3 ways to unlock commercial gains with the Procurement Act

The UK construction industry is at a crossroads. With the Procurement Act taking effect in February, firms that understand and adapt to the changes stand to gain a significant competitive edge.  Yet, our recent survey of nearly 100 construction leaders across the UK revealed that many businesses were unprepared for the shift:

• 37% were unaware of the Procurement Act’s go live date 
• 70% were uncertain about its impact on their business 
• 69% were not yet incorporating the Procurement Act’s principles into their tenders 

The last figure is particularly concerning, as it means businesses could be missing out on key opportunities that will shape the future of construction procurement. 

But for those willing to take proactive steps, the Procurement Act offers a pathway to smarter commercial strategies. By using the Act’s principles, construction firms can unlock efficiencies, secure better contract terms and improve long-term business sustainability. 

But how can businesses capitalise on the Procurement Act and unlock commercial gains? Here are three ways: 

1. Strengthen collaboration to optimise costs and efficiency 

One of the core themes of the Procurement Act is promoting collaboration and early engagement. For main contractors, this presents a significant opportunity to optimise cost management and project efficiency. Traditionally, construction procurement processes have been siloed, with subcontractors brought into the fold late in the planning stage. This often leads to inefficiencies, misaligned expectations and costly rework.

Under the new legislation, early engagement with subcontractors can create a more integrated approach, taking advantage of their specialist expertise to refine project planning. By involving subcontractors at the outset, main contractors can identify potential challenges before they escalate, reducing rework and ensuring a smoother project lifecycle. This results in cost savings, better resource allocation and improved timelines.

For subcontractors, particularly SMEs, the shift towards early collaboration means they can provide input at an earlier stage and align their capabilities with the project’s needs. It allows them to demonstrate their value beyond just price competitiveness, positioning themselves as strategic partners rather than just suppliers. 

Additionally, the Procurement Act prioritises transparency, making procurement processes more predictable. This will enable subcontractors to plan resources more effectively and reduce risks associated with last-minute contractual changes.

2. Align with social value to strengthen your market position

Another crucial aspect of the Procurement Act is its emphasis on social value. Businesses that align their procurement strategies with social and environmental priorities will have a stronger competitive edge when bidding for contracts.

For main contractors, embedding social value principles – such as prioritising local employment, supporting apprenticeships and implementing sustainable construction practices – can enhance their reputation and brand image. Clients and stakeholders are increasingly favouring firms that demonstrate corporate responsibility, and the Procurement Act reinforces this trend.

What is social value?

The UK Green Building Council (UKBC) identifies three main themes to define the social value of a project: jobs and economic growth; health, wellbeing and the environment; and strength of community.  

But keep in mind that the meaning of social value in practice is likely to change from one job to the next, as different clients will have different priorities when it comes to delivering social impact. 

Additionally, investing in social value initiatives can help businesses attract and retain top talent. Employees are more likely to be engaged and motivated when they work for an organisation that prioritises social impact. With the construction sector facing ongoing skills shortages, this can be a powerful differentiator in a highly competitive job market. 

For subcontractors, aligning with social value can create new opportunities to collaborate with main contractors who need partners that meet these requirements. SMEs, in particular, can use their local ties and community engagement initiatives to strengthen bids and increase their chances of securing contracts. 

Beyond reputational benefits, the emphasis on social value will also shape funding and partnership opportunities. Businesses that actively demonstrate their commitment to sustainability and social impact will be better positioned to win both public and private sector construction projects. 

Read more on how to demonstrate social value as a subcontractor

3. Improve cash flow and financial stability

One of the biggest wins for subcontractors under the Procurement Act is the introduction of mandatory 30-day payment terms for undisputed invoices. Late payments have long been a challenge in the construction industry, creating cash flow issues that affect business stability and growth. With payment terms often extending well beyond 30 days, many subcontractors have faced significant financial strain, which has limited their ability to invest in their operations and workforce. 

Under the new Procurement Act, timely payments will be enforced, creating a more financially stable ecosystem. For subcontractors, this means greater predictability in revenue streams, allowing them to manage supply chains more effectively, invest in equipment and training, and take on larger projects with confidence. For main contractors, the shift towards timely payments can enhance relationships with subcontractors, helping build greater trust and reliability within project teams. Ensuring payments are made on time can also help contractors maintain a more stable supply chain, reducing the risk of project delays caused by financial constraints among subcontractors.

Moreover, businesses that comply with the new payment regulations will be viewed more favourably in future construction procurement processes. Clients and stakeholders are likely to prefer working with companies that have a reputation for fair and reliable financial practices.

Preparing for the future: a call to action

The Procurement Act is now in force and construction businesses cannot afford to stand still. Firms that fail to prepare risk falling behind competitors who are already aligning their strategies with the new requirements, or made preparations before the Procurement Act go live date.

If they haven’t already, main contractors should review their procurement policies to ensure they incorporate early engagement principles and social value commitments. Establishing partnerships with subcontractors that align with these priorities will not only strengthen their bids, but also improve overall project outcomes. 

Subcontractors, meanwhile, should focus on positioning themselves as valuable partners by demonstrating their ability to meet the Procurement Act’s criteria. This includes refining their proposals to highlight expertise in sustainability, workforce development and efficiency. Understanding the implications of the new payment regulations will also help them navigate financial planning more effectively. 

Ultimately, the Procurement Act represents a shift towards a more sustainable, efficient and fair procurement landscape. Those who embrace these changes proactively will not only avoid potential risks, but also unlock commercial gains that will strengthen their business for the long term. 

Make the most of the Procurement Act’s commercial opportunities with Constructionline 

Are you ready to make the most of the opportunities ahead? Now is the time to act and position your business for success under the new rules. That’s why we’ve prepared the ultimate guide to understanding the Procurement Act with 3 golden rules. Click here to download your FREE copy.  

For further support, you can always contact our Procurement Act experts.