M&E sector leads rise in subcontractor tender activity

Subcontractor tender activity is on the rise despite lingering concerns about projects crossing the line to start construction.

The latest survey of around 150 package contractors by leading framework provider Southern Construction Framework reveals tender activity improved 3.2% in the first three months of 2024.

M&E firms saw the biggest rise in demand to price work, up 9.5%, while drylining subcontractors also enjoyed a 6.7% rise.

This rise in activity is being driven in the main by both rounds of project value engineering to achieve affordability and office upgrade work.

On the structural building side, steelwork and concrete frame specialists also saw a rise in demand, ahead 5.4% and 4.9%, respectively.

The survey of southern region firms indicates that pipelines are still relatively strong, but subcontractors reported that affordability pressures on projects remain common with many schemes vulnerable to outdated budget setting and high interest rates.

Build cost continued to rise in the first quarter, up by an average of 2.3%.

Across the sectors, greatest inflation was seen in drylining (4.7%), M&E (4.6%), brickwork (2.6%), carpentry and joinery (2.4%).

A quarter of subcontractors surveyed said their biggest challenge over the next 12 months was the certainty of projects progressing from preconstruction to onsite, as a result of ongoing programme delays and project cancellations due to rising costs, this is leading to concerns over securing sufficient workload, despite high tender workload levels.

Adrienne Turner, framework manager at SCF, said: “The combination of firms seeing more tendering opportunities despite the high level of insolvencies is creating a complex mix in the industry, likely leading to some firms nearing collapse going in with competitive bids to keep them afloat.

“With challenges likely to remain throughout 2024 as interest rates remain high, clients need to be careful about who they select as simply selecting on price could be incredibly damaging for a project if the chosen firm is unable to deliver.

“While challenges are likely to persist throughout 2024 as interest rates remain high, its vital that clients utilise early engagement with their main contractor to ensure design solutions incorporate current market pressures before detailed design.“


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