CIF Q1 2026 Outlook Survey: Sector flags major concerns over impact of Iran war on construction costs

The CIF has released its Q1 2026 Construction Outlook Survey.

The survey of 200 construction companies, carried out between 30th January and 24th February 2026, found rising costs as a concern for the industry with 79% reporting a year-on-year increase in the cost of raw materials in Q4 2025. The federation has warned that the recent surge in oil prices following the outbreak of war in Iran could further accelerate cost increases for the industry.

While the residential and non-residential sectors continue to drive momentum, specialist contracting firms outperformed on year-on-year turnover and new order revenue in Q4 2025. The survey also reveals a deepening ‘wait-and-see’ approach to public projects due to administrative hurdles.

Based on responses from 200 construction companies, the survey shows:

• Residential and non-residential sectors dominated activity in Q4 2025 (68% and 52% respectively). Specialist Contracting outperformed on year-on-year (YOY) turnover and new order revenue.
• While General Building and Specialist Contracting expect a strong Q1, Civil Engineering faces headwinds with 43% anticipating order volume decreases.
• Significant YOY price increases persist, most notably among companies with €300k – €4.5m turnover.
• Employment levels rose in Q4, particularly in large-scale firms (€9m+). Broad-based growth is anticipated for Q1 2026.
• Exports remain a growing contributor: 50% of companies reported a YOY increase in export turnover in Q4 2025, and 58% expect export gains in Q1 2026. Around one in four larger companies (€9M+) are currently exporting.
• International project demand is concentrated in Data Centres, Pharmaceutical Plants, Roads and Transport and Healthcare.
• Engagement with Public Works Contracts remains limited. 73% of companies reported no or low involvement in Q4, with 71% expecting no or low involvement in Q1 2026.
• Despite this, 19% of companies expect their Public Works Contracts involvement to increase over the next 12 months. For those anticipating reduced involvement, the administrative burden, bureaucracy, and the low margin on public works contracts are cited as the primary challenges.

Andrew Brownlee, CEO of the CIF, said:  

“As oil prices surge in the wake of the war in Iran, we are seeing renewed concern across the Irish construction industry about the volatility this is injecting into global markets and its impact on the cost of construction materials and fuel. The sector has already been operating in an environment of significant cost inflation for some time. In Q4 2025, 79% of firms reported year‑on‑year increases in raw material costs, and that was before the conflict in Iran began.

“The scale and speed of the oil price spikes since the outbreak of war on 28 February are deeply alarming for the industry. Fuel is a core driver of costs. It underpins the manufacture and transport of construction materials and is a fundamental day‑to‑day business cost. As a small island economy, transportation and logistics form a major component of our material costs, so shocks of this magnitude have an outsized impact on construction project viability.

“Our members are seriously concerned about what these escalating fuel prices mean for project delivery, contract management, and the pipeline of work. Navigating these price shocks will require careful cost management and ongoing monitoring of supply‑chain pressures in the weeks ahead.

“Total capital expenditure is projected to reach €19.1 billion in 2026. While innovative strategies like Delivering Homes, Building Communities 2025–2030 and the Action Plan on Accelerating Infrastructure signal strong state intent, the CIF contends that structural barriers remain. The primary constraints on delivery are not labour or skills, but rather planning delays, legal challenges, and infrastructure deficits and delivery delays.

“To maintain business certainty and prevent firms from pivoting to international markets, the industry requires clear, traceable project pipelines for the €102.4bn NDP allocation (2026–2030). Throughout 2026, the CIF remains focused on driving the competitiveness and productivity needed to convert this record investment into completed projects.”

The survey of 200 construction companies found that:

Business Turnover

• 41% report a YOY increase in turnover in Q4 2025
• 25% anticipate turnover will increase in Q1 2026

New Orders

• 29% report a YOY revenue increase from new orders in Q4 2025
• 22% expect revenue from new orders to continue to increase into Q1 2026 with 42% expecting no change

Employment

• 26% report a YOY increase in the total number of people they employ in Q4 2025
• 23% expect to employ more staff in the coming months, with 60% expecting no change

Costs and Pricing

• 79% report a YOY increase in the cost of raw materials in Q4 2025
• 77% expect the cost of raw materials to continue to increase in Q1 2026
• 54% acknowledge a YOY increase in the pricing of projects
• 51% expect the project pricing to increase in Q1 2026

Read CIF’S Quarter 1 Construction Outlook Survey.