Power is shifting to subcontractors

Catherine Welch RWK Goodman

With suppliers in a better position to call the shots on contract terms, the industry must recalibrate its approach to risk management

The construction industry is immersed in a storm of circumstances impacting the viability of projects across the UK. Employers and investors that have previously expected contractors to accept contract terms fully wrapping all the risks on construction projects for an all-in lump-sum price are now finding this approach unrealistic. The industry is witnessing the cumulative effect of an ongoing shortage of skilled labour, rising inflation rates, residual covid-19 impacts, rising energy prices, a slow planning system and a hardening professional indemnity insurance market. 

Main contractors are already struggling to deliver current projects procured on lump-sum contracts that do not allow for recovery of rising inflation costs. The prevailing contract approach previously adopted was for contractors to be held to existing lump-sum pricing arrangements in their upstream contracts, without any allowance for fluctuations. This is a particular concern for contractors that are yet to secure certain packages on current projects. Subcontractors are not only changing their prices but also demanding more favourable contractual terms.

This is PREMIUM content, available to subscribers only

You are not currently logged in. Subscribers may LOGIN here.

SUBSCRIBE to access this story

Gated access promo

SUBSCRIBE for UNLIMITED access to news and premium content

A subscription will provide access to the latest industry news, expert analysis & comment from industry leaders,  data and research - including our popular annual league tables. You will receive:

  • Print/digital issues delivered to your door/inbox
  • Unlimited access to building.co.uk including our archive
  • Print/digital supplements
  • Newsletters - unlimited access to the stories behind the headlines

Subscribe now 


Get access to premium content subscribe today