More contractors turning down chance to price jobs, Gleeds report finds

More evidence of firms turning down the chance to bid jobs has emerged with Gleeds’ latest spring sentiment survey saying that 90% of respondents saying they or their supply chain had refused to price a scheme in the previous three months.

And the survey added that 40% of respondents said they had had “difficulty securing a sufficient number of tenderers” for projects over the same period.

Onerous contract terms and capacity issues were blamed for the issues and follow recent concerns flagged by London cost consultants Core Five and Exigere and the firm set to handle the administration of Osborne.

Earlier this month, Core Five said the number of firms able to carry out work on major building schemes was limited, making these projects comparably more expensive than smaller jobs.

In its latest market update for Q2 this year, the London cost consultant said the number of main contractors and subcontractors willing to carry out schemes worth £200m and above was much smaller than jobs below this amount.

Exigere said façade contractors “are generally opting not to bid for projects which have insufficiently developed designs or involve main contractors with ‘shakier’ credit ratings – too many have been caught out taking these risks before”.

Kelly Boorman, the head of construction at restructuring firm RSM, now officially confirmed as administrator of Osborne, said: “There is a different feel this time to the bid and procurement environment in the industry, with a large number of businesses scaling down their operations either through a reduction of contracts or an exit from large-scale, complex agreements knowing they can protect margins through the careful selection of projects.

“There is what appears to be a shift of power, in that those bidding now are much more willing to step away from an opportunity.

“A number of firms used the pandemic to tighten up their operations, access data and analysis on contract performance, and to focus on what they deliver best, as well as how they create further efficiencies. This, coupled with better technology in the design stage, has allowed many of these firms to gain clarity on what they want to tender for – and what they may choose to simply step away from.”

Meanwhile, just 13% had any faith that the National Infrastructure and Construction Pipeline recently published by the Treasury and Infrastructure and Projects Authority will be delivered. Respondent said inflation and rising costs would put the brakes on the programme while schemes, they added, would get bogged down by planning delays and legal challenges.