverage estimated at around 78% for 2026. However, this is expected to decline to approximately 55% by 2027, signalling increased competition and reduced certainty over future workloads.

For procurement and construction leaders, the findings reinforce the importance of collaborative procurement models, proactive supplier engagement and stronger risk management practices. As market conditions become more volatile, organisations are increasingly focusing on securing cost certainty, strengthening supply chain resilience and maintaining sustainable delivery performance.

Explore the original report for further insight into construction costs, market conditions and procurement trends.