EXECUTIVE SUMMARY

From procurement reform to transformation

Government-led reform may accelerate the transformation of procurement in UK construction for the benefit of clients, contractors and ultimately communities.

Traditional procurement methods becoming unsustainable in face of endemic industry change

Our 2026 Procurement Trends Survey reveals an industry operating in a fundamentally different environment to the one in which many procurement models were designed. A sustained rise in uncertainty, driven by geopolitical disruption, supply chain shocks and skills shortages, is no longer sporadic but represents endemic industry change. In this context, our 2026 report shows construction behaving exactly as expected: risk appetites are tightening and traditional approaches to procurement are becoming harder to sustain.

This is most clearly visible in client and contractor behaviours. Against sustained volatility, risk is being managed far more actively. Contractors are becoming more selective in bid decisions, with over half reporting more stringent bid/no‑bid criteria for their largest projects, driven by commercial terms, risk transfer and concerns about client capability and governance.

Proposed retention ban presents challenges but also opportunity to improve quality standards

Against this backdrop, the government intends to introduce arguably the most significant commercial reform for construction contracts since the Construction Act three decades ago. In May 2026, the government announced legislation to ban retention payments in the industry and the Commercial Payments Bill had its first reading in the House of Lords. Trying to manage quality through withholding part payment is a blunt tool, but retention has been the tool of choice for decades.

Our data shows some of the challenges ahead for introducing the legislation as contractors are already anticipating increased SME subcontractor vetting and greater use of subcontractor retention bonds. And yet our data also shows challenges in bonding markets, not so much in availability but in willingness to provide them.

While SMEs are encouraged through the Procurement Act, those same SMEs should be a beneficiary of the retention ban and not inadvertently disadvantaged by unrealistic screening requirements. But the opportunity is there for the taking, not only for a more resilient supply chain, but with 43% of contractors agreeing that quality will be improved, zero defects could become increasingly likely.

Increasing demand for sustainability measures but mixed picture on use of value selection criteria

At the same time, clients are asking for more. Notably for ESG where 34% of contractors are now seeing objective setting of sustainability targets (up 13% over four years).

And yet four in 10 clients do not use value selection criteria and things are arguably getting worse in the public sector with their use dropping by 7% over the last 12 months.

Clients and contractors who embrace reform stand to gain competitive advantage

Encouragingly, the behavioural responses that are being reported point to a different procurement model. Contractors report increased collaboration, greater willingness to share risk, and a growing use of mechanisms such as fluctuations to manage uncertainty. Rebalancing decades of practice is now part of the legislative agenda. But that is not the only reason for clients to change their ways of working.

Clients who recognise the changes in the market and adapt will secure better market engagement, more resilient delivery and improved outcomes; those who do not will find an increasingly constrained and expensive market responding accordingly. The market is not withdrawing, but it is becoming more disciplined.

More resilient supply chains in construction will deliver greater value and better outcomes

This leads to the central conclusion of the report: procurement is entering a new phase where value is created through resilience in supply chains. Better outcomes must be created collaboratively rather than transferring ever more onerous contractual obligations. The retention ban accelerates this shift, but the underlying drivers have been in play for some years.

Clients who recognise this will unlock stronger, more resilient delivery and better outcomes; those who do not will find an increasingly constrained and expensive market responding accordingly.