54% of contractors surveyed in the RLB’s annual Procurement Trends survey reported an increase in collaborative working in procurement, with 35% of contractors stating that clients were more willing to share risk
RLB’s annual procurement trends report has found that faced with an industry-wide wariness toward supply chain stability, collaborative working across procurement has increased.
Attitudes towards shared responsibility are shifting, with 35% of contractors seeing an increased willingness from clients to consider risk sharing.
Correspondingly, 26% reported increased use of fluctuation clauses, as well as 63% of contractors reporting a significant increase in the cost of performance bonds.
However, concerns about the fragility of the supply chain prevail, impacting market trends on labour availability, materials cost and supply.
Other key findings include:
In response to market volatility, 16% of contractors now report increased use of project bank accounts
An 8% increase in the use of two-stage tendering, and a 6% reduction in negotiated projects
67% of projects use design and build forms of contract, the highest proportion since the start of our survey
87% of contractors report that the greatest issue they face in the next 12 months is robustness of their supply chains
Regional breakdowns of procurement practice indicate that in Yorkshire & Humber and North West, single-stage procurement activity may have more appeal (all other project attributes being equal), whereas in the Midlands and London, two-stage procurement or negotiated routes to market activity may have more appeal (all other project attributes being equal).
Collaborative procurement still needs to win over the majority of the market
Paul Beeston, RLB head of Industry and Service Insight, said: “There are mutual benefits for clients and contractors by moving to a programme-based, not project-based, procurement process where earlier contract involvement is standard and the risk is borne across parties, rather than resting solely on the shoulders of the contractor or the client.
“It is not just contractors struggling to put the theory into practice – clients and their advisors are rightly contemplating the impact of insolvency in a market where bonding facilities are proving more challenging to source.”
If we are seeing major contractors unable to remain profitable, we know there is a crumpling ecosystem below them in the supply chain,” warned Sam Barnes, RLB partner and national head of cost management. “Things need to change fast, and we need a more transparent and collaborative procurement system.”
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