Recent findings show that many contractors are hesitant to bid on new projects, citing tough contract conditions and capacity issues.
- A significant number of contractors have declined tenders recently due to challenging contract conditions and a lack of capacity within the supply chain.
- Only a small fraction of industry insiders feel confident in the government’s infrastructure plans coming to fruition.
- Current high inflation rates and elevated costs are putting immense pressure on budgets, complicating project initiations.
- Despite some labour shortages, there are optimistic signs of market improvement, though long-term staffing remains a concern.
In the latest findings from construction consultant Gleeds, it has been revealed that contractors are increasingly selective when it comes to taking on new work. Nine out of ten contractors surveyed reported declining tenders in the past three months, mainly due to onerous contract conditions and a lack of operational capacity. Such hesitance amongst contractors is becoming a significant challenge in the industry.
Furthermore, nearly 40% of respondents indicated difficulty in attracting an adequate number of bidders for tenders. This situation is exacerbated by a prevailing lack of confidence in the government’s commitment to deliver on its infrastructure and construction promises. As it stands, only 13% of those surveyed believe in the viability of the government’s National Infrastructure and Construction Pipeline.
The construction sector is also grappling with substantial inflationary pressures and elevated costs, which are increasingly contradictory to budgetary constraints. High levels of inflation in particular are creating immense obstacles, making it challenging for projects to get off the ground. Planning delays and legal complications further add to the industry’s woes.
However, there are glimmers of hope in the landscape. The number of projects negatively impacted by contractor insolvencies has decreased from 54% to 30%, according to Gleeds’ latest survey. Graham Harle, the chief executive of Gleeds, notes a trend towards cautious optimism, underscoring the importance of preparing for future opportunities, particularly those facilitating the transition towards a net-zero future.
While short-term easing can be seen in labour-related challenges—only 15% of respondents report staffing issues, the lowest since 2021—long-term challenges persist. The ongoing exodus of workers from the UK construction industry has resulted in a shortage of over 300,000 workers since 2019. This attrition poses a long-term threat to the sector’s ability to maintain a skilled workforce necessary for future demands.
The construction industry must navigate complex challenges to attract bidders and ensure sustainable growth.
