Fixed price
Contractors on high-value projects reduce fixed price risk exposure in response to market uncertainty
Our key findings
months reduction in the duration of fixed price offered on projects in excess of £100m.
days average increase in the duration of fixed price offered on all other project sizes.
days increase in tender validity period offered by contractors since our 2024 survey.
“Client decision-making now takes longer. In the last 10 years, it has become the norm where projects do not start on time.”
SME contractor
We surveyed the average fixed price duration being offered by contractors broken down by typical project size. Fixed price duration is the maximum construction programme of a project that will be entered into without some form of fluctuations provision.
We also looked at the tender validity period that contractors were offering (being the period that a tender was being held open for acceptance).
What it means for projects
Higher-value projects, which are more likely to be longer in duration, are seeing a decrease in the fixed price durations being offered. This is undoubtedly about risk exposure.
Contractors are no longer willing to shoulder all of the burden. While data elsewhere in our survey suggests an increase in the use of fluctuations provisions, that increase has slowed in the past 12 months.
What it means for client outcomes
Assessing value in tender returns may take longer, but clients should be aware that while there may be more tolerance now than in the past 12 months, extended decision-making can be problematic for the ability of contractors to hold their prices and retain the best teams.
There may be alternative ways to manage contractor exposure to risk over longer-term projects that do not simply transfer risk to the point of threatening client outcomes by diminishing supply chain capacity.
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