Bidding activity heads up but confidence among London’s Tier 1 contractors stays brittle, Aecom survey finds

Tier 1 contractors in the capital have said short-term confidence remains low despite bidding activity being at a rate not seen since the pandemic.

Aecom surveyed Tier 1 and 2 contractors with a combined turnover of £6bn and working on schemes over £50m in the London market.

It said Tier 1 contractors’ tender activity rose to just over 70%, which Aecom said is above the typical range for a market not experiencing major shocks.

It added that Tier 1 and Tier 2 contractors’ combined tender activity was 64% last year, an increase on 2024’s 59% figure. Aecom defines tender activity as the number of tenders invited to, versus the number of tender bids submitted per contractor.

But firms’ fragile confidence is being driven by higher-than-average inflation of 3% and increasing costs for both skilled and unskilled labour.

And it warned that increased demand for data centres is putting a strain on M&E resource “This is driving up prices and competition and is leading some contractors to develop in-house MEP capacity to support projects,” it added.

The report also said more firms were using AI to help out with their day-to-day working with “contractors reporting increased use of the technology for tendering and estimating”.

Brian Smith, head of cost management and commercial at Aecom, said: “This year’s survey shows contractors are balancing the need to secure work with managing risk exposure. As competition intensifies, some are prepared to take on greater risk, such as committing to long programme durations, to win work, while others are prioritising lower-risk opportunities with trusted partners.”

The survey, now in its 13^th year, said order books for this year were looking healthy with no one sector standing out.

It added: “Orders in London were above the long-term average in the final quarter of 2025, with growth across all sectors offsetting the year’s overall decline in residential activity.”