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Construction Disrupted Episode 98 - Is change destroying construction? (14.01.26)

It's good to be back (Happy New Year everyone). 2026, the year construction builds more than just homes, it's the year for building positivity, one episode, three headlines, two opinions and one takeaway at a time. Let's get to it:

1. Market Forecast: Strong Order Books Drive Tender Inflation as Smaller Firms Struggle

The UK construction industry demonstrated resilience in 2025 despite economic uncertainty. While overall sentiment suggested a slowdown, data revealed that construction output grew faster than services or manufacturing. However, this growth came with challenges:

1. Tender Price Inflation: Tender prices increased by 3.0% in 2025, driven by persistent inflation and subdued demand that failed to yield cost savings.
2. Building Costs: Building costs rose by 3.5%, with significant price hikes in imported materials like wood, aluminium, and electric water heaters.
3. Smaller Firms Struggling: Smaller construction firms faced difficulties due to rising costs and economic pressures, highlighting the need for targeted support to ensure their survival.

In parallel, the Building Safety Regulator (BSR) reported a record year-end performance in processing Gateway 2 building control applications. Key highlights include:

1. A 250% increase in Gateway 2 determinations in the final quarter of 2025 compared to the first quarter.
2. A focus on resolving legacy cases, with 83% of older applications approved.
3. The establishment of an Innovation Unit to streamline approvals for new build applications, achieving results in just 12-13 weeks.

These developments indicate a positive trajectory for the industry, but challenges such as cost inflation and the struggles of smaller firms remain critical issues to address.

2. Fast Homes at Scale: ‘We’ve All the Tools We Need to Solve Homelessness’

The homelessness crisis in London has reached alarming levels, with over 130,000 households in temporary accommodation as of 2025. The cost of housing families in temporary solutions has skyrocketed to nearly £3 billion annually, surpassing the budget for building affordable homes.

Despite the challenges, innovative solutions exist to address this crisis:

1. Modular Construction: Companies like ZED PODS and RSHP have developed modular housing solutions that can be deployed quickly and efficiently. For example, ZED PODS installed 25 zero-carbon homes above a car park in Bromley, retaining most parking spaces below.
2. Prototype Modular Homes: RCKa and Rollalong have created high-quality modular...