Procurement strategies will need to change to reflect market conditions – Gleeds survey
A SURVEY conducted by Birmingham-based construction firm Gleeds highlights a growing divide between client and contractor responses to prevailing market conditions.
Contractor and supplier confidence around future workload has strengthened as tender opportunities become more plentiful. Heightened construction activity means the supply chain can be more selective about the jobs they take on.
However, contractors also report that clients are being slow to accept that there is a less competitive desire to win work and that supplier capacity is still limited following the recession.
Client pricing expectations remain low, fixed, single stage and competitive. Rising construction inflation, spurred by labour and materials shortages, has led to an increase in tender prices making competitive pricing strategies unattractive to the supply chain.
With contractors less willing to agree to these terms, the survey suggests there is a danger that delays in getting projects onto site could ensue, as tender negotiation periods lengthen.
In the longer term, project programmes and budgets could also be at risk, as the supply chain is forced to try and recuperate money during the construction phase.
Lindsay McCombe, director for Gleeds for the West Midlands, said: “It is likely that procurement strategies will need to change. Whilst we need to ensure that the supply chain is operating realistically in the market, clients should be reassured that they are getting the output and value they are looking for.
