Market volatility

The cost of bonding facilities is easing but many clients are still embracing collaborative working

Our key findings

fewer contractors reporting a significant increase in cost of securing bonds.

fewer contractors are reporting increased appetite for client-held risks.

of contractors still reporting an increase in collaborative working.

“It depends on the values of the end user or clients. Where do they see the value? This can only be achieved by executing our expertise at a very early stage and working collaboratively.”

National contractor

The percentage of contractors reporting a year-on-year change in procurement practices responding to a volatile market.

▉ Collaborative practices ▉ Changes in risk profiling ▉ Payment security

What it means for projects

With the supply chain generally seeing increased use of collaborative practices and risk sharing, placing a tender that is contrary to the market direction is likely to result in increased risk pricing and/or less contractor interest in bidding.

Reading the market wrongly in terms of placing of risk could result in a greater overall cost.

What it means for client outcomes

After a prolonged period of risk transfer being the market norm, clients may fear risk sharing will compromise outcomes. If risk is held client-side, it needs to be managed, and this will be a change in approach for many.

Collaborative procurement allows focus on value creation and, provided it is well executed, will improve client outcomes.

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