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Local authorities are under immense pressure to deliver capital programmes at pace, with shrinking budgets and rising public scrutiny against a background of supply chain volatility and inflationary pressures. Yet, all too often, project teams fix cost, programme, and risk positions too early in the procurement process. The intention is sensible: protect the Authority from exposure. The problem is that transferred risk doesn't disappear, it reappears elsewhere. Our survey of 50 subcontractors found that budget control pressure from leadership (26%) and cost predictability (27%) are the top reasons why survey respondents perceive that the industry remains attached to Fixed Price Lump Sum models.Based on insights from local authorities, alongside contractors and consultants working across education, health, and civic projects, we know that early procurement decisions are increasingly governance decisions, with long term implications for affordability, deliverability, and trust.Price certainty too early often creates risk laterContractors repeatedly told us they are asked to price against incomplete or evolving information. One contractor interviewed noted that when scope is unclear, ‘you are forced to assume worst case scenarios', leading to inflated costs or, in some cases, an unwillingness to bid at all. Another explained that they had turned down projects entirely when early fundamentals did not stack up.Two stage procurement is designed to address this by allowing cost, scope and risk to be developed collaboratively before committing to construction. However, our research found that where early stages are rushed or poorly governed, two stage simply becomes an ‘extended tender period' rather than a genuine problem solving phase.Scope uncertainty highlights governance issuesAcross interviews with local authority clients and delivery partners, we saw that scope uncertainty was one of the most common root causes of programme failure. When scope is unclear, you need to reevaluate and often reset the business case. This means confidence drains from projects long before spades hit the ground.Many councils deliver major capital projects infrequently, meaning early decisions are often taken without full technical, risk or market input. One local authority contributor acknowledged the challenge of optimism bias, noting that ‘contractors don't want to give you bad news, so you need to actively create space for challenge'.Clear gateways, senior sponsorship and informed advice early on are therefore essential to ensure that the scope and programme viability are tested at the right time.Risk allocation remains one of the most sensitive areas of public sector procurement. Our research found that blanket risk transfer, particularly in single stage or late stage models, often concentrates risk where it is least sustainable. This increases cost and undermines market appetite.Subcontractors told us that they are put under financial strain where risk is not shared adequately., This reinforces the point that risk is not eliminated through transfer, it is simply priced in. This aligns with government guidance, which makes clear that risk should sit with the party best placed to manage it, not be pushed down the supply chain by default.Encouragingly, examples from our research show that early engagement can reduce risk rather than redistribute it. Contractors described situations where early collaboration enabled alternative materials, sequencing or design approaches that avoided exposure altogether. As one consultant observed, ‘risk management needs to be a live process in pre construction, not something frozen in a contract'.What councils can do differentlyCouncils that succeed invest in being informed clients, supported by advisers who understand market conditions and supply chain realities. They treat time as a value driver, not just a constraint, and create governance structures that reward honest challenge rather than prioritising momentum without scrutiny.Ultimately, procurement is not about securing the lowest price at the earliest point. It is about creating the conditions for informed decision making, realistic expectations and confident delivery. For councils facing increasing complexity and scrutiny, getting the fundamentals right has never mattered more.James Wright is head of Southern Construction Framework, South East & London

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PROCUREMENT

Why councils need to rethink construction procurement

By James Wright | 15 May 2026

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