The UK construction industry has recently experienced the sharpest downturn since 2009, with the second quarter of 2016 showing slowed market growth and low business confidence according to the Markit/CIPS purchasing managers' index (PMI).
To ease the decline in the industry it is thought that interest rates will be cut to boost the UK economy so firms will feel less pressure. Sectors such as construction would benefit from this as borrowing becomes cheaper, boosting investment and hiring by firms.
The loss of momentum has been prompted by uncertainty following Britain’s vote to leave the EU. We look at what effect this has on public sector contracts in the construction industry.
Public Sector Contracts
Many firms will become more reliant on public sector contracts, as securing the work is a guaranteed source of income, and for some firms even a necessity in order to continue trading during uncertain times in the market. This will increase the level of competition when bidding for contracts as they become more lucrative and firms look away from private contracts.
The main point to consider when writing a tender or bidding for a contract is that your bid submission must include elements showing value for money and added benefits, so that the contracting authority can see your company has the most economically advantageous tender. Like businesses, authorities are also under pressure to make cost savings at this time, so value for money is a key differentiator in the public procurement process.
To put forward an average bid submission, at an average price, is not going to secure you a new contract in the current market. This is something which firms who are the incumbent for a contract being put out to tender should be aware of, and not take for granted that they will be awarded a contract just because they are currently delivering the service. If a competing company offers better value for money, innovations and additional benefits, at a low price, then the authority will look to change suppliers.
Repair and Maintenance Framework
One large contract currently out to tender is the Home Group repair and maintenance services framework, which includes the following areas: responsive repairs, void works and planned maintenance to three geographical regions across the UK. With an expected total contract value of over £13 million, this is one example of an opportunity within the construction industry which may create subcontractor prospects and jobs in the geographical areas, amidst slowed market growth.
The full contract notice is available here:
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Alternatively, head over to our PQQ resources to read our useful information on ‘Pre-Qualification Questionaire for Construction‘.