24 February 2021
A survey from independent construction, property and management consultancy Rider Levett Bucknall UK reveals key concerns for construction contractors in the next 12 months.
Providing a snapshot of the latest market sentiment on procurement trends and issues, the survey found that the top concern, unsurprisingly, is the effect of Covid-19 on the construction market.
A further concern is the impact on material cost and availability and the capacity of the supply chain, rather than the pipeline of work.
Paul Beeston (pictured), partner at RLB Midlands, said: “Staying close to the supply chain is essential for us as a construction consultant to really understand the key trends facing contractors so that our advice is founded on expert market knowledge. This allows us to plan procurement routes that deliver better outcomes for clients.
“With the Government outlining construction as a key to economic recovery, not only in the Midlands, but nationwide, we see the findings from our procurement survey as a key indicator of how the next 12-18 months economic landscape might pan out.”
While there is evidence of increased competitive practices such as single stage routes to market, there has also been a pivot towards negotiated routes, as clients have engaged more collaboratively through a period of profound market uncertainty.
The survey also revealed that in the Midlands, private sector clients are more likely to use value based selection criteria than the UK average.
The region also has the highest use of Design and Build in the country and a tendency to issue earlier stages of design with a design and build tender than in other parts of the UK.
With the average fixed price period offered by contractors decreasing by five months since 2019 to just 16 months, and input costs rising quicker than tender prices, it looks like many contractors are carefully watching their input cost risk as tender prices languish.
Although new methods of design and construction are now becoming mainstream within the industry, RLB’s survey found that BIM (Building Information Modelling) is still not being provided at tender stages, with only 28 per cent of those surveyed stating that projects had provided models in procurement.
Although MMC (modern methods of construction) rates of adoption are climbing, there is slower progress in that adoption than had been anticipated by contractors in RLB’s previous procurement trends survey in 2019.
Adding to the fears over availability and cost of materials, the survey suggests an uncertain 18 months ahead. RLB Midlands says that this is something clients will need to respond to as they plan their procurement activity across this time.