Established procurement methods are no longer tenable in face of endemic industry change

The last few years have fundamentally reshaped the industry in which we operate. With the uncertainty caused by geopolitical disruption and the resulting impact on supply chain, skills and labour shortage, we are now in an era of endemic industry change. The ways we worked, the models we previously adopted and much of the governance mandated, are no longer fit for purpose.

RLB’s 2026 Procurement Trends report reflects how the built environment is reacting to these changes with stakeholders within the ecosystem demanding that risk is managed and contractors becoming more selective in their bidding.

Proposed retention ban presents challenges and opportunities

It is against this backdrop that, not dissimilar to what we have seen in the building safety regime, the way we procure is changing, with the proposed legislation to ban retentions that was announced in May this year as part of the Commercial Payments Bill. A way to manage quality, retentions had been the tool of choice for decades and while 43% of contractors that RLB surveyed believe the ban will improve quality and make zero defects more likely, the report also reveals the challenge of delivering that change in practice.

In response to the ban, 63% of contractors expect increased vetting of SME subcontractors, while 49% anticipate greater use of retention bonds. Without market adjustment, the ban risks restricting SMEs as scrutiny increases. However, managed well, it will support more resilient and better performing supply chains.

Sustainability key procurement requirement

While quality is key, sustainability has also crept up the procurement agenda with more clients this year citing ESG as essential within their procurement practices. Some 34% of those surveyed explicitly set sustainability measures, up by 13% over four years. However, 40% still do not use value-based selection criteria when awarding contracts and within the public sector, there was a 7% drop of those using value-based selection over the last year.

Rebound in single-stage tendering, but reliance on design and build contracts

This market uncertainty has also led to a rebound in single-stage tendering as pipelines ease and contractors have become wary of tying up bid teams in long two-stage periods. However, the report found that clients are still relying on design and build contracts, passing over design at Stage 3 more frequently than they were 12 months previously.

AI in tender responses now mainstream

Not surprisingly, the adoption of technology, and particularly AI, by contractors is now mainstream with three in four surveyed stating that they used AI in their procurement process to some degree, mainly to draft qualitative answers to bid questions. This poses interesting challenges to those assessing bid responses with some evolution in the types of questions that are asked.

Collaborate and embrace reform to gain competitive advantage 

Reassuringly, the findings from our report show that different ways of working and a change in the procurement models are being welcomed. Increased collaboration from clients and contractors, a greater willingness to share risk and growing use of mechanisms such as fluctuation clauses to manage uncertainty were all stated as more commonplace today. This suggests that better market engagement leads to stronger supply chain relationships and greater value through resilience, rather than the transfer of ever more onerous contractual obligations.

There is no doubt that there is a systemic shift happening in procurement. Against a backdrop of sustained volatility and tightened risk appetites, traditional approaches are becoming increasingly strained and new alternatives are essential for the industry to progress. Collaboration is no longer optional – it is a necessary response to that pressure. Those who recognise this evolution and adapt more quickly to it are more likely to succeed in this new world with stronger market engagement, more resilient delivery and improved outcomes.

Paul Beeston is head of industry and service insight at RLB