The government’s Infrastructure Pipeline sets out 780 projects worth £530 billion over the next ten years, covering transport, energy, education and healthcare.
For UK construction firms, this represents a significant pipeline of opportunity. However, the sector recorded more insolvencies than any other UK industry in 2025, with almost 4,000 firms collapsing.
This contrast highlights a critical point: a strong pipeline does not guarantee commercial viability. With construction costs forecast to rise by 15 per cent over the next five years and tender prices expected to increase alongside them, successful contractors will be those who balance opportunity with disciplined pricing and robust risk management.
Experts at Executive Compass, a bid and tender writing specialist, examine how construction firms can evaluate opportunities and identify which contracts are commercially viable.
Rising Costs are Eating into Every Tender
The Building Cost Information Service (BCIS) forecasts construction costs to rise by 15 per cent over the next five years, with tender prices expected to follow at 16 per cent.
Labour remains the primary pressure point, with employer National Insurance contributions and the National Living Wage driving the BCIS Labour Cost Index upwards.
Skills shortages are compounding the issue, and demand from the booming data centre sector is adding further strain on mechanical and electrical contractors.
While the volume of available work is growing, the cost of delivering it is growing faster. For firms operating on tight margins, this significantly reduces tolerance for error.
The Hidden Danger of Bidding Too Aggressively
“The sizeable pipeline is very positive for the sector, and the long-term visibility it provides is something the industry has needed for years,” said Christian Rowe, CEO at Executive Compass.
“However, visibility alone does not make a contract viable. We are seeing firms bid aggressively to secure work, only to find that cost inflation erodes margin before delivery is complete.”
The Procurement Act 2023 introduces greater accountability for contract performance. Suppliers that fail to meet required standards risk exclusion from future opportunities through the public debarment regime.
“Bid/no-bid decisions need to be made objectively,” Rowe added. “That means assessing whether you have the cost base, workforce and supply chain resilience to deliver. It is not just about whether you can win.”
How to Identify Genuine Commercial Opportunities in the Pipeline
With £285 billion of the pipeline funded by the public sector, there is real work to be won.
But Rowe urges construction businesses to apply a structured evaluation before committing resources to any tender, “Start by asking whether the contract aligns with your strategic direction and whether you have a genuine competitive advantage such as local presence, specialist skills or delivery track record.”
“Then look hard at the risk profile,” adds Rowe. “If price weighting is high and you are competing against national contractors with greater buying power, you need to be realistic about whether you can compete without undercutting yourself into difficulty.”
It’s also very important to gain an understanding of the full cost picture before submitting a price. “With tender prices forecast to climb and material costs subject to increasing volatility as infrastructure output grows, firms that price on today’s costs for contracts beginning in 12 to 18 months risk building in losses from day one,” warns Rowe.
Seeking Support with Bid/No-Bid Decisions
While the infrastructure pipeline brings the construction sector some much needed certainty, firms that use it wisely, with realistic cost forecasting, careful bid decisions and a solid delivery model, have a real opportunity to grow.
But for those that chase volume of bids without checking whether their numbers stack up properly, it could mean more contracts ending in financial difficulty.
“The pipeline gives the sector the roadmap it has been asking for,” advises Rowe. “The key is selecting the right opportunities, not simply pursuing more of them.”
Specialist bid support can assist firms in evaluating opportunities and making informed bid/no-bid decisions, reducing exposure to commercial risk and improving long-term outcomes.
