The construction industry in Wales is currently facing a multitude of challenges, from material shortages and rising costs to skills shortages and sustainability demands. But there is one issue that seems to be causing particular frustration among industry professionals: procurement.
Procurement lies at the heart of everything in the construction sector. It determines which projects get greenlit, who gets to work on them and, ultimately, how successful they are. Yet, despite its importance, procurement processes in Wales are proving to be one of the most difficult hurdles for construction companies to navigate, particularly for small and medium-sized enterprises (SMEs).
Current frameworks are widely seen as inefficient, overly complex, and too costly, leading many to question their role in the future of Welsh construction.
The financial strain of bidding for public sector contracts in Wales is a recurring pain point for SMEs. As one industry professional put it, “we bid to bid”. This means that even after securing a place on a procurement framework, companies must then bid again for individual projects. Each bidding process can cost SMEs anywhere from £40,000 to £50,000, and the costs mount quickly. If a company bids for three projects in a year and is unsuccessful, it could lose upwards of £150,000 – a significant sum for any small business.
This “race to the bottom” approach leaves many SMEs struggling. As another industry insider explains, “We're not valued. As an industry, we're just not valued.” While larger contractors might be able to absorb the costs of multiple unsuccessful bids, SMEs often cannot, which leaves them financially vulnerable and unable to invest in other areas of their business, such as training apprentices or adopting new technologies.
The issues with procurement go beyond just financial losses. They also have a ripple effect on the skills development and future workforce of the construction industry. The construction sector is already grappling with a skills shortage and SMEs, who are typically the ones most engaged in training the next generation, are finding it difficult to plan ahead.
When companies are forced to devote so many resources to simply bidding for contracts, they lose the capacity to invest in their workforce. This has a direct impact on the number of apprenticeships offered and the ability of firms to invest in continuing professional development (CPD) for their current staff. In the long run, this threatens the sustainability of the Welsh construction sector, as fewer skilled workers are trained to meet future demands.
One professional shared the sentiment that “procurement is at the crux of all of it”, highlighting how the inefficiencies in the system hinder broader goals like addressing the skills gap. If procurement processes could be simplified and stabilised, it would provide the breathing room that SMEs need to focus on long-term growth and skills development.
Cat Griffith-Williams, CEO of Constructing Excellence Wales, describes procurement as ‘the fundamental process that determines project success’.
She said:
“To deliver value, to build for future generations and for our industry to remain profitable and survive, we must do it right from the beginning of the construction process. We operate in a sector limited by tight margins, whilst delivering complex projects against a background of competitive tendering and increased legislative scrutiny. The core of this is how we procure construction services. We must stop the ‘race to the bottom’ culture that focuses on price to the detriment of value.
“The requirements within the Building Safety Act and the Social Partnership and Public Procurement (Wales) Act will ensure this shift from ‘lowest bid’ to ‘best quality.’”
Another concern is the skills gap within procurement itself. While some innovations in procurement have been welcomed, there is still a sense that procurement officials often lack the depth of understanding necessary to manage large, complex construction projects effectively.
For example, while the introduction of social clauses, which aim to link construction projects with social benefits such as local employment and training, has been praised, there is a question of whether these clauses are being implemented effectively.
“We don't interrogate the data enough,” said one professional, referring to the lack of rigorous evaluation of the impact that these social clauses have.
The industry is calling for greater scrutiny to understand why some projects achieve better results than others, and how the procurement process can be refined to deliver more consistent and meaningful outcomes.
The continuous professional development (CPD) of procurement officials is seen as an area that needs urgent attention. Without better training and skills development among those managing procurement frameworks, it will be difficult to bring about the much-needed reforms that could make the system more effective and equitable.
There is a clear consensus among industry professionals that procurement reform is essential if the Welsh construction sector is to thrive. While frameworks were originally designed to streamline public sector contracting, the reality is that many smaller firms feel shut out of the system, facing high costs and complex bidding requirements that make it difficult to compete.
Reforms should focus on simplifying the bidding process and reducing the financial burden on smaller companies. One possible solution is to introduce a more transparent and streamlined pre-qualification process, where companies that meet certain criteria would not have to re-bid for every individual project. This would save time, reduce costs, and allow SMEs to focus on delivering high-quality work rather than constantly bidding for contracts they may not win.
In addition, there needs to be a greater emphasis on value for money. Currently, many in the industry feel that procurement is often focused solely on cost, driving prices down to unsustainable levels. This approach fails to consider the broader value that a company can bring, such as its commitment to local employment, sustainability, or quality workmanship. A more holistic approach to procurement, one that values quality and long-term outcomes over short-term savings, would benefit both the construction sector and the Welsh economy as a whole.
The industry’s call for action is clear: procurement reform is essential if Wales is to build a sustainable and competitive construction sector.