Projects struggle to attract bidders as uncertainty lingers

The latest UK Construction Market Report from international property and construction consultancy, Gleeds, reveals contractors are remaining selective about taking on new work, with almost 90 per cent saying they or their supply chain had declined a tender in the previous three months as onerous contract conditions and lack of capacity converge.

In the wake of this shift in approach, nearly 40 per cent of all respondents claimed to have had difficulty securing a sufficient number of tenderers for projects over the same period.

The report also reveals that confidence in the current government’s commitment to invest is in short supply, with just 13 per cent of those quizzed believing that the National Infrastructure and Construction Pipeline recently published by the Treasury and Infrastructure and Projects Authority will be delivered. High construction inflation and elevated costs putting the squeeze on budgets were cited as the primary barriers, followed by the impact of planning delays and legal challenges.

Commenting on the latest findings, Gleeds CEO Graham Harle said: “Despite lingering uncertainty in the market, there are signs of a gradual improvement in the overall landscape. The number of contractors telling us that projects had been adversely affected by insolvencies fell from 54 per cent to 30 per cent in the latest survey, for example, and we’ve also seen cautiously optimistic stats coming out from the likes of S&P in recent weeks.”

He added: “We must prepare for an upturn and ready ourselves to deliver a substantial investment pipeline that will be crucial for transitioning towards a net zero future and building resilience in our public services, energy and infrastructure.” 

The slowdown in activity over the preceding six months does appear to have led to an easing of labour-related pressures, resulting in the lowest number of respondents reporting issues with labour supply since the survey began in 2021, at just 15 per cent. Long-term shortages promise to prove more problematic, however. Two-thirds of those questioned think it will be near impossible for the industry to recruit and retain enough people to plug the widening skills gap as the sector haemorrhages UK construction workers, with the departure of more than 300,000 since 2019.