Can contractors confidently submit fixed-price tenders in the current market?

We work in an industry that stood strong during the first year of the pandemic, with many contractors and their workforces going above and beyond to ensure that site programmes faced minimal delays. Steep prices were paid to guarantee material deliveries to site and long hours were worked in ensuring important UK developments would not come to a standstill.

Heroes in aiding UK economic recovery some might say, but this was not enough for the industry to contend with, as on Christmas Eve 2020 the European Union and the United Kingdom agreed on a post-Brexit trade agreement which came into effect as of 1st of January 2021. The Trade and Cooperation Agreement (TCA) introduced changes that had a major impact on procurement and construction site programmes. Products and materials become increasingly difficult to import with a raft of new measures in place. Common supplies such as timber, roof tiles and cement prices rocketed with contractors being forced to swallow the price and accept the commercial impact it has on the overall project budgets. Sadly, this has been too much for several contractors.

With the noticeable delay on tenders due this month, we wonder if investors are now re-evaluating project construction cost before going to market. Not only is the industry facing the adverse impact from recent energy cost hikes and interest rate increase, but nobody knows quite yet if the conflict in Ukraine will bring about another steep hike in energy and fuel prices. This could lead to a further increase in costs of materials such as glass, bricks, and plasterboard.

We wait with bated breath to read the Spring Statement due to be published by the Chancellor Rishi Sunak on 23rd March. Will the current strain on the supply chain and materials to the construction sector be addressed? Or will the industry be left in fear that the worst is still yet to come.

We will continue to help our clients submit competitive tenders during these uncertain times by providing accurate bills of quantities. Accuracy and a timely turnaround remain key to both ours and our client’s future success!