Preparing for the upturn: how an industrialised mindset can stabilise construction’s supply chain

At the beginning of the year, there was hope for a return to form for the construction sector, with order books beginning to fill and expectations of a stronger period of growth on the horizon. These hopes, however, were dashed following the US-Israeli assault on Iran on 28 February.

Indications of how long the war will last have been conflicting, with statements issued by the US continuing to shift both its timescale and ambitions, and global sentiment no more certain. What is clear is that UK construction is highly exposed as a result, with higher fuel and material costs working their way through the supply chain, squeezing margins and limiting the progress contractors had hoped to regain this year.

The rising oil prices we are now experiencing have historically impacted construction costs directly, affecting everything from logistics and plant operations to the price of key manufactured materials.

There will inevitably be further disruption as a result of the conflict in the Middle East, but in the hope that the sector may, in future months, emerge into a more stable phase, it would be pertinent to question whether the industry is ready for that much anticipated growth and whether the supply chain is sufficiently resilient and prepared to deliver. And, perhaps most importantly, whether construction has put its own house in order to avoid the mistakes of previous cycles.

This oscillation between contractor dominance and supplier leverage is a familiar feature of our industry. But it is deeply unhealthy

Here, the signs are less encouraging. After a prolonged period of anaemic – or non-existent – growth, much of the supply chain has been scrambling for work. Main contractors have, for some time, held the balance of power, driving procurement strategies focused on short-term price competition.

As workloads increase, that dynamic will inevitably reverse. Suppliers will once again become more selective, negotiate from a position of strength, and prioritise clients who offer certainty and continuity.

This oscillation between contractor dominance and supplier leverage is a familiar feature of our industry. But it is deeply unhealthy. Too often it fosters adversarial behaviours, transactional relationships and a race to the bottom on margins, undermining productivity, quality and long-term resilience.

If construction is serious about improving outcomes, it needs to move beyond this cycle. Adopting an industrialised construction mindset provides a credible pathway to do so.

This is not a quick fix, and it requires a shift in behaviour as much as process. But there are practical steps which the industry can take now to begin that transition.

First, rethink procurement models. Too many projects still default to repeatedly tendering work to the lowest price, often with little regard for capability, capacity or long-term value. In an industrialised model, the emphasis shifts from one-off transactions to longer-term relationships.

Frameworks, alliances and strategic partnerships give suppliers visibility of future workload and the confidence to invest in people, skills and manufacturing capability. For clients and contractors, that investment is repaid through improved certainty on cost, programme and quality.

Second, share the pipeline earlier and more transparently. One of the most powerful, but underused, tools available to main contractors is visibility of future work. Sharing a credible pipeline with key suppliers and designers allows them to plan resources, lock in capacity and commit to rates at an earlier stage.

Instead of renegotiating in 12 or 18 months’ time, when market conditions may have shifted dramatically, teams can align around realistic costs and programmes from the outset. Pipeline transparency also supports standardisation, repeatability and learning across projects, which are all core principles of industrialised construction.

Third, involve the supply chain earlier in design and planning. Industrialised construction is fundamentally about designing for manufacture and assembly, not forcing suppliers to retrofit solutions once designs are fixed. Early engagement of specialist contractors and manufacturers in planning, sequencing and technical design can unlock significant productivity gains.

It reduces waste, simplifies interfaces and improves buildability. Crucially, it also creates shared ownership of outcomes, rather than transferring risk down the supply chain once decisions have already been made.

Fourth, align on data, digital platforms and compliance. This is critical and too often overlooked. An industrialised approach relies on accurate, consistent and accessible data flowing across the entire supply chain.

Main contractors must work with their supply chain partners to ensure that everyone is operating on common digital and design platforms, with agreed standards for information management and record keeping.

Those contractors and clients who invest in stronger, more collaborative supply chain relationships today will be far better placed to deliver tomorrow

When it comes to technology adoption, a project team is only as fast as its slowest participant. It is simply not viable for two-thirds of the supply chain to be working in fully integrated BIM and digital models while the remainder relies on outdated systems. With the building gateway process now firmly embedded, consistent, auditable information has never been more important.

Underlying all of this is a shift in mindset: from managing risk through contractual transfer, to managing it collectively through collaboration, certainty and repeatability. Industrialised construction does not remove risk, but it does make it more visible, manageable and shared.

If the industry is indeed on the cusp of a new growth cycle, now is the moment to act. Those contractors and clients who invest in stronger, more collaborative supply chain relationships today will be far better placed to deliver tomorrow, while those who fall back on old habits risk finding that capacity, capability and trust are in increasingly short supply.

Hope remains that growth is coming. The question is whether construction is ready to make the most of it this time around.

Paul Ruddick is founder and chairman of Reds10