More Tenders, Tighter Margins: Why Getting Your Tender and Contract Right Matters in 2026
The construction market is changing. For contractors, winning work is important — but winning the right work at the right price, under the right contract, is key.
The UK construction industry continues to face a challenging trading environment. For contractors, this creates a difficult balancing act.
There is pressure to keep the order book moving.
There is pressure to submit more tenders.
There is pressure to remain competitive.
But there is also a very real danger:
Winning work at the wrong price can be worse than not winning it at all.
In a competitive market, commercial discipline matters - the temptation to "just get the job".
When workloads are uncertain, it is understandable that contractors want to win as much work as possible.
A tender comes across the desk.
The drawings look reasonable.
The programme looks achievable.
The client looks credible.
The project fits your team.
So you get to work estimating.
Hours are spent measuring, pricing labour, obtaining subcontractor quotations and checking materials.
Eventually, the number is submitted.
And then comes the phone call:
“Congratulations — you’ve won the job.”
It should be good news.
But before celebrating, there is one important question to ask:
Have you actually won a profitable project?
A competitive tender price is only useful if the scope, programme, risks and contractual obligations behind that price have been properly understood.
Tendering isn't just about producing the lowest number.
A good tender isn't necessarily the cheapest tender.
It is a tender where the contractor understands exactly what they are committing to deliver and has priced the associated risks appropriately.
Before submitting a tender, contractors should be asking questions such as:
Is the scope clearly defined?
Are the drawings and specifications coordinated?
Are there discrepancies between the tender documents?
Are provisional sums realistic?
Are there design responsibilities hidden within the specification?
Is the programme achievable?
Have inflation and procurement periods been considered?
Are subcontractor quotations based on the same scope?
Have exclusions and assumptions been clearly identified?
What happens if the information changes?
What contractual risks are being transferred to the contractor?
Are material prices from the supplier up to date and accurate?
These questions can make the difference between a project that delivers a healthy margin and one that slowly erodes profitability.
Don't price the risk, if you haven't understood it.
One of the biggest mistakes contractors can make is simply adding a percentage for “risk”.
Risk isn't always something that can be solved by adding 5% or 10% to a tender.
Some risks need to be understood, qualified, excluded, negotiated or transferred.
For example, imagine a contractor is pricing a refurbishment project.
The tender documents contain incomplete information.
The contractor makes reasonable assumptions and prices accordingly.
Six weeks after contract award, the client issues additional information that significantly changes the works.
If the tender and contract documentation hasn't clearly established how changes are to be dealt with, the contractor could find themselves arguing about entitlement rather than getting paid for the additional work.
The problem didn't start when the variation was instructed.
The problem started when the original risk wasn't properly identified.
Winning the tender is only half the battle
This is where contract review becomes just as important as tendering.
A contractor can spend weeks producing a carefully calculated tender, win the project and then sign a contract without fully appreciating the commercial consequences of the terms.
The contract may contain provisions relating to:
Payment periods
Retention
Set-off
Liquidated damages
Extensions of time
Variations
Design responsibility
Insurance obligations
Collateral warranties
Defects
Termination
Suspension
Indemnities
Programme obligations
Delay
Dispute resolution
Individually, these clauses may appear manageable.
Collectively, they can significantly alter the commercial risk of a project.
The contract should reflect the price you submitted
One of the most important principles for contractors is simple:
Your tender and your contract need to tell the same commercial story.
If your tender was based on certain assumptions but the contract subsequently places additional obligations on you, there is a potential disconnect.
For example, your tender may have been based on:
“The works will be completed within 26 weeks.”
But the contract could contain significant delay damages if completion isn't achieved by a fixed date.
Your tender may assume that additional works will be valued as variations.
But the contract could contain restrictive provisions around entitlement to additional payment.
Your price may assume that payment will be received within an agreed period.
But the contract could provide the client with broad rights of withholding or set-off.
These aren't simply legal technicalities.
They are commercial risks.
And they should be understood before the contract is signed.
A £500,000 project isn't necessarily a £500,000 opportunity
Consider a hypothetical contractor tendering for a £500,000 project.
The contractor expects a £50,000 gross margin.
On paper, it looks attractive.
But during the project:
£15,000 is lost through underestimated preliminaries.
£10,000 is lost through additional labour.
£8,000 is lost because of procurement delays.
£7,000 is lost through unanticipated contractual obligations.
£10,000 of variations become disputed.
The expected £50,000 margin has effectively disappeared.
The contractor hasn't necessarily made a bad business decision by taking the project.
They may simply have failed to identify and manage the commercial risks early enough.
This is why commercial review shouldn't start when the project starts.
It should start before the tender is submitted.
What does a QS bring to the process?
A Quantity Surveyor isn't simply there to produce quantities or check valuations.
A QS can provide commercial oversight throughout the tender and contract process.
At pre-tender stage, this can include:
Identifying suitable tender opportunities
Reviewing tender documentation
Assessing project suitability
Preparing and reviewing pricing
Identifying commercial risks
Reviewing subcontractor quotations
Checking scope and exclusions
Supporting tender submissions
Before a contract is signed, the focus can then move towards:
Reviewing the proposed contract
Identifying commercially onerous clauses
Highlighting payment risks
Reviewing delay and damages provisions
Checking variation mechanisms
Identifying responsibility for design and information
Reviewing termination and suspension provisions
Advising on areas requiring clarification or negotiation
The objective isn't to make every project risk-free.
That's impossible.
The objective is to make sure the contractor understands the risks before committing to them.
Don't confuse “busy” with “profitable”
Construction businesses don't need to win every tender.
They need to win the right tenders.
There is a significant difference.
A full order book can look impressive, but if projects are being won on unrealistic margins, under poorly understood contracts, the workload can create more pressure rather than more profit.
The strongest commercial decisions are often made before the contract is signed.
That means asking:
Is this the right project for us?
Is the price right?
Have we allowed for the risks?
Are the contractual terms acceptable?
Do we understand exactly what we're signing up to?
If the answer to any of those questions is unclear, it may be time to take a closer look before submitting the tender or signing the contract.
Win the work. Understand the risk. Protect the margin.
Need help with your next tender?
At Daedalus Consultancy, we support contractors with tendering and commercial advice, helping businesses identify suitable opportunities, understand project risks and approach tenders with greater commercial confidence.
We also provide construction contract reviews, helping contractors understand the commercial implications of the terms they're being asked to sign before they commit to the project.
Because the best time to discover a problem with a project is before you've signed the contract.
Daedalus Consultancy — saving you time and money on your construction projects.
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