The construction sector has warned that the surge in oil prices could "further accelerate cost increases" for the industry.
The Construction Industry Federation’s Outlook Survey for the first quarter of the year found that rising costs was a concern for the sector.
The research shows that 79% of the companies surveyed reported a year-on-year increase in the cost of raw materials during the fourth quarter of last year.
77% said they expect the cost of raw materials to continue to increase during the first three months of this year.
The survey of 200 construction companies was carried out between 30th January and 24th February, before the Middle East conflict escalated and oil prices surged.
The Chief Executive of the CIF, Andrew Brownlee, said there is a "renewed concern across the Irish construction industry about the volatility" the war is injecting into global markets and its impact on the cost of construction materials and fuel.
He said the sector has already been operating in an environment of "significant cost inflation" for some time", even 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."
Mr Brownlee said fuel is a core driver of costs in the industry.
"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," he added.
"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."
Companies adopting a ‘wait and see approach’
The Q1 2026 Outlook Survey also found that engagement with Public Works Contracts "remains limited" and the CIF said it has revealed "a deepening ‘wait-and-see’ approach" to public projects due to administrative hurdles.
73% of companies reported no or low involvement in the fourth quarter of last year, with 71% expecting no or low involvement in Q1 2026.
Despite the findings, the survey said 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."
"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," according to Andrew Brownlee.
The CIF CEO said 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 also showed that employment levels rose in Q4, particularly in large-scale firms, with "broad-based growth" anticipated for Q1 2026.
