Major contractors reluctant to bid for high-profile Olympics jobs

A host of major contractors will shy away from bidding for high profile Olympics work due to the high risk involved and the current problems experienced by Multiplex at Wembley stadium, a leading QS has predicted.

Ross Savage, a partner at Gleeds, said many companies he had spoken to were wary of taking on such work and were more likely to pitch for the infrastructure schemes needed for the 2012 Games.

He said: “A lot of them will be reluctant to go for the major above ground works that have tight deadlines. They will be concerned about sub-contractors holding them to ransom as is happening at Wembley.”

Australian contractor Multiplex is struggling to complete Wembley stadium following a strike over Christmas by steel workers. And the first major new project planned for the Olympics, the swimming pool, has already sparked a dispute over how much it will cost with the government insisting it should stick to the £75m budget.

Savage said contractors were generally becoming more selective in choosing to bid for work due to healthy workloads. This had also led to an increase in the amount of the contract given to overheads and profits, Savage said, which was up to between 5-6% of the contract size from around the 4% mark in previous years.

They will be concerned about sub-contractors holding them to ransom as is happening at Wembley

Ross Savage, partner, Gleeds

Savage added that contractors were increasingly preferring to use two-stage design and build contracts rather than single stage as they took “as much risk out of their side of the business as possible”.

Savage added that contractors were particularly wary of taking on big-scale residential work due to the high quality of finish needed by clients.

Savage’s firm is predicting an overall easing in construction inflation in the UK this year in a report produced for QS News.