Contractors Seek Tender Uplifts over War Impact Fears

Why It Matters

Rising tender prices and contract delays erode profit margins and could stall key construction pipelines, signaling heightened risk for investors and developers across the sector.

Key Takeaways

• Contractors request tender uplifts before signing contracts.
• 85% declined at least one tender, tightening work‑winning.
• Gleeds forecasts 3.5% tender price inflation in 2026.
• Mace adds 0.5% transport cost increase to forecasts.
• Housing sector faces greatest pressure; public projects more insulated.

Pulse Analysis

The escalation of hostilities in the Middle East is reverberating through global construction markets, primarily via surging fuel costs and the looming threat of a Strait of Hormuz blockage. When oil and diesel prices climb, contractors face higher equipment operating expenses and material transport fees, prompting many to renegotiate or uplift previously agreed tender prices. This dynamic underscores how geopolitical risk has become a direct cost driver for the industry, beyond traditional supply‑chain considerations.

Gleeds’ first‑quarter survey reveals a defensive posture among contractors: 85% have turned down at least one tender, and half cite global conflicts as the most significant threat to project viability. The firm predicts a 3.5% rise in tender prices for 2026, edging up to 3.75% in 2027 if the war persists. Mace Consult adds a 0.5% uplift for transport costs, highlighting the compounded pressure on energy‑intensive materials such as cement, steel, and glass. While the housing sector bears the brunt of these cost escalations, public‑sector and infrastructure projects are expected to remain comparatively shielded.

For investors and developers, the message is clear: risk mitigation strategies must now incorporate geopolitical scenario planning. Accelerated investment in renewable energy, electrification, and diversified supply chains can reduce exposure to oil‑price volatility and potential blockades. Moreover, upcoming policy shifts—such as the planned ban on retentions—could improve cash flow and bolster supply‑chain resilience, offering a modest counterbalance to inflationary pressures. Stakeholders who proactively adapt to these evolving risks will be better positioned to protect margins and sustain project pipelines in an uncertain global environment.