Yet despite the coolness of tendering conditions and the general weakness of the construction sector over the past two years, this is far from the out-and-out buyer’s market one might expect, and the following issues have been reported on the procurement front line:

• Contractors: Tier one contractors have become increasingly selective about which clients and projects they take on, including how risk is apportioned.
• Capacity constraints: Labour shortages have worsened as the flow of skilled foreign workers and school leavers into UK construction dwindles.
• Pivot problems: Several main contractors refocused their operations during the recent lean years, and pivoting back to their core sectors will take time.
• Subdued subcontractors: Volatile trading conditions and high interest rates have stretched many smaller contractors’ cashflow dangerously tight.
• Enter ESG: While material cost inflation is cooling, the shift to newer, lower carbon specification may prove inflationary for tender prices.
• Market competition: Any sudden release of pent-up demand could heat up tendering conditions, potentially increasing prices and bringing extra scrutiny to the procurement model.
• Public sector funding: Days after taking office in July, Chancellor Rachel Reeves announced a review of nearly £800m of transport projects, and the October Budget could raise further questions about how much public funding will be made available for major programmes.

This edition of the UKMI will examine to what extent these factors could impede growth as the industry gains momentum, and how they can be effectively mitigated, right from the business case stage, through construction and into the asset lifecycle.