Spain's Ministry of Finance, known as Hacienda, has become more open to approving price revision clauses across public works contracts, aiming to offset the rising cost of energy and materials driven by the conflict in the Middle East. Sources familiar with the matter told La Razón that government concern over the issue has grown in recent months.
Energy and raw material costs have risen 45% since the war between the United States and Iran, according to the sources. Since the conflict began, the construction sector has called for urgent, extraordinary measures to offset an increase in costs that comes on top of those already suffered in 2022, after the end of the pandemic and the start of the war in Ukraine. Until now, the government had been reluctant to act.
The sources said many contracts issued by Spain's General State Administration already include some form of price revision, but contracts from local and regional administrations generally lack any compensation clause. Many of these projects, they added, are impossible for construction firms to carry out without price updates, because their long execution periods mean that cost swings often make them unprofitable if carried out at the original awarded price.
Sector demands and deserted tenders
To secure profitability, the construction sector has for some time been calling for changes to the Public Sector Contracts Law and the Deindexation Law, so that public contracts would be excluded from their scope and automatic price revision mechanisms, like those that existed until 2015, could be reinstated.
According to the Confederación Nacional de la Construcción, or CNC, average input cost growth in the sector has ranged between 30% and 40% since 2016, depending on the type of work and materials involved, on top of a 28.5% rise in the consumer price index.
Those increases are already having visible effects. At least 1,130 civil works tenders have gone unawarded so far this year, according to data the CNC collected from its members. The employers' association said the monthly rate at which tenders are going unawarded is 16% higher than it was after the war in Ukraine, reaching an average of 188 deserted tenders a month, compared with 162 during that earlier period.
The CNC also said 747 tenders drew only a single bidder, a pattern it attributed either to projects lacking economic appeal for companies or to tenders being tailored to a predetermined winner, a concern that has also been raised by the European Commission.
CNC president Pedro Fernández Alén recently warned that the scale of the difficulties is such that many companies are slowing down or halting works while they wait for prices to ease, as La Razón had previously reported. Fernández Alén said no administration would admit it publicly, but that this is what is happening.
Nearly 1,200 million euros in losses
Seopan, the employers' association representing Spain's large construction firms, has put figures on the impact of the price rises, estimating that they have already caused unrecoverable cost overruns of nearly 1,200 million euros.
Seopan said the 6,425 public works tendered in Spain between December 2025 and February 2026, with a combined budget of 6,898 million euros based on bids submitted before the conflict began, face an unrecoverable cost increase of 327 million euros even before construction starts. The association also said the execution cost of 33,103 works contracts tendered between December 2024 and November 2025, with a base tender budget of 24,519 million euros, will rise by an average of 3.5%, an aggregate overcost of 868 million euros.
ANCI, a third employers' association representing unlisted companies, said average overcosts on road works reach 15%, and range between 25% and 30% for pavement rehabilitation. It also reported significant overcosts on rail track and platform assembly works, at 11% and 9% respectively, on certain port works such as esplanades, landfills and gravity docks at 17%, and on airport runway work, where overcosts run between 15% and 16%.
Tragsa gets a price adjustment
The government's reluctance to introduce automatic price revisions for private companies contrasts with its decision to let the state-owned firm Tragsa and its subsidiary Tragsatec apply a price adjustment because of the war.
According to a resolution dated April 24, 2026, and published in Spain's Official State Gazette, the Boletín Oficial del Estado, on April 28, the government authorized both companies to update their prices under two circumstances. The resolution states that, in order to keep tariffs aligned with the Tragsa Group's real costs amid the current economic uncertainty and raw material price swings, an exceptional economic update of simple material prices could be approved during September, provided deviations from the approved tariff for a given material type, upward or downward, exceed 20%.
The resolution also allows for a temporary easing of the tariff regime, on an exceptional basis, in cases where parts of a commissioned job go to third parties through deserted tenders, following a regulated procedure that the resolution also sets out.
