Large public sector projects such as the 2012 Olympic Games are set to weigh more heavily on the public purse than expected owing to rising construction costs.

In a report that raises further questions on the viability of long-delayed schemes such as Crossrail, the Royal Institution of Chartered Surveyors will today warn that there could be delays and, at worst, the cancellation of some large public sector schemes because of changing financial conditions in the sector.

RICS’s building cost information service shows that raw materials and labour costs have risen by 12.2% over the past year and forecasts that costs will continue to rise by a further 12% over the next two years. “Public sector project contingency plans will come under increasing pressure to stay out of the red,” it says.

Financial Times