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Sharp Rise in Construction Sector Tenders is Highly Promising

Sep 04, 2014

Activity in the construction sector has seen the strongest surge in seven months, aiding the current trend of continuously high employment rates throughout the industry. The sharp rise in contract work is incredibly promising for the British economy, with subcontractor usage rising at the fastest rate since the Markit/CIPS purchasing manager’s index (PMI) was first implemented in April 1997. Civil engineering contracts have been boosted by additional infrastructure spending, and commercial construction also grew strongly. PMI rates the growth or contraction of a specific sector on a numerical scale, with 50 indicating non-movement. The surge has entailed an increase in the construction sector’s PMI rating, boosting it from an already impressive 62.4 in July to 64.0 last month. However, increasing demand has revealed a record drop in availability, as many contractors are already involved in major projects, giving room for other subcontractors to land lucrative government contracts. The Help to Buy Initiative Experts have associated the rapid increase in construction tenders to the recent Help to Buy government initiative, originally launched in April last year. Help to Buy is essentially an equity loan scheme proposed by the government in order to encourage first-time buyers and home movers to purchase new-build homes by covering some of the costs. Typically, buyers will be required to put down at least 5 per cent of the price as a deposit, and the government will agree to loan up to 20 per cent of the total cost. Since the initiative was introduced, almost 50,000 new-build homes have been purchased in the UK, nearly 30,000 of them aided with Help to Buy. A large quantity of these purchases were off-plan, meaning that the number of invitations to tender (ITTs) aimed at construction subcontractors has risen as a direct result. Supply and Demand Being in such high demand has left contractors in a difficult situation. Some larger contractors are experiencing shortages, both in materials and skilled personnel. That has led to some of the slowest delivery times from vendors in the construction sector since the PMI survey began. With so many construction companies having their resources stretched to the limit, the government will be issuing ITTs that will be open to other bidders. With the right bid, even a small subcontractor could land a lucrative government contract. Ensuring Tender Success A great example of our own experience in tender success with these government contracts comes from a client we worked with who was based in the South West. With the help of our expert bid writers, the client applied for a request for tender, their eyes set on a fantastic contract opportunity with their local authority. Our client came out on top, winning a contract worth £48 million to build an array of new homes in and around their local area. With the Help to Buy initiative infiltrating a number of areas around the UK, there’s more opportunity than ever for tender success with contractors specialising in domestic and commercial construction, which could promise a bright future for their enterprise. For more information on our bid management services, contact one of our offices in Greater Manchester, Central Scotland and the Midlands by telephone or by email. See our Contact Us page for more details.

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