Quarterly tender growth hits post-pandemic low

The survey was released by Southern Construction Framework (SCF) a construction procurement framework delivered for and by the public sector in the South of England.

The modest increase in tender workload compares with a 2.5 per cent increase in Q3 2023, a 3.5 per cent increase in 2022 and an 8.5 per cent increase in Q3 2021.

It found that M&E build costs, a package which accounts on average for around 20 per cent of project construction costs, continues to place pressure on project affordability, with costs 5.5 per cent higher than last year. 

While tender workload has increased by an overall 1.4 per cent this year, SCF’s data showed that the variation in appetite for tendering was significant across trades.

There was a near split among businesses, reporting either an increase (32.7 per cent) or decrease (26.5 per cent) in tender workload.

Trades reporting the highest increase in tender workload include: 

• Brickwork (4.4 per cent)

• Drylining (4.7 per cent)

Those reporting a decrease include:

• Groundworks (-8.1 per cent)

• Windows (-6.2 per cent)

• Curtain Walling (-2.2 per cent)  

Build costs

While build costs only increased by an average of 1.6 per cent across trades in this quarter, 0.4 per cent less than this time last year, build costs for some trades continued to rise.

The trades with the largest increase include: 

• M&E (3.6 per cent)

• Drylining, 3.5 per cent

• Brickwork (2.5 per cent)

• M&E (5.5 per cent)

The Department for Business & Trade reported material prices for All Work construction falling by 1.1 per cent over the course of the year to August 2024.

SCF suggests that this rise in build cost is being triggered by other factors such as labour. 

According to the Building Cost Information Service (BCIS), the Labour Cost Index is expected to increase by 16 per cent from Q3 2024 to Q3 2029. 

The report revealed that labour shortages are continuing to impact M&E, which is being reflected in package prices.

The news comes as The Consumer Prices Index (CPI) rose by 1.7 per cent in the 12 months to September 2024, with SCF’s trade suppliers reporting building cost at 4.5 per cent greater when compared with the same time last year. 

Janara Singh, assistant framework manager at SCF, said: “A demonstration of value for money is critical for public sector projects. It is important that clients take time to consider procurement approaches to help maximise market interest.  

“While tender workload has slowed, our findings reveal a forecasted increase in tender workload over the coming year of 5.5 per cent, reflecting how confidence remains despite persistent cost challenges. 

“Clients must however prioritise early engagement, where risks in design, logistics, budget, or timelines can be identified. This proactive approach ensures contingency plans are in place, avoiding costly errors later, and giving project teams the assurance needed.”

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