Construction Inflation
Project build cost inflation between appraisal and completion.
Introduction
Who this is for: Developers appraising schemes that will start on site months after pricing.
Why it matters: Build costs are rarely fixed at appraisal. A scheme priced today but starting in a year, running 18 months, faces inflation across the whole period — and mid-point inflation is the right measure, not end-point.
Typical scenario: A scheme priced now, starting in 9 months, with an 18-month build.
- Appraising at today’s costs for a scheme starting in 12 months.
- Applying inflation to the end date rather than the mid-point of the build.
- Assuming a fixed-price contract removes the risk — it prices the risk in instead.
Inputs
Scheme
months
months
Analysis
At 4% annual build inflation, a £3,000,000 scheme starting in 9 months with an 18-month programme should be appraised at £3,181,788 — the cost at the build mid-point, 18 months out. That is £181,788 of inflation to carry.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Live Results
Inflated Build Cost
£3,181,788
Inflation Allowance
£181,788
Total Inflation
6.06%
Months to Build Mid-Point
18.00x