Contractors are continuing to shy away from high-risk projects, with 57% admitting they have scaled back their risk appetite this quarter, according to the latest market survey by consultant Gleeds.Nearly three-quarters of firms reported walking away from tenders – a sharp rise on the two-thirds that did so a year ago.
Pre-construction phases are also lengthening, with programmes that once wrapped up in 12–18 months now taking more than two years in many parts of the country.
Gleeds warns that shaky investor confidence, tighter access to development finance and regulatory hurdles such as Gateway 2 are stalling projects before they even reach site.
Bid margins are also climbing, increasing from 5.7% in Q1 to 6.3% in Q3. Consultants caution that these could soon edge towards the 7% mark as contractors continue to feel the pressure of rising costs.
One contractor said: “Increases in contractor National Insurance costs are being passed directly on to the client/end user.”
Another warned procurement rules and policy add-ons were making schemes unviable: “Given current budget constraints we need to be looking at UK government policies that are not adding value or social good, and removing them from tenders to allow a sporting chance of contracts being awarded within budget.”
The survey also highlighted that delays tied to the Building Safety Regulator have eased slightly, with the share of affected projects falling from 37% in Q2 to 25% in Q3. However, residential developments in London remain the most heavily impacted.
Industry confidence has also dipped. Fewer than half of respondents now express optimism about the sector’s outlook, down sharply from the 70% recorded when Labour entered government with its promise to “get Britain building again.”
Brian McArdle, Gleeds’ UK managing director, said: “Our Market Report shows a fragile but gradually stabilising picture of construction under a Labour government.
“The sector continues to come under strain from insolvencies, inflation, and labour pressures, but opportunities do exist in public housing, healthcare, education, infrastructure and commercial – success will depend on converting government spending commitments in these areas into real project delivery, while safeguarding supply chain resilience.”
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