Tendering and contracts

The outlook for tender opportunities is optimistic, with three-quarters of survey respondents saying that tender opportunities remained the same or increased in the last six months and just 13% forecasting tender opportunities to decrease in the next six months.

A significant pipeline of public investment, infrastructure works and mining projects is expected to support the recovery and growth of the Peruvian construction industry.

The positive outlook continues as we look ahead to 2025, with six in ten respondents forecasting more tender opportunities compared to 2024.

Our survey respondents said they are seeing most tender opportunities in infrastructure. This is no surprise given that ProInversion, Peru’s private investment promotion agency, shared plans to award 40 public-private partnership (PPP) projects worth $8 billion throughout 2024. In 2023, ProInversion awarded 14 projects worth $2.3 billion.

Also seeing high levels of tender opportunities are education and healthcare. The Bicentennial Schools programme to construct 75 new, state-of-the-art schools is ongoing, with the completion of the last school expected in 3Q 2025.

Gleeds has joined forces with AECOM and Currie & Brown in a joint venture (UK Healthcare Alliance) as programme manager for two highly complex hospitals in Piura and Trujillo , in northern Peru. Expected to be operational from 2028, the new hospitals will offer advanced diagnostic and treatment options, reducing the need for patients to travel outside the region for high-quality, specialised care.

The programme continues a trend of large-scale infrastructure programmes being delivered through government-to-government agreements following in the success of the Bicentennial Programme (currently nominated for the APM transformation project of the year) and the ANIN programme formally known as ARCC (winner of the APM project of the year 2023).

Nearly 40% of our survey respondents see predominantly all new build opportunities, with a further 22% seeing mostly new build with some refurbishment.

Just under a quarter of respondents said they are mainly seeing refurbishment projects. Whilst this is significantly below the new build level, refurbishment is expected to increase due to concerns about embodied carbon emissions and the need to reuse resources to reduce these. With the modernisation of assets, there will be greater opportunity for successful refurbishment in the future.

Four in ten of our survey respondents said they or their supply chain had declined a tender in the past six months, with 35% saying this was due to the proposed conditions and risk profile of the project, 13% expressed it was due to a lack of capacity and 44% said it was due to a combination of these factors.

Therefore, it is important to ensure that projects are de-risked as much as possible before tender and that risk transfer is fair. Pain/gain mechanisms can be considered to foster a collaborative project environment.

Also linked to ensuring fair apportionment of risk is insolvencies. Fixed price contracts have caused issues for the supply chain as costs rapidly increased. Insolvencies can have enormous consequences for projects, causing delays and additional costs to find another contractor to finish the work; therefore, due diligence and close monitoring is important to avoid such consequences.

Insolvencies can also reduce supply chain capacity for future projects, causing cost escalation and diminished returns on investment, which means that budgets do not reach as far.

Most respondents said that typical main contractor overhead and profit margins are at the higher end of the range in the current market. This aligns with results of other questions that there is sufficient work and the supply chain is able to choose what it works on. Higher overhead and profit levels are positive for the industry, enabling investment and innovation.