Autumn 2021 UK Market Report
Tender, contracts and claims
In line with our Spring and Summer reports, confidence has continued to return with increased levels of tendering activity. Over half of contractor respondents said that tender opportunities had increased over the past quarter and 38 percent see the number of tender opportunities increasing in the next quarter. This is similar to non-contractor respondents, with 45 percent responding that they thought tender opportunities will increase in the next quarter.
Survey respondents indicated that the top five sectors for current tender opportunities are:
- Education including higher education (38%)
- Residential including student accommodation (36%)
- Health and care (31%)
- Commercial offices, refurbishments and fit-outs (28%)
- Public sector (27%)
Our survey shows that respondents saw aviation and hospitality and leisure as the most impacted by COVID-19 and that the impacted sectors are starting to increase in activity, particularly the hospitality and leisure sector.
Score is a weight calculation with items ranked first being valued higher, the score is a sum of all weighted rank counts.
With the market improving and contractors facing commercial pressures related to materials, labour and COVID-19 measures, we are continuing to see larger ranges in tenders than usual as contractors have different workloads, pipelines and appetites for risk.
Pipelines are becoming fuller and with the current challenges, contractors must be engaged early to ensure that they have capacity for the project and to tender. Tender documents need to be robust and risk transfer carefully considered to ensure that it is appropriate and to make projects as attractive as possible. Contractor appetite for single stage Design and Build tendering is reducing.
Materials price increases may see the supply chain under significant financial pressure, and this may see a more contractual approach taken to recoup margins/reduce the burden of additional costs. EY-Parthenon has recently said that “Most profit warnings over the last year cited contract problems that pre-dated the pandemic. Cost inflation will only exacerbate the pressure and companies will need to maintain discipline and visibility over key parts of their supply chain.”
Commentary from The Insolvency Service indicates that the number of registered company insolvencies in September 2021 was 56 percent higher than those registered a year earlier, but 4 percent than those registered in September 2019. Since the start of the pandemic, overall numbers of company and individual insolvencies have remained low when compared with pre-pandemic levels, with government measures put in place to support businesses and individuals. This includes temporary restrictions on the use of statutory demands and certain winding up petitions.
Enhanced government financial support during the pandemic is said to have had an impact. There is a general expectation that there will be an increase in the number of supply chain company insolvencies as we reach the latter stages of 2021 and the ending of government support programmes, and future reporting from The Insolvency Service is anticipated to reflect this.
