Tender Market is Active but Still Price-Driven
The UK Built Environment Sector is experiencing no shortage of opportunities. According to the Centre for Construction Best Practice (CCBP) Industry Confidence Report, which captured the views of contractors and consultants across the sector, workloads remain high and pipelines healthy. Yet behind the busy tender market lies a persistent frustration: opportunities are plentiful, but price remains the dominant driver, often overshadowing quality, value, and long-term resilience.
Opportunities
Survey responses show that contractors are far from idle. 74% of respondents agreed that there are a high number of tender opportunities available to them. This sense of an “active market” is reinforced by the fact that 81% reported strong win rates over the last six months. On the surface, this is encouraging – contractors are finding work and securing projects at a consistent rate.
This activity is further reflected in sector-specific data. The residential market remains active, with 77% of respondents reporting engagement, while the education sector shows similarly strong momentum with 88% of respondents reporting strong activity. Commercial real estate is active with 73% highlighting activity in this area, and industrial/logistics also reported high levels of opportunity (81%). Even in sectors where activity is more moderate, such as healthcare (65%) and energy (67%), contractors are still identifying a steady flow of opportunities to pursue.
Quality Concerns Persist
However, beneath the surface lies a nagging concern. An overwhelming 75% of respondents did not strongly endorse the idea that the quality and realism of tenders have improved. This highlights a disconnect. While the volume of opportunities is high, the quality of those opportunities is questionable.
Contractors are increasingly concerned that tenders are being designed with unrealistic cost assumptions or structured in a way that prioritises lowest-price bids above all else. This practice not only squeezes margins but also risks undermining quality, safety, and sustainability.
Qualitative responses reinforce this sentiment. Many contractors voiced their desire for procurement reform that moves beyond lowest-price competition. As one put it, there needs to be “a more permanent shift away from lowest fixed price tendering and towards early contractor involvement.” Another was more blunt: “Move away from price only tendering.”
The Price-Driven Problem
The dominance of price in the tender process is not new, but the industry’s frustration with it is intensifying. Price-led tendering may deliver short-term savings for clients, but it often comes at the cost of long-term value. Contractors forced into razor-thin margins have less ability to invest in innovation, sustainability, or skills development. Over time, this weakens the industry’s resilience and amplifies risks of insolvency.
The survey’s findings also reveal the broader context: a volatile economic backdrop that exacerbates these risks. Respondents comments to what the biggest threat to the UK construction industry point to concerns about the UK’s economic environment; with answers such as “UK economy is dire,”, “Lack of growth in UK economy,” and “Macro economic issues.” Against this fragile economic outlook, the reliance on price-led tendering becomes even more precarious.
Shaping a Healthier Tender Market
For the tender market to serve both clients and contractors sustainably, reforms must address the underlying imbalance:
- Shift towards Most Advantageous Tenders. Clients should assess bids not only on cost but on quality, sustainability, social value, and whole-life performance. The Procurement Act is a big step to ensuring this.
- Improve realism in tender documentation. Budgets and requirements need to reflect market realities, particularly in an inflationary environment.
- Encourage early contractor involvement. By engaging contractors earlier, clients can benefit from buildability insights, realistic pricing, and collaborative risk management.
- Foster transparency and trust. Clearer communication around how tenders are structured and evaluated can reduce the adversarial nature of procurement.