Cost consultant Gardiner + Theobald's latest Autumn Market Update offers a mixed outlook for the construction industry as it trims its 2026 tender price inflation forecast to 3.25% from 3.5%. The cooling is more pronounced in London, where the forecast lowers to 3.5% from 3.75%, with similar quarter-point reductions in the South East, South West, and East Anglia. The rest of the UK sees no change. This adjustment signals a selective market rather than a cheaper one, with main contractors showing increased interest in 2027 projects amid softening workloads. However, the squeeze on specialist trades remains a significant concern.
What Happened
Gardiner + Theobald's report highlights a cautious optimism in the tendering landscape, but it's tempered by a persistent bottleneck in specialist trades such as mechanical, electrical, and plumbing (MEP), façades, and steelwork. The report notes that while longer tender lists might suggest more capacity, this is not necessarily the case. Instead, it reflects more selective bidding, particularly for projects in the £10m–£30m range, which attract robust competition. Larger projects exceeding £50m, or those with high complexity, struggle to draw a capable field of bidders. As workloads shift, Tier 1 contractors are increasingly selective, with 69% reporting a more discerning approach to bids than a year ago. Despite a growing pipeline, confidence in projects reaching the site is waning, with 73% indicating a decline in project viability due to affordability and financing challenges.
What This Means for Your Business
For AECM professionals, this environment necessitates strategic planning and a focus on risk management. The persistent pressure on specialist trades means companies must prioritize relationships with reliable subcontractors to ensure project delivery. With main contractors booking approximately 60% of their 2027 workload, the competition for capable subcontractors will intensify, especially in MEP and structural steel. Additionally, understanding the shifting risk landscape is crucial, as over half of the surveyed respondents cite contract terms and risk allocation as factors pushing up prices. This underscores the importance of thorough contract negotiations and risk assessments to maintain competitive positioning and protect margins.
What US Operators Should Watch
US operators should closely monitor the evolving trends in subcontractor availability and pricing, especially in specialist trades like MEP, which are already tight. Keeping abreast of regional tender price forecasts and aligning procurement strategies with these insights can provide a competitive edge. Additionally, understanding the impact of compressed timelines and immature designs on project costs will be vital for accurate budgeting and bidding. As the market shifts, maintaining agility in project planning and execution will be essential to capitalize on emerging opportunities while mitigating risks.
Source: https://www.constructionenquirer.com/2026/10/06/tier-1-tender-rises-cool-but-specialist-trades-costs-hold-firm/. Read the original story ->
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